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As filed with the Securities and Exchange Commission on September 24, 2013

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

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

APPAREL HOLDING CORP.*
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	5600	 	75-3264870	
(State or other jurisdiction of incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer Identification No.)	
	 	1441 Broadway—6th Floor
New York, New York 10018
(212) 515-2600	 		
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Lisa Klinger
Chief Financial Officer and Treasurer
1441 Broadway—6th Floor
New York, New York 10018
(212) 515-2600
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Gerald T. Nowak, P.C.
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
(312) 862-2000	 	Kevin P. Kennedy
Simpson Thacher & Bartlett LLP
2475 Hanover Street
Palo Alto, California 94304
(650) 251-5000	

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
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:   ¨ 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨ 
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.   ¨ 
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 statement number of the earlier effective registration statement for the same offering.   ¨ 
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   ¨ 	 	Accelerated filer   ¨ 	  	Non-accelerated filer   x 	 	Smaller reporting company   ¨ 	
	 		  	(Do not check if a smaller reporting company)	

 	
Title of Each Class of
Securities to be Registered	 	Proposed
Maximum
Offering Price(1)(2)	 	Amount of
Registration Fee(3)	
Common stock, par value $0.01 per share	 	$200,000,000	 	$27,280	

(1)	Includes the offering price of the shares of common stock that may be sold if the option to purchase additional shares granted by us to the underwriters is exercised in full.	
(2)	Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.	
(3)	Calculated by multiplying 0.00013460 by 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 this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
* Apparel Holding Corp., the registrant whose name appears on the cover of this registration statement, is a Delaware corporation. Prior to the consummation of this offering, Apparel Holding Corp. will change its name to Vince Holding Corp. Shares of the common stock of Vince Holding Corp. are being offered by the prospectus.

 

Table of Contents
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 nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
Subject to Completion, dated                     , 2013
             Shares

Apparel Holding Corp.
Common Stock

This is an initial public offering of shares of common stock of Apparel Holding Corp. (to be renamed Vince Holding Corp. prior to the consummation of this offering). All of the              shares of common stock are being sold by the company.
Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $         and $        . We intend to list the common stock on the New York Stock Exchange under the symbol “VNCE”.
We are an “emerging growth company” as defined under the federal securities laws and are therefore subject to reduced public company reporting requirements.

See ‘‘ Risk Factors ’’ on page 24 to read about the factors you should consider before buying shares of the common stock . 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
									
 	  	Per Share	 	  	Total	 	
Initial public offering price	  	$	            	  	  	$	            	  	
Underwriting discount	  	$	            	  	  	$	            	  	
Proceeds, before expenses, to us	  	$	            	  	  	$	            	  	
To the extent that the underwriters sell more than              shares of common stock, the underwriters have the option to purchase up to an additional              shares from us at the initial price to the public less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on or about                     , 2013.

Goldman, Sachs & Co.	  	Baird	

BofA Merrill Lynch	 	   Barclays	  	J.P. Morgan  	 	  UBS Investment Bank	

KeyBanc Capital Markets	 	Stifel	 	William Blair	

Prospectus dated                     , 2013.

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 TABLE OF CONTENTS

PROSPECTUS SUMMARY	  	 	1	  	
RISK FACTORS	  	 	24	  	
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	  	 	61	  	
RESTRUCTURING TRANSACTIONS	  	 	63	  	
USE OF PROCEEDS	  	 	67	  	
DIVIDEND POLICY OF AHC	  	 	70	  	
CAPITALIZATION OF AHC	  	 	71	  	
DILUTION	  	 	74	  	
ADDITIONAL INFORMATION RELATED TO AHC	  	 	76	  	
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF AHC	  	 	77	  	
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AHC	  	 	80	  	
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF AHC	  	 	99	  	
AHC BUSINESS	  	 	139	  	
AHC MANAGEMENT	  	 	142	  	
AHC EXECUTIVE COMPENSATION	  	 	145	  	
DESCRIPTION OF CERTAIN INDEBTEDNESS OF AHC	  	 	153	  	
ADDITIONAL INFORMATION RELATED TO VINCE	  	 	155	  	
SUPPLEMENTAL SELECTED HISTORICAL FINANCIAL DATA OF VINCE, LLC	  	 	156	  	
SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VINCE, LLC	  	 	158	  	
VINCE BUSINESS	  	 	185	  	
VINCE MANAGEMENT	  	 	197	  	
VINCE EXECUTIVE COMPENSATION	  	 	204	  	
DESCRIPTION OF CERTAIN INDEBTEDNESS OF VINCE, LLC	  	 	219	  	
OTHER INFORMATION RELATED TO THIS OFFERING	  	 	220	  	
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF AHC	  	 	221	  	
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF AHC	  	 	231	  	
DESCRIPTION OF CAPITAL STOCK OF AHC	  	 	233	  	
SHARES ELIGIBLE FOR FUTURE SALE	  	 	239	  	
MATERIAL U.S. TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK	  	 	242	  	
UNDERWRITING	  	 	247	  	
VALIDITY OF COMMON STOCK	  	 	252	  	
EXPERTS	  	 	252	  	
WHERE YOU CAN FIND ADDITIONAL INFORMATION	  	 	252	  	
INDEX TO THE AUDITED FINANCIAL STATEMENTS FOR AHC	  	 	F-1	  	
INDEX TO THE AUDITED FINANCIAL STATEMENTS FOR VINCE, LLC	  	 	V-1	  	

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
 
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Persons who come into possession of this prospectus and any such free writing prospectus in jurisdictions outside the United States (the “U.S.”) are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.
Market and Industry Data
We obtained the industry, market and competitive position data throughout this prospectus from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties, including (i) the Worldwide Luxury Markets Monitor, Spring 2012 Update (dated May 7, 2012), the 2012 Luxury Goods Worldwide Market Study (11th Edition) (dated October 15, 2012) and the Worldwide Luxury Markets Monitor, Spring 2013 Update (dated May 16, 2013) (the “Bain Studies”) each of which was prepared by the Altagamma Foundation in cooperation with Bain & Company and (ii) the Vince Survey Among Qualified Non-Customers (dated January 9, 2013) (the “Harris Study”) which was prepared by Harris Interactive. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. Further, while we believe the market opportunity information included in this prospectus is generally reliable, such information is inherently imprecise. In addition, projections assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. See “Special Note Regarding Forward-Looking Statements.”
The Bain Studies analyze the global luxury market, including the market and financial performance of more than 230 of the world’s leading luxury goods companies and brands. All 2012 figures derived from the Bain Studies are based on an exchange rate of $1.00 to € 0.809.
We commissioned the Harris Study to analyze awareness of the Vince brand, affinity for the Vince brand and overall brand and purchase behavior among 500 qualified respondents.

Basis of Presentation
Our fiscal year ends on the Saturday closest to January 31. Fiscal years are identified in this prospectus according to the calendar year prior to the calendar year in which they end. For example, references to “2012,” “fiscal 2012” or “fiscal year 2012” or similar references refer to the fiscal year ended on February 2, 2013. References to the “first six months of fiscal 2012” and the “first six months of fiscal 2013” refer to the six month periods ended July 28, 2012 and August 3, 2013, respectively.
Unless the context otherwise requires, references to the “company,” “we,” “us” and “our” collectively refer to Vince Holding Corp. (currently known as Apparel Holding Corp.) and its consolidated subsidiaries, which will include Vince, LLC after giving effect to the transactions to be effected prior to or in connection with the consummation of this offering. When discussing periods prior to the consummation of this offering, such references refer to the historical results and operations of Vince, LLC.
 
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We describe these transactions in the “Restructuring Transactions” section of this prospectus as “IPO Restructuring Transactions”. Additionally, unless the context otherwise requires, references to:
 
 	Ÿ 	 	“AHC” refer to Apparel Holding Corp. and its consolidated subsidiaries (including Kellwood Company) prior to the completion of the IPO Restructuring Transactions. Apparel Holding Corp. is the historical owner and operator of the Vince and non-Vince businesses;	
 
 	Ÿ 	 	“Kellwood” refer to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions, as the future owner and operator of the non-Vince businesses, or to the non-Vince businesses of AHC prior to the completion of the IPO Restructuring Transactions, as the context requires;	
 
 	Ÿ 	 	“Kellwood Company” refer to Kellwood Company prior to the completion of the IPO Restructuring Transactions and “Kellwood Company, LLC” references refer to such entity after completion of the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince” refer to the Vince business after giving effect to the IPO Restructuring Transactions; and	
 
 	Ÿ 	 	“Vince, LLC” refer to the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering and the application of the proceeds of this offering as described herein. Apparel Holding Corp. is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC.	
In connection with the IPO Restructuring Transactions, affiliates of Sun Capital Partners, Inc. will retain their ownership of the non-Vince businesses through their ownership of Kellwood Holding, LLC.

Trademarks
Prior to giving effect to the IPO Restructuring Transactions, AHC owned or had rights to trademarks or trade names that it used in conjunction with the operation of both the Vince and non-Vince businesses, including Vince ® , Rebecca Taylor ® , David Meister ® , My Michelle ® , XOXO ® , Jolt ® , Rewind ® , Democracy™, Sag Harbor ® , Briggs New York ® , Jax ® , Sangria™, Kelty ® , Sierra Designs ® , Ultimate Direction ® , Slumberjack ® , Wenzel ® and Isis ® . After giving effect to the IPO Restructuring Transactions, we will own or have the right to use the Vince ® trademark, under which we will operate our business, and Kellwood will continue to own the trademarks and tradenames necessary to operate the non-Vince businesses. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ 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 rights of the applicable licensor to these trademarks and trade names. In this prospectus, we also refer to product names, trademarks, trade names and service marks that are the property of other companies. Each of the trademarks, trade names or service marks of other companies appearing in this prospectus belongs to its owners. Our use or display of other companies’ product names, trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of, the product, trademark, trade name or service mark owner, unless we otherwise indicate.
 
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 PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read the following summary together with the entire prospectus, including the matters set forth under “Risk Factors,” “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” and our financial statements and related notes included in the “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC” section of this prospectus. Some of the statements in this prospectus constitute forward-looking statements. See “Special Note Regarding Forward-Looking Statements.” Statement of operations data set forth in this “Prospectus Summary” and the “Additional Information Related to Vince—Vince Business” and “Risk Factors—Risks Related to Vince” sections are calculated and presented on a stand-alone basis for Vince, LLC as if the Vince Transfer (as defined below in “—Corporate and Other Information”) was consummated on the first day of the applicable period, unless the context otherwise requires. See “—Summary Historical Financial Data of Vince, LLC” for additional information.
Restructuring Transactions
Apparel Holding Corp. was formed to hold the assets and liabilities of Kellwood Company in connection with the February 2008 acquisition of Kellwood Company by affiliates of Sun Capital Partners, Inc. (“Sun Capital”). In September 2012, Kellwood Company transferred the assets and liabilities of the Vince business to Vince, LLC in anticipation of this offering. Immediately prior to the consummation of this offering, affiliates of Sun Capital will engage in a series of transactions pursuant to which they will establish new corporate entities that will retain all of the non-Vince businesses after this offering. These non-Vince businesses will accordingly remain privately-held and will not be owned by the investors in this offering. In addition, in connection with the IPO Restructuring Transactions, as described below in “—The Offering—Restructuring Transactions,” Apparel Holding Corp., the entity offering stock in this offering, will change its name to Vince Holding Corp. and its only assets, liabilities, and operations will consist of the Vince business. Vince is the business in which you are investing by buying shares of common stock in this offering. Notwithstanding the foregoing, an investment in us is not the same as an investment in Vince, LLC as there are assets and liabilities of Apparel Holding Corp. not reflected in the Vince, LLC balance sheet. These assets and liabilities will be significantly impacted by the IPO Restructuring Transactions and the application of the net proceeds of this offering. See “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC.”
Consummation of this offering is conditioned upon the successful completion of the IPO Restructuring Transactions, including entry into the Transfer Agreement, which requires the issuance of the Kellwood Note Receivable, the application of the proceeds of this offering to the repayment of the Kellwood Note Receivable and the repayment, discharge or refinancing, as applicable, of certain indebtedness of Kellwood Company, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC.”
Our Company
Apparel Holding Corp. is currently a diversified apparel company that designs, manufactures, and markets a collection of fashion brands which include Vince, Rebecca Taylor, David Meister, Sag Harbor, My Michelle and XOXO, along with numerous private label businesses for major retailers. After giving effect to the IPO Restructuring Transactions, Apparel Holding Corp. will be renamed Vince Holding Corp. and its assets, liabilities, and operations will consist solely of the Vince business. An investment in us is an investment in the Vince business.

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Vince is a prominent, high-growth contemporary apparel brand known for its modern, effortless style and everyday luxury essentials. The Vince brand was founded in 2002 with a collection of stylish women’s knits and cashmere sweaters that rapidly attracted a loyal customer base drawn to the casual sophistication and luxurious feel of our products. Over the last decade, Vince has generated strong sales momentum and has successfully grown to include a men’s collection in 2007, expanded denim, leather and outerwear lines in 2010 and women’s footwear, which was launched through a licensing partnership in 2012. The Vince brand is synonymous with a clean, timeless aesthetic, sophisticated design and superior quality. We believe these attributes have generated strong customer loyalty and allow us to hold a distinctive position among contemporary apparel brands. We also believe that we will achieve continued success by expanding our product assortment and distributing this expanded product assortment through our premier wholesale partners in the U.S. and select international markets, as well as through our growing number of branded retail locations and on our e-commerce platform. The strength of the Vince brand is demonstrated by our growth trajectory, with net sales, comparable store sales growth, Adjusted EBITDA and net income, as set forth below, for each of fiscal 2010, fiscal 2011 and fiscal 2012 and the first six months of fiscal 2012 and 2013:

Period	 	Net Sales	 	 	Change
from
Prior Period	 	 	Comparable
Store Sales
Growth	 	 	Adjusted
EBITDA	 	 	Change
from
Prior Period	 	 	Net Income	 	
(Dollars in Millions)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fiscal 2010	 	$	111.5	  	 	 	—	  	 	 	9.3	% 	 	$	23.6	  	 	 	—	  	 	$	9.1	  	
Fiscal 2011	 	 	175.3	  	 	 	57.2	% 	 	 	7.6	% 	 	 	44.2	  	 	 	86.9	% 	 	 	16.7	  	
Fiscal 2012	 	 	240.4	  	 	 	37.1	% 	 	 	23.1	% 	 	 	51.5	  	 	 	16.6	% 	 	 	10.3	  	
	 				 				 				 				 				 				
First six months of Fiscal 2012	 	 	90.5	  	 	 	—	  	 	 	13.9	% 	 	 	15.3	  	 	 	—	  	 	 	1.2	  	
First six months of Fiscal 2013	 	 	114.7	  	 	 	26.6	% 	 	 	31.7	% 	 	 	21.5	  	 	 	40.9	% 	 	 	2.4	  	
See “—Non-GAAP Financial Measures” for the definition of Adjusted EBITDA and a reconciliation from net income to Adjusted EBITDA.
Led by an experienced management team, Vince is evolving from a U.S. wholesale-driven women’s apparel business to a global, dual-gender, multi-channel lifestyle brand. We believe we have significant and visible growth opportunities that include:
 
 	Ÿ 	 	expanding the brand’s appeal with new product offerings;	
 
 	Ÿ 	 	increasing wholesale penetration and productivity in premier department stores and specialty stores;	
 
 	Ÿ 	 	opening new retail locations and improving productivity in existing Vince stores;	
 
 	Ÿ 	 	growing our e-commerce business;	
 
 	Ÿ 	 	selectively adding new points of distribution globally; and	
 
 	Ÿ 	 	building brand awareness to attract new customers.	
We serve our customers through a variety of channels that reinforce the Vince brand image. Our diversified channel strategy allows us to introduce our products to customers through multiple distribution points that are reported in two segments: wholesale and direct-to-consumer. Our wholesale segment is comprised of sales to premier department stores and specialty stores in the U.S. and in select international markets, with U.S. wholesale representing 76% of our fiscal 2012 sales and 70.4% of our sales for the first six months of fiscal 2013. We believe that our success in the U.S. wholesale segment and strong relationships with premier wholesale partners provide opportunities for continued growth. These growth initiatives include creating enhanced product assortments and brand extensions

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through both in-house development activities and licensing arrangements, as well as by continuing the build-out of Vince branded shop-in-shops in select wholesale partner locations. We also believe international wholesale, which represented 8% of net sales for fiscal year 2012 and 10.3% of net sales for the first six months of fiscal 2013, presents a significant growth opportunity as we strengthen our presence in existing geographies and introduce Vince in new markets globally.
In 2008, we began to broaden our distribution beyond the wholesale channel with the opening of our first retail store. Since then, we have expanded our direct-to-consumer presence, and as of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 free-standing Vince store locations. The direct-to-consumer segment also includes our website, www.vince.com , which was launched in 2008. The direct-to-consumer segment accounted for 16% of fiscal 2012 net sales and 19.3% of net sales for the first six months of fiscal 2013, and we expect sales from this channel to accelerate as we drive productivity in existing stores, open new stores and upgrade and re-launch our website in 2014.
Our Competitive Strengths
Differentiated Brand for Everyday Luxury Essentials.     We believe that the Vince brand holds a distinct position in today’s marketplace driven by a premium product assortment that combines sophisticated comfort with contemporary and timeless fashion that can be worn virtually everyday. The Vince brand is distinguished by a refined, modern aesthetic with superior quality and attention to detail and fit. The premium nature of the Vince brand is reinforced through our highly selective wholesale partnerships with premier department stores and specialty stores and a retail strategy designed to ensure a consistent brand presentation and enhanced customer experience. We believe the enduring fashion and effortless style of the Vince brand, coupled with a pricing strategy that positions us as an affordable luxury, have created strong and proven global appeal.
Exceptional Customer Loyalty and Reach.     The quality, consistency and design of our products have attracted a loyal following among style-savvy consumers across a broad age demographic. Based on a 2012 third-party survey that we commissioned among 500 qualified consumers, Vince has high levels of brand affinity and purchase intent. Among women surveyed who are aware of Vince, 41% express that they “love” the brand, and 35% report that they are “highly likely” to purchase the brand within the next six months, representing the highest levels of affinity and purchase intent compared to 20 other peer brands included in the survey. While our target customer is between the ages of 30 and 50, we have successfully attracted fashion-conscious customers as young as 18 and customers over 55 who appreciate our brand’s sophistication and design aesthetic.
Established Network of Premier Wholesale Partners .     Vince is a leading brand in premier U.S. department stores, including Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s, as well as in select specialty stores nationwide. Based on industry experience, we believe that in the majority of these U.S. department stores, Vince was a top selling brand on the contemporary floor in fiscal 2012 and the first six months of fiscal 2013. Our product offerings and brand also resonate with customers outside the U.S., as demonstrated by the strong growth experienced through premium international stores including Harrods and Harvey Nichols in both these periods and by Lane Crawford in the first six months of fiscal 2013. Looking forward, we believe there are opportunities for further growth and productivity gains with our wholesale partners through new initiatives such as product line extensions and the transformation of Vince product displays at select department stores into branded shop-in-shops.

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Scalable and Flexible Retail Format.     We opened our first retail location in 2008 and have since grown our retail footprint in the U.S. to a total of 26 stores, which consist of 21 full-price retail stores and 5 outlet locations, as of August 31, 2013. Our stores offer a personalized, service-oriented shopping experience in a boutique setting that reflects the lifestyle and modern aesthetic of the brand. We have a proven and flexible full-price retail format that targets both street and mall locations, which can accommodate both dual and single gender assortments. The strength of our retail channel is evidenced by the revenue growth across our existing store base, with a 9.3%, 7.6% and 23.1% comparable store sales growth in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, and 31.7% comparable store sales growth in the first six months of fiscal 2013. We continue to open retail locations and invest in infrastructure to support the long-term growth of this channel.
Experienced Management Team.     We have assembled a world-class management team with extensive experience across a broad range of disciplines including global brand building, merchandising, marketing, design, operations, retail, international, licensing and finance. Our highly skilled team is led by our Chief Executive Officer (“CEO”), Jill Granoff, who was previously CEO of Kenneth Cole Productions, our President, Karin Gregersen, who was previously Managing Director of Chloé/Richemont Americas, and our Chief Financial Officer (“CFO”), Lisa Klinger, who was previously CFO of The Fresh Market.
Growth Strategy
Capitalize on New and Existing Product Opportunities.     We believe there are significant opportunities to capitalize on our strong customer loyalty and growing customer base by enhancing our current product assortment and introducing new product categories in order to provide additional reasons to shop the Vince brand. We plan to build sales of existing product categories by elevating our men’s collection, expanding our denim and outerwear offerings, increasing our assortment of women’s bottoms and dresses and implementing a replenishment program for core items. Additionally, we continue to identify new product categories that will allow us to capture incremental share from existing customers and attract new customers. Categories already identified include handbags and leather accessories as well as more tailored collections for women and men. We also entered into a licensing agreement for women’s footwear, which launched in 2012, and signed a licensing agreement in 2013 for the launch of children’s apparel in 2014. We will continue to explore additional licensing opportunities for select categories requiring specialized expertise, such as intimates/loungewear, men’s footwear and fashion accessories.
Increase Wholesale Penetration .    In fiscal 2012, we grew our wholesale net sales in the U.S. by 35% compared to fiscal 2011. This revenue growth exceeded our growth of 17% in the number of wholesale doors during fiscal 2012, which illustrates our ability to improve productivity within existing locations. We believe we can continue to increase wholesale net sales by enhancing assortments in existing product categories, introducing new product categories and improving our visual presentation, space layout and fixtures. Working with our wholesale partners, we are planning to open 15 to 20 new branded shop-in-shops in fiscal 2013 and believe there is an attractive opportunity to open additional shop-in-shops in 2014 and beyond. We believe our shop-in-shop strategy will provide our customers with a more elevated retail shopping experience and allow us to better showcase the Vince lifestyle.
Accelerate Growth of U.S. Direct-to-Consumer Segment.     As of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 free-standing Vince store locations. We plan to double our current store base over the next three

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to five years, including opening a net total of six new stores in fiscal 2013. Our new full-price store model ranges from 2,000 to 3,000 gross square feet, and we target a payback period on our new store investments of two to three years. In addition to new store expansion, we also have an opportunity to increase productivity in our existing stores through enhanced merchandising with a focus on a broad lifestyle presentation, personalized customer service strategies, the launch of new product categories, improved inventory management and the expansion of made-for-outlet product. We believe our recently enhanced e-commerce strategy creates additional opportunities for growth. As a component of this strategy, we intend to upgrade and re-launch our www.vince.com website in 2014 to offer a more compelling shopping experience and richer content to increase customer engagement and visit frequency.
Expand Our International Business.     Given increasing worldwide demand for affordable luxury goods, targeted international expansion represents a compelling growth opportunity. Vince products are currently sold in 43 countries, either directly to premier department and specialty stores, or through distribution relationships with highly-regarded international partners with exclusive rights to certain territories. As of August 31, 2013, we had seven international shop-in-shops. We believe we can increase international sales by supplementing existing distribution partnerships, increasing wholesale penetration and productivity and selectively adding retail locations with current and prospective partners in attractive international markets including Canada, select European countries, Asia and the Middle East.
Build Our Brand Awareness .    Vince has a significant opportunity to increase brand awareness and drive incremental sales. Based on a 2012 third-party consumer survey we commissioned, Vince has aided brand awareness of 20% compared to 30% to 50% for other contemporary brands and approximately 75% to 90% for brands like Michael Kors, Diane von Furstenburg and Ralph Lauren. Aided brand awareness is when a respondent indicates recognition of a specific brand from a list of possible names presented by those conducting the survey instead of indicating recognition of a specific brand without being offered a list of potential responses. Our low awareness level, coupled with the high affinity and purchase intent we have among existing consumers, underscores what we believe is a significant growth opportunity to convert potential new customers to loyal brand enthusiasts. To address this opportunity, we intend to increase our marketing investment across a range of strategic initiatives, including cooperative advertising with wholesale partners, print media, digital media, editorial coverage, direct mail, search engine optimization, social media initiatives, targeted product placement, celebrity outreach and in-store events. We also believe our brand awareness will increase as we open new retail stores in prominent, high-visibility locations, increase the number of shop-in-shops at our wholesale partner locations and upgrade and re-launch our www.vince.com website.
Our Market Opportunity
We operate in the global personal luxury goods industry. According to the Bain Studies, the luxury goods market grew at a compound annual growth rate of approximately 6% between 1996 and 2012, with estimated sales of approximately $260 billion in 2012. The Bain Studies define the global personal luxury goods market to include design, hospitality, wines & spirits, food, cars and yachts. According to the Bain Studies, for fiscal 2010 through fiscal 2012, the global personal luxury goods market grew at an 11% compounded annual growth rate. Going forward, Bain & Company expects the global personal luxury goods market to grow 4% to 5% in 2013, and at a 5% to 6% compounded annual growth rate over the next few years, reflecting a growing middle class possessing increased purchasing power in select international markets, increased demand for higher-end apparel and leather goods, and growing demand for luxury goods in China and South-East Asia. We believe our business is well-positioned to benefit from these trends.

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Risks Associated with our Business
There are a number of risks and uncertainties that may affect our financial and operating performance and our growth prospects. You should carefully consider all of the risks discussed in “Risk Factors” before investing in our common stock. Some of these risks include the following:
 
 	Ÿ 	 	General economic conditions in the U.S. and other parts of the world, including a continued weakening of the economy and restricted credit markets, can affect consumer confidence and consumer spending patterns;	
 
 	Ÿ 	 	Intense competition in the apparel industry could reduce our sales and profitability;	
 
 	Ÿ 	 	A substantial portion of our revenue is derived from a small number of large wholesale partners, and the loss of any of these wholesale partners could substantially reduce our total revenue;	
 
 	Ÿ 	 	We have grown rapidly in recent years and we have limited operating experience as a team at our current scale of operations. If we are unable to manage our operations at our current size or are unable to manage any future growth effectively, our business results and financial performance may suffer;	
 
 	Ÿ 	 	Kellwood provides us with certain key services for our business. If Kellwood fails to perform its obligations to us or if we do not find appropriate replacement services, we may be unable to perform these services or implement substitute arrangements on a timely and cost-effective basis on terms favorable to us; and	
 
 	Ÿ 	 	Our historical financial information may not be representative of our results as a stand-alone public company.	
Our Equity Sponsor
Sun Capital is a leading private investment firm focused on leveraged buyouts, equity, debt and other investments in market-leading companies that can benefit from its in-house operating professionals and experience. Since its inception in 1995, Sun Capital affiliates have invested in over 320 companies worldwide with combined sales in excess of $45 billion. Sun Capital affiliates have invested in several specialty retail and apparel companies, including Gerber Childrenswear, Hanna Andersson, Limited Stores, Gordmans, Edwin Watts Golf Shop, Mattress Firm, Pamida and Shopko Stores.
On February 12, 2008, investment funds advised by affiliates of Sun Capital acquired Kellwood Company for aggregate consideration of $955.4 million, including the assumption of debt, in a cash tender offer and subsequent squeeze-out merger. Following consummation of this offering, affiliates of Sun Capital will own approximately     % of our outstanding common stock, or     % if the underwriters’ option to purchase additional shares is fully exercised. See “Other Information Related to this Offering—Security Ownership of Certain Beneficial Owners of AHC.” Sun Cardinal, LLC, a Sun Capital affiliate, will have the ability to designate a majority of our directors for so long as affiliates of Sun Capital own 30% or more of the outstanding shares of our common stock. As a result, funds advised by affiliates of Sun Capital will be able to have a significant effect relating to votes over fundamental and significant corporate matters and transactions. See “Risk Factors—Risks Related to this Offering and Our Common Stock—We are a “controlled company,” controlled by investment funds advised by affiliates of Sun Capital, whose interests in our business may be different from yours.”
Company History
Kellwood Company was founded in 1961 as the successor by merger of fifteen independent suppliers to Sears, Roebuck & Co. Beginning in 1985, Kellwood implemented a strategy to expand its

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branded business, broaden its customer base, diversify its distribution channels and further develop its global sourcing capability. In 2006, Kellwood Company acquired the Vince business from its founders. As described above, affiliates of Sun Capital acquired Kellwood Company in February 2008 through Apparel Holding Corp. Affiliates of Sun Capital will continue to control the non-Vince businesses through their ownership of Kellwood Holding, LLC, after giving effect to the IPO Restructuring Transactions.
Corporate and Other Information
Apparel Holding Corp. was incorporated in Delaware in February 2008 in connection with the acquisition of Kellwood Company by affiliates of Sun Capital. In September 2012, Kellwood Company formed Vince, LLC and all assets constituting the Vince business were contributed to Vince, LLC at such time (the “Vince Transfer”). In connection with the consummation of this offering, Apparel Holding Corp. will be renamed Vince Holding Corp., the entity issuing common stock in this offering. Our principal executive office is located at 1441 Broadway, 6th Floor, New York, New York 10018 and our telephone number is (212) 515-2600. Our corporate website address is www.vince.com . The information contained on, or accessible through, our corporate website does not constitute part of this prospectus.
Affiliates of Sun Capital are Apparel Holding Corp.’s controlling stockholders. After consummation of this offering, affiliates of Sun Capital will continue to control both Kellwood and Vince. Kellwood will continue to provide certain services to us through the Shared Services Agreement (as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement”), such as distribution, information technology and back office support.
Emerging Growth Company Status
We are, and will continue to be after completing the IPO Restructuring Transactions, an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and stockholder advisory votes on golden parachute compensation.
Under the JOBS Act, we will remain an “emerging growth company” until the earliest of:
 
 	Ÿ 	 	the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more;	
 
 	Ÿ 	 	the last day of the fiscal year following the fifth anniversary of the consummation of this offering;	
 
 	Ÿ 	 	the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and	
 
 	Ÿ 	 	the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for at	

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 	least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.	
The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (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 companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

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The Offering

		
Common stock offered by us	  	             shares.	
		
Common stock outstanding immediately after the offering	  	
             shares.	
		
Option to purchase additional shares	  	We have agreed to allow the underwriters to purchase up to an additional              shares from us, at the public offering price, less the underwriting discount, within 30 days of the date of this prospectus.	
		
Use of proceeds	  	We expect to receive net proceeds from this offering of approximately $         million, based upon an assumed initial public offering price of $         per share, the midpoint of the range set forth on the cover of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us.
 
We expect to receive approximately $         of net proceeds from this offering and retain approximately $         of such net proceeds to fund new store openings and for other general corporate purposes. We expect to use the remaining estimated net proceeds, together with borrowings of $         million under our new term loan facility, to repay the $         Kellwood Note Receivable, as described in “Restructuring Transactions.”
 
After giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates, Kellwood Company, LLC will use proceeds from our repayment of the Kellwood Note Receivable to repay, discharge or repurchase a portion of its indebtedness, including fees, expenses and accrued and unpaid interest related thereto, and will refinance the remainder of such then outstanding indebtedness. Kellwood Company, LLC also intends to utilize a portion of the proceeds from repayment of the Kellwood Note Receivable to pay (i) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Partners Management V, LLC (“Sun Capital Management”) pursuant to that certain management services agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party	

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	  	— Transactions of AHC—Management Fees” (the “Management Services Agreement”) and (ii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation— Employment Agreements.” See “Restructuring Transactions” and “Use of Proceeds” for additional information. It is currently estimated that the restructuring fee described in clause (i) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.	
		
Restructuring Transactions	  	Effective September 1, 2012, Kellwood Company, a wholly-owned subsidiary of Apparel Holding Corp., contributed the assets and liabilities constituting the Vince business to Vince, LLC, a Delaware limited liability company and wholly-owned subsidiary of Kellwood Company, in the Vince Transfer.	
		
	  	In anticipation of this offering and effective June 18, 2013, affiliates of Sun Capital, contributed $407.5 million of indebtedness to Apparel Holding Corp. as a capital contribution. We refer to this contribution as the “Sun Capital Contribution.”
 
We will complete the IPO Restructuring Transactions in connection with the consummation of this offering through which (i) Kellwood Holding, LLC will acquire the non-Vince businesses, which include Kellwood Company, LLC (to be converted from Kellwood Company in connection with these transactions) and (ii) Vince Intermediate Holding, LLC, a to be formed direct subsidiary of Apparel Holding Corp., will retain the Vince business, which includes Vince, LLC. Sun Capital affiliates will continue to own and control the non-Vince businesses through their ownership of Kellwood Holding, LLC after giving effect to the IPO Restructuring Transactions. Additionally, prior to consummation of this offering, and as part of the IPO Restructuring Transactions, Apparel Holding Corp. will (A) convert all of its issued and outstanding non-voting common stock into common stock on a one-for-one basis, (B) effect a stock split of its common stock on a              for              basis and (C) change its name to Vince Holding Corp. We refer to the Vince Transfer, the Sun Capital Contribution and the IPO Restructuring Transactions collectively as the “Restructuring Transactions.” Successful completion of the IPO	

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	  	Restructuring Transactions and the discharge or refinancing of certain indebtedness of Kellwood Company are conditions to the consummation of this offering.
 
For a more detailed discussion and charts showing our structure before and after consummation of this offering, see “Restructuring Transactions.”	
Dividend policy	  	We currently expect to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and therefore we do not anticipate paying any cash dividends in the foreseeable future. We anticipate that our ability to pay dividends on our common stock will be limited by our new revolving credit facility and our new term loan facility and may be further restricted by the terms of any other of our future debt or preferred securities. See “Dividend Policy of AHC” and “Additional Information Related to Vince—Description of Certain Indebtedness of Vince, LLC.”	
Risk factors	  	See “Risk Factors” and the other information in this prospectus for a discussion of the factors you should consider before you decide to invest in our common stock.	
Proposed New York Stock Exchange Symbol	  	We intend to apply to list our common stock on the New York Stock Exchange (the “NYSE”) under the symbol “VNCE”.	
The number of shares of our common stock to be outstanding following this offering is based on          shares of our common stock outstanding as of                 , 2013, and excludes:
 
 	Ÿ 	 	         shares of our common stock issuable upon the exercise of options that we intend to grant under our new management equity incentive plan (the "Vince 2013 Incentive Plan") as described in “Additional Information Related to Vince—Vince Executive Compensation —Employee Stock Plans—Vince 2013 Incentive Plan,” to certain of our executives in exchange for existing Kellwood Company stock options at a weighted average exercise price of $         per share prior to the consummation of this offering;	
 
 	Ÿ 	 	         restricted stock units, representing the right, at the option of the company, to deliver             shares of our common stock or an equivalent cash amount, that we intend to grant to our non-employee directors in connection with the consummation of this offering;	
 
 	Ÿ 	 	         shares of our common stock that will be reserved and available for future issuance under our Vince 2013 Incentive Plan, after giving effect to the option and restricted stock grants described above; and	
 
 	Ÿ 	 	         shares of our common stock reserved for future issuance under our 2013 Employee Stock Purchase Plan (the "Vince ESPP") which we plan to adopt in connection with this offering (as described in “Additional Information Related to Vince—Vince Executive Compensation—Employee Stock Plans—Employee Stock Purchase Plan”).	

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Unless otherwise indicated, this prospectus reflects and assumes the following:
 
 	Ÿ 	 	the conversion of all of our issued and outstanding non-voting common stock into common stock on a one-for-one basis;	
 
 	Ÿ 	 	the subsequent stock split of our common stock on a                      for                      basis;	
 
 	Ÿ 	 	the completion of the remainder of the IPO Restructuring Transactions;	
 
 	Ÿ 	 	no exercise by the underwriters of their option to purchase up to              additional shares from us; and	
 
 	Ÿ 	 	an initial public offering price of $         per share, the midpoint of the initial public offering price range indicated on the cover of this prospectus.	

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Summary Historical Consolidated Financial Data of Apparel Holding Corp.
The following tables set forth summary historical consolidated financial data of Apparel Holding Corp. and its consolidated subsidiaries. They include the results of operations associated with the combined Vince and non-Vince businesses and assets and liabilities associated with the Vince business as well as the non-Vince businesses that will be transferred to Kellwood Holding, LLC and its consolidated subsidiaries in connection with the IPO Restructuring Transactions. An investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business. We will not have ongoing involvement with the non-Vince businesses following separation, with the exception of our payments to Kellwood for certain services to be provided under the Shared Services Agreement as further described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” contained elsewhere in this prospectus. Similarly, Kellwood will not have ongoing involvement in our business, other than pursuant to the Shared Services Agreement. You should read the information set forth below in conjunction with “Use of Proceeds,” “Capitalization of AHC,” “Additional Information Related to AHC—Selected Historical Consolidated Financial Data of AHC,” “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC” and Apparel Holding Corp.’s audited historical consolidated financial statements and notes thereto included elsewhere in this prospectus.
The statement of operations data for each of fiscal 2010, fiscal 2011 and fiscal 2012 set forth below are derived from AHC’s audited consolidated financial statements included elsewhere in this prospectus. The statements of operations data for each of the six month periods ended July 28, 2012 and August 3, 2013 and the balance sheet data as of August 3, 2013 set forth below are derived from AHC’s unaudited quarterly consolidated financial statements included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. Operating results for the six month periods are not necessarily indicative of results for a full financial year, or any other periods. Historical results are not necessarily indicative of results to be expected for future periods.
Once we have completed the IPO Restructuring Transactions, results of operations of the non-Vince businesses will be reported as discontinued operations for accounting purposes and our continuing operations will consist solely of the Vince business. See “—Summary Historical Financial Data of Vince, LLC” for additional information regarding the operations and assets and liabilities of Vince, LLC.

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010(1)	 	 	2011(1)	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except per share data)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statement of Operations Data:	 				 				 				 				 				
Net sales	 	$	586,574	  	 	$	662,846	  	 	$	707,995	  	 	$	319,445	  	 	$	363,967	  	
Cost of products sold	 	 	430,801	  	 	 	490,110	  	 	 	507,905	  	 	 	235,293	  	 	 	256,031	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	155,773	  	 	 	172,736	  	 	 	200,090	  	 	 	84,152	  	 	 	107,936	  	
Operating expenses:	 				 				 				 				 				
Selling, general and administrative expenses	 	 	140,567	  	 	 	155,220	  	 	 	177,755	  	 	 	83,526	  	 	 	93,503	  	
Amortization of intangible assets	 	 	954	  	 	 	1,941	  	 	 	1,899	  	 	 	950	  	 	 	950	  	
Restructuring, environmental remediation and other charges(2)	 	 	9,729	  	 	 	2,651	  	 	 	5,091	  	 	 	2,264	  	 	 	827	  	
Impairment of long-lived assets (excluding goodwill)	 	 	438	  	 	 	2,504	  	 	 	2,349	  	 	 	717	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	10,821	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net(3)	 	 	—	  	 	 	(1,578	) 	 	 	(7,162	) 	 	 	(4,507	) 	 	 	(54	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	151,688	  	 	 	171,559	  	 	 	179,932	  	 	 	82,950	  	 	 	95,226	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	4,085	  	 	 	1,177	  	 	 	20,158	  	 	 	1,202	  	 	 	12,710	  	
Interest expense, net	 	 	103,074	  	 	 	127,148	  	 	 	122,383	  	 	 	74,151	  	 	 	43,671	  	
Gain on acquisition, net of tax(3)	 	 	(939	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment(3)	 	 	(15,912	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, net	 	 	2,442	  	 	 	1,914	  	 	 	2,723	  	 	 	1,215	  	 	 	1,233	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	 	 	(84,580	) 	 	 	(127,885	) 	 	 	(104,948	) 	 	 	(74,164	) 	 	 	(32,194	) 	
Provision for income taxes	 	 	3,507	  	 	 	3,401	  	 	 	708	  	 	 	2,245	  	 	 	2,679	  	

 
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 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010(1)	 	 	2011(1)	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except per share data)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net loss from continuing operations(2)(3)	 	$	(88,087	) 	 	$	(131,286	) 	 	$	(105,656	) 	 	$	(76,409	) 	 	$	(34,873	) 	
Net (loss) income from discontinued operations(2)(4)	 	 	(16,391	) 	 	 	(16,580	) 	 	 	(2,053	) 	 	 	(4,798	) 	 	 	9,230	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic loss per share (basic and diluted)	 	$	        	  	 	$	        	  	 	$	        	  	 	$	        	  	 	$	 	  	
Weighted average shares outstanding:	 				 				 				 				 				
Basic and diluted	 				 				 				 				 				

(1)	In January 2011, AHC acquired Rebecca Taylor, a women’s contemporary apparel and accessory company. In July 2011, AHC acquired Zobha, a women’s athletic apparel brand, primarily focused on the yoga market. See “Additional Information Related to AHC—Management’s Discussion and Analysis or Financial Condition and Results of Operations of AHC—Basis of Presentation” for information regarding AHC’s decision to divest the Zobha business during the second quarter of 2013.	
(2)	During the years presented, AHC performed several rationalization efforts aimed at improving its operational efficiency to streamline the fashion apparel and recreational apparel and products businesses. These restructuring activities, along with impairment of long-lived assets, environmental remediation charges and other charges included in net loss from continuing operations, are $10.2 million in fiscal 2010, $16.0 million in fiscal 2011, $7.4 million in fiscal 2012, $3.0 million in the first six months of fiscal 2012 and $0.8 million in the first six months of fiscal 2013. These restructuring activities, along with impairment of long-lived assets and other charges included in net (loss) income from discontinued operations, are $27.7 million in fiscal 2010, $6.6 million in fiscal 2011, $4.8 million in fiscal 2012, $0.2 million in the six months of fiscal 2012 and $0.9 million in the six months of fiscal 2013.	
(3)	Net loss from continuing operations includes net gains affecting comparability of the following:	
 
 	Ÿ 	 	$16.8 million in fiscal 2010 comprised of a $0.9 million gain on the acquisition of certain net assets from Adampluseve, Inc, (the “Adam operations”) as the fair value of the identifiable assets less the liabilities assumed exceeded the fair value of the purchase price consideration, and a $15.9 million gain on debt extinguishment as a result of AHC’s repurchase of $29.7 million of face value of certain notes outstanding from an affiliate of Sun Capital for $9.1 million in cash;	
 
 	Ÿ 	 	$1.6 million in fiscal 2011 due to a reduction in the estimated contingent payments related to the acquisitions of Rebecca Taylor and Zobha as those purchase agreements contained provisions for contingent consideration that would be paid to the respective sellers if certain performance targets are met within a specified timeframe and during the periods presented expectations related to the achievement of these targets were revised; and	
 
 	Ÿ 	 	$7.2 million in fiscal 2012, of which $4.5 million was recognized during the six months ended July 28, 2012, due to further reductions in the estimated contingent payments related to the acquisitions of Rebecca Taylor and Zobha.	
 
(4)	During fiscal 2011, AHC discontinued its Adam operations and Koret wholesale operations. During fiscal 2012, AHC discontinued its Baby Phat wholesale and Lamb & Flag businesses. Additionally, AHC sold its Royal Robbins and BLK DNM businesses. During the first quarter of fiscal 2013, AHC discontinued its Phat Licensing business because it sold the related trademarks. During the second quarter of fiscal 2013, AHC divested its Zobha business. As such, these operations have been reflected as discontinued operations for all periods presented.	
AHC’s consolidated balance sheet data as of August 3, 2013 is presented on an actual basis:

 	  	As of August 3,
2013	 	
 	  	Actual	 	
(In thousands)	  	 	 	
 	  	(unaudited)	 	
Balance Sheet Data:	  				
Cash and cash equivalents	  	$	2,178	  	
Total current assets	  	 	228,891	  	
Total assets	  	 	467,791	  	
Total current liabilities	  	 	221,230	  	
Long-term debt	  	 	386,842	  	
Total stockholders’ deficit	  	 	(179,102	) 	
Total liabilities and stockholders’ deficit	  	 	467,791	  	
For information relating to the impact of the IPO Restructuring Transactions and this offering on AHC’s consolidated balance sheet, see the balance sheet data of AHC, as presented as of August 3, 2013 on an actual, pro forma and pro forma, as adjusted basis in “—Summary Historical Financial Data of Vince, LLC.”

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Summary Unaudited Pro Forma Consolidated Financial Data of AHC
The following tables set forth the summary unaudited consolidated pro forma financial data of AHC for fiscal 2012 and the first six months of fiscal 2013. They give effect to anticipated transactions and adjustments that are relevant to the understanding of the business being offered and will have a material impact on the comparability of AHC’s results of operations. They are described below and are as follows: (i) “—Kellwood Separation,’ (ii) “—Sun Capital Contribution and Tax Receivable Agreement,’ and (iii) “—This Offering.” You should read the information set forth below together with “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC” included elsewhere in this prospectus for our pro forma results of operations for fiscal 2010 and fiscal 2011. For summary information related to the pro forma, as adjusted balance sheet of AHC after giving effect to this offering, please see “Summary Historical Financial Data of Vince, LLC.” Finally, for additional information relating to the IPO Restructuring Transactions and the use of our proceeds from this offering, please see “Restructuring Transactions,” “Use of Proceeds,” and “Capitalization of AHC.”
The Kellwood Separation.     AHC will use a series of transactions to legally separate the Vince business from the non-Vince businesses immediately prior to consummation of this offering. We refer to this series of transactions as the “Kellwood Separation.” Once these transactions have occurred, the non-Vince businesses will be owned and operated separately from us. After consummation of this offering, the Vince business will be our only assets, liabilities and operations. Although Apparel Holding Corp. is the legal issuer of the shares offered in this offering, an investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business.
Sun Capital Contribution and Tax Receivable Agreement.     Additional restructuring activities that have occurred or will occur in order to effect the consummation of this offering, include the following:
 
 	Ÿ 	 	effective June 18, 2013, affiliates of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes (each as defined in “Restructuring Transactions”) as a capital contribution to Apparel Holding Corp. in the Sun Capital Contribution; and	
 
 	Ÿ 	 	we will enter into a tax receivable agreement (the “Tax Receivable Agreement” or “TRA”) with certain of our stockholders immediately prior to the consummation of this offering (which will include affiliates of Sun Capital, the “Pre-IPO Stockholders”).	
This Offering.     Pro forma adjustments to reflect (i) our receipt of the estimated net proceeds from the sale of common stock by us in the offering at an assumed initial public offering price of $         per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the assumed underwriting discount and commissions and estimated fees and expenses payable by us; and (ii) our use of these proceeds and the incurrence of $         million of borrowing under our new term loan facility, as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable, are described as “Offering Adjustments.”

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Fiscal 2012 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC(1)

 	 	 	 	 	Kellwood Separation	 	 	Sun Capital Contribution
and TRA	 	 	This Offering(4)	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(2)	 	 	Pro
Forma	 	 	Sun Capital
Contribution
and TRA
Adjustments(3)	 	 	Pro
Forma	 	 	Adjustments	 	Pro
Forma,
As Adjusted	
(In thousands, except
per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	707,995	  	 	$	(467,643	) 	 	$	240,352	  	 	$	—	  	 	$	240,352	  	 		 		
Cost of products sold	 	 	507,905	  	 	 	(375,749	) 	 	 	132,156	  	 	 	—	  	 	 	132,156	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	200,090	  	 	 	(91,894	) 	 	 	108,196	  	 	 	—	  	 	 	108,196	  	 		 		
Operating Expenses:	 				 				 				 				 				 		 		
Selling, general and administrative expenses	 	 	177,755	  	 	 	(111,094	) 	 	 	66,661	  	 	 	—	  	 	 	66,661	  	 		 		
Amortization of intangible assets	 	 	1,899	  	 	 	(1,301	) 	 	 	598	  	 	 	—	  	 	 	598	  	 		 		
Impairment (excluding goodwill), restructuring, environmental remediation, and other charges	 	 	7,440	  	 	 	(7,440	) 	 	 	—	  	 	 	—	  	 	 	—	  	 		 		
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 		 		
Change in fair value of contingent consideration, net	 	 	(7,162	) 	 	 	7,162	  	 	 	—	  	 	 	—	  	 	 	—	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	179,932	  	 	 	(112,673	) 	 	 	67,259	  	 	 	—	  	 	 	67,259	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	20,158	  	 	 	20,779	  	 	 	40,937	  	 	 	—	  	 	 	40,937	  	 		 		
Interest expense, net(5)	 	 	122,383	  	 	 	(53,700	) 	 	 	68,683	  	 	 	(68,683	) 	 	 	—	  	 		 		
Other expense, net	 	 	2,723	  	 	 	(1,944	) 	 	 	779	  	 	 	—	  	 	 	779	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	 	 	(104,948	) 	 	 	76,423	  	 	 	(28,525	) 	 	 	68,683	  	 	 	40,158	  	 		 		
Provision for income taxes(6)	 	 	708	  	 	 	15,512	  	 	 	16,220	  	 	 	—	  	 	 	16,220	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(105,656	) 	 	$	60,911	  	 	$	(44,745	) 	 	$	68,683	  	 	$	23,938	  	 		 		
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 				 	$	 	  	 		 		
	 	 	 	 	 				 	 	 	 	 				 	 	 	 	 	 	 	 	
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 				 	$	 	  	 		 		
	 	 	 	 	 				 	 	 	 	 				 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding, basic	 				 				 				 				 				 		 		
Weighted average number of common shares outstanding, diluted	 				 				 				 				 				 		 		
See accompanying notes to Summary Unaudited Pro Forma Consolidated Financial Data of AHC.

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First Six Months of 2013 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC(1)

 	 	 	 	 	Kellwood Separation	 	 	Sun Capital
Contribution
and TRA	 	 	This Offering(4)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(2)	 	 	Pro
Forma	 	 	Sun Capital
Contribution
and TRA
Adjustments(3)	 	 	Pro
Forma	 	 	Adjustments	 	Pro
Forma,
As Adjusted	 	
(In thousands, except per
share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	363,967	  	 	$	(249,310	) 	 	$	114,657	  	 	$	—	  	 	$	114,657	  	 		 				
Cost of products sold	 	 	256,031	  	 	 	(192,525	) 	 	 	63,506	  	 	 	—	  	 	 	63,506	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	107,936	  	 	 	(56,785	) 	 	 	51,151	  	 	 	—	  	 	 	51,151	  	 		 				
Operating Expenses:	 				 				 				 				 				 		 				
Selling, general and administrative expenses	 	 	93,503	  	 	 	(59,537	) 	 	 	33,966	  	 	 	—	  	 	 	33,966	  	 		 				
Amortization of intangible assets	 	 	950	  	 	 	(650	) 	 	 	300	  	 	 	—	  	 	 	300	  	 		 				
Impairment (excluding goodwill), restructuring, environmental remediation, and other charges	 	 	827	  	 	 	(827	) 	 	 	—	  	 	 	—	  	 	 	—	  	 		 				
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 		 				
Change in fair value of contingent consideration, net	 	 	(54	) 	 	 	54	  	 	 	—	  	 	 	—	  	 	 	—	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	95,226	  	 	 	(60,960	) 	 	 	34,266	  	 	 	—	  	 	 	34,266	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	12,710	  	 	 	4,175	  	 	 	16,885	  	 	 	—	  	 	 	16,887	  	 		 				
Interest expense, net(5)	 	 	43,671	  	 	 	(27,788	) 	 	 	15,883	  	 	 	(15,883	) 	 	 	—	  	 		 				
Other expense, net	 	 	1,233	  	 	 	(721	) 	 	 	512	  	 	 	—	  	 	 	512	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	 	 	(32,194	) 	 	 	32,684	  	 	 	490	  	 	 	15,883	  	 	 	16,375	  	 		 				
Provision for income taxes(6)	 	 	2,679	  	 	 	3,909	  	 	 	6,588	  	 	 	—	  	 	 	6,588	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(34,873	) 	 	$	28,775	  	 	$	(6,098	) 	 	$	15,883	  	 	$	9,787	  	 		 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 				 	$	 	  	 		 	$	            	  	
	 	 	 	 	 				 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 				 	$	 	  	 		 	$	            	  	
	 	 	 	 	 				 	 	 	 	 				 	 	 	 	 		 	 	 	 	
Weighted average number of common shares outstanding, basic	 				 				 				 				 				 		 				
Weighted average number of common shares outstanding, diluted	 				 				 				 				 				 		 				
See accompanying notes to Summary Unaudited Pro Forma Consolidated Financial Data of AHC.

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(1)	You should refer to the Notes to the Unaudited Pro Forma Consolidated Financial Data of AHC contained in “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC” for detailed information regarding the pro forma adjustments.	
(2)	As described within “Restructuring Transactions” included elsewhere in this prospectus, AHC will use a series of transactions to legally separate the non-Vince businesses from the Vince business immediately prior to the consummation of this offering. Once these transactions have occurred, the non-Vince businesses will be owned and operated separately from us. After consummation of this offering, the Vince business will be our only assets, liabilities and operations. An investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business. We will not have ongoing involvement with the non-Vince businesses following separation, with the exception of our payments to Kellwood for certain services to be provided under the Shared Services Agreement as further described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” contained elsewhere in this prospectus. Similarly, Kellwood will not have ongoing involvement in our business, other than pursuant to the Shared Services Agreement. Following the consummation of this offering, we expect to report the non-Vince businesses as discontinued operations in accordance with ASC Topic 205 Presentation of Financial Statements beginning with our first financial statements filed after the effectiveness of the registration statement of which this prospectus forms a part. All pro forma adjustments to AHC’s historical financial statements that relate to the separation of the Vince business from the non-Vince businesses are described as Kellwood Separation Adjustments and they are included under the caption “Kellwood Separation.”	
(3)	On June 18, 2013, affiliates of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes to AHC in the Sun Capital Contribution. As such, the related interest expense on such indebtedness has been removed from AHC’s pro forma statements of operations for fiscal 2012 and the first six months of fiscal 2013.	
(4)	Reflects pro forma adjustments related to (i) our receipt of the estimated net proceeds from the sale of common stock by us in the offering at an assumed initial public offering price of $         per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the assumed underwriting discount and commissions and estimated fees and expenses payable by us; and (ii) our use of these proceeds and the incurrence of $         million of borrowing under our new term loan facility, as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable. As reflected in the table, the interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
(5)	Historical AHC interest represents interest costs and amortization of debt issuance costs on the following indebtedness: the Wells Fargo Facility, the Sun Capital Loan Agreement, the Sun Promissory Notes, the Cerberus Term Loan, the Sun Term Loan Agreements, the 12.875% Notes, the 7.625% Notes and the 3.5% Convertible Notes (each as defined and described in “Restructuring Transactions”). Pro forma for Kellwood Separation interest represents interest costs on the Sun Capital Loan Agreement and the Sun Promissory Notes. Pro forma for Sun Capital Contribution and Tax Receivable Agreement contains no interest. Pro forma, as adjusted includes interest costs on a new revolving credit facility and a new term loan facility we expect to enter into in connection with the consummation of this offering.	
(6)	AHC has historically included the operating results of the combined Vince business and non-Vince businesses in its U.S. federal and state income tax returns. Provision for income taxes in this pro forma presentation have been determined assuming the Kellwood Separation had occurred at the beginning of the earliest period presented, and would therefore exclude the historical operating results of the non-Vince businesses. These amounts are not necessarily indicative of the provision for income taxes that would have been recorded had we operated separately from the non-Vince businesses during the periods presented. The adjustment represents the difference between the amount calculated in accordance with the methodology described herein and the historical amounts recorded.	

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Summary Historical Financial Data of Vince, LLC
The following tables set forth the summary historical financial data of Vince, LLC, the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering.
Please note the following:
 
 	Ÿ 	 	Apparel Holding Corp. (to be renamed Vince Holding Corp. prior to the consummation of this offering) is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC;	
 
 	Ÿ 	 	The information set forth below is provided as supplemental information and should not be considered in lieu of the information pertaining to Apparel Holding Corp; and	
 
 	Ÿ 	 	The financial information included in this discussion and in Vince, LLC’s historical financial statements may not be indicative of Apparel Holding Corp.’s financial position, operating results and changes in equity after the completion of the IPO Restructuring Transactions, or what they would have been had the Vince business operated separately from the non-Vince businesses during the periods presented.	
You should read the information set forth below in conjunction with “Use of Proceeds,” “Capitalization of AHC,” “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC,” “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC,” and Vince, LLC’s audited financial statements and notes thereto included elsewhere in this prospectus. The statement of operations data for each of fiscal 2010, fiscal 2011 and fiscal 2012 are derived from Vince, LLC’s audited financial statements included elsewhere in this prospectus.
The statement of operations data for the six month periods ended July 28, 2012 and August 3, 2013 and the balance sheet of Vince, LLC dated as of August 3, 2013 set forth below are derived from Vince, LLC’s unaudited quarterly financial statements and contain all adjustments, consisting of normal recurring adjustments, that our management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. The balance sheet data of AHC dated as of August 3, 2013 set forth below is derived from AHC’s unaudited quarterly consolidated financial statements included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that AHC’s management considers necessary for a fair presentation of our financial position and results of operation for the periods presented. We have included the balance sheet data of AHC on an actual, pro forma and pro forma, as adjusted basis, each as of August 3, 2013, to reflect the assets and liabilities of the business in which you will be investing.
Operating results for the six month periods are not necessarily indicative of results for a full financial year, or any other periods. Vince, LLC’s summary historical financial data include charges from Kellwood Company for certain expenses, including centralized legal, tax, treasury, information technology, employee benefits and other centralized services and infrastructure costs. The charges have been determined on bases that we consider to be reasonable reflections of the utilization of services provided or the benefit received by Vince, LLC.

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Summary Historical Financial Data of Vince, LLC

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except for percentages and store counts)	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statement of Operations Data:	  				 				 				 				 				
Net sales	  	$	111,492	  	 	$	175,255	  	 	$	240,352	  	 	$	90,531	  	 	$	114,657	  	
Cost of products sold	  	 	55,695	  	 	 	89,545	  	 	 	132,156	  	 	 	50,119	  	 	 	63,506	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	55,797	  	 	 	85,710	  	 	 	108,196	  	 	 	40,412	  	 	 	51,151	  	
Operating expenses:	  				 				 				 				 				
Selling, general and administrative expenses(1)(2)	  	 	32,704	  	 	 	42,148	  	 	 	66,639	  	 	 	27,057	  	 	 	33,954	  	
Amortization of intangible assets	  	 	598	  	 	 	599	  	 	 	598	  	 	 	299	  	 	 	300	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	33,302	  	 	 	42,747	  	 	 	67,237	  	 	 	27,356	  	 	 	34,254	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	22,495	  	 	 	42,963	  	 	 	40,959	  	 	 	13,056	  	 	 	16,897	  	
Interest expense(3)	  	 	7,172	  	 	 	15,004	  	 	 	22,903	  	 	 	10,690	  	 	 	12,429	  	
Other expense, net	  	 	350	  	 	 	478	  	 	 	779	  	 	 	396	  	 	 	512	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	  	 	14,973	  	 	 	27,481	  	 	 	17,277	  	 	 	1,970	  	 	 	3,956	  	
Provision for income taxes	  	 	5,923	  	 	 	10,812	  	 	 	6,964	  	 	 	789	  	 	 	1,556	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	$	1,181	  	 	$	2,400	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Operating and Financial Data:	  				 				 				 				 				
Total stores at end of period	  	 	16	  	 	 	19	  	 	 	22	  	 	 	19	  	 	 	24	  	
Comparable store sales growth	  	 	9.3	% 	 	 	7.6	% 	 	 	23.1	% 	 	 	13.9	% 	 	 	31.7	% 	
Capital expenditures	  	$	1,602	  	 	$	1,450	  	 	$	1,821	  	 	$	457	  	 	$	3,406	  	

(1)	Includes the impact of our public company transition costs and certain one-time costs of $9.3 million, $1.7 million and $4.0 million for fiscal 2012, the first six months of fiscal 2012 and the first six months of fiscal 2013, respectively. These costs include transition payments to our founders, charges that are directly attributable to this offering, incremental costs for external legal counsel and consulting fees incurred to effect the Restructuring Transactions and other one-time charges. We expect additional transaction costs (excluding underwriting discounts and commissions) of approximately $2.9 million for the remainder of fiscal 2013 will be charged to selling, general and administrative expenses (“SG&A”).	
(2)	Vince, LLC is charged for the use of services provided by the departments and shared facilities of Kellwood, which will own and operate the non-Vince businesses after the consummation of this offering. These charges are based upon the actual cost incurred, without markup. These functions and facilities will remain with Kellwood upon separation in the IPO Restructuring Transactions and will continue to be an integral part of the non-Vince businesses going forward. Vince, LLC will continue to use certain of these services for a period of time through the Shared Services Agreement described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” and will be charged accordingly. The charges to Vince, LLC may not be representative of what the costs would have been had Vince, LLC been a separate, stand-alone entity during the periods presented.	
(3)	Interest expense for fiscal 2010, fiscal 2011 and fiscal 2012 and the six month periods ended July 28, 2012 and August 3, 2013 represents interest costs and amortization of debt issuance costs on certain Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements (each as defined and described in “Restructuring Transactions”). These debt instruments and related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. We intend to enter into a new revolving credit facility and a new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We also intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
The balance sheet data as of August 3, 2013 is presented:
 
 	Ÿ 	 	on an actual basis for Vince, LLC;	
 
 	Ÿ 	 	on an actual basis for AHC.;	

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 	Ÿ 	 	on a pro forma basis to reflect changes in AHC’s balance sheet assuming (i) the separation of the assets constituting the Vince business from those of the non-Vince businesses and (ii) our entry into the Tax Receivable Agreement, each in the IPO Restructuring Transactions (as further described in “Restructuring Transactions”) and as if such transactions had occurred on August 3, 2013. See “Restructuring Transactions” for additional information; and	
 
 	Ÿ 	 	on a pro forma, as adjusted basis to further reflect changes in AHC’s balance sheet including (i) our receipt of the estimated net proceeds from the sale of              shares of common stock by us in this offering at an assumed initial public offering price of $         per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the underwriting discount and commissions payable by us, (ii) our use of these proceeds as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable and (iii) our entry into our new term loan and revolving credit facilities and $         million of borrowings under such term loan facility.	

 	  	As of August 3, 2013	 	
 	  	Actual
(Vince, LLC)	 	 	Actual
(AHC)	 	 	Pro Forma
(AHC)	 	 	Pro Forma,
As Adjusted
(AHC)	 	
(In thousands)	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
Balance Sheet Data:	  				 				 				 				
Cash and cash equivalents	  	$	106	  	 	$	2,178	  	 	$	325	  	 	$	            	  	
Total current assets	  	 	82,603	  	 	 	228,891	  	 	 	82,892	  	 				
Total assets	  	 	290,562	  	 	 	467,791	  	 	 	389,580	  	 				
Kellwood Note Receivable(1)	  	 	—	  	 	 	—	  	 	 	385,000	  	 	 	—	  	
Total current liabilities	  	 	148,005	(2) 	 	 	221,230	  	 	 	417,523	  	 				
Long-term debt	  	 	163,675	(2) 	 	 	386,842	  	 	 	—	  	 				
Tax Receivable Agreement due(3)	  	 	—	  	 	 	—	  	 	 	172,151	  	 				
Invested equity/Stockholders’ deficit	  	 	(26,159	) 	 	 	(179,102	) 	 	 	(203,336	) 	 				
Total liabilities and invested equity/Stockholders’ deficit	  	 	290,562	  	 	 	467,791	  	 	 	389,580	  	 				

(1)	In connection with Vince Intermediate Holding, LLC’s acquisition of Vince, LLC in the IPO Restructuring Transactions, Vince Intermediate Holding, LLC will issue the Kellwood Note Receivable to Kellwood Company, LLC. The principal amount of the Kellwood Note Receivable represents (i) the face value of the indebtedness, including accrued and unpaid interest and any related fees and expenses, to be repaid, discharged or repurchased by Kellwood Company, LLC in connection with the consummation of this offering, (ii) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (iii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements,” all partially offset by (iv) indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. It is currently estimated that the restructuring fee described in clause (ii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million. Most of the proceeds from this offering, along with the borrowings under our new term loan facility, will be used to repay the Kellwood Note Receivable.	
(2)	Included within current liabilities are short-term borrowings under the Wells Fargo Facility of $88.2 million, $79.8 million and $115.6 million as of January 28, 2012, February 2, 2013 and August 3, 2013, respectively. Long-term debt includes the Cerberus Term Loan and the Sun Term Loan Agreements. Total current liabilities Pro Forma (AHC) include amounts outstanding under the Kellwood Note Receivable. These debt instruments and the related capitalized deferred issuance costs are included in the Vince, LLC financial statements as Vince, LLC is a borrower party. This debt was incurred to fund the operation and growth of the Vince and non-Vince businesses, including to finance certain acquisitions made by AHC since 2008. As discussed above, we intend to enter into a new revolving credit facility and a new term loan facility with the consummation of this offering. We also intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
(3)	As described in “Other Information Related to the Offering — Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement” included elsewhere in this Prospectus, we will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders, where we will be obligated to pay 85% of cash savings on federal, state and local income taxes realized by us through our use of certain net tax assets held by us subsequent to the IPO Restructuring Transactions. The amount set forth in this line represents 85% of the value of these net tax assets.	

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Non-GAAP Financial Measures
To provide investors with additional information about our financial results, we disclose within this prospectus Adjusted EBITDA, a non-GAAP financial measure of Vince, LLC, after giving effect to the Vince Transfer. This metric is derived exclusively from the operations of the Vince business, as reflected in the Vince, LLC financial statements and results of operations. We have provided below a reconciliation between Adjusted EBITDA and net income. Net income is the most directly comparable financial measure prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
We have included Adjusted EBITDA in this prospectus because we believe it enhances investors’ understanding of Vince, LLC’s operating results. Adjusted EBITDA is provided because management believes it is an important measure of financial performance commonly used to determine the value of companies, to define standards for borrowing from institutional lenders and because it is the primary measure used by management to evaluate our performance.
Some limitations of Adjusted EBITDA are:
 
 	Ÿ 	 	Adjusted EBITDA does not reflect the interest expense of, or the cash requirements necessary to service interest or principal payments on, our debts;	
 
 	Ÿ 	 	Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us;	
 
 	Ÿ 	 	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future; and	
 
 	Ÿ 	 	other companies may calculate Adjusted EBITDA differently or not at all, which reduces its usefulness as a comparative measure.	
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and Vince, LLC’s audited historical financial results presented elsewhere in the prospectus in accordance with GAAP.
The following table presents a reconciliation of Vince, LLC net income to Adjusted EBITDA based on Vince, LLC’s statements of operations for each of the periods indicated:

 	  	Fiscal Year	 	  	Six Months Ended	 	
 	  	2010	 	  	2011	 	  	2012	 	  	July 28,
2012	 	 	August 3,
2013	 	
(In thousands)	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	
 	  	 	 	  	 	 	  	 	 	  	(unaudited)	 	 	(unaudited)	 	
Net income	  	$	9,050	  	  	$	16,669	  	  	$	10,313	  	  	$	1,181	  	 	$	2,400	  	
Interest expense(a)	  	 	7,172	  	  	 	15,004	  	  	 	22,903	  	  	 	10,690	  	 	 	12,429	  	
Provision for income taxes	  	 	5,923	  	  	 	10,812	  	  	 	6,964	  	  	 	789	  	 	 	1,556	  	
Depreciation and amortization expense	  	 	1,492	  	  	 	1,701	  	  	 	2,009	  	  	 	921	  	 	 	1,106	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
EBITDA	  	 	23,637	  	  	 	44,186	  	  	 	42,189	  	  	 	13,581	  	 	 	17,491	  	
Public company transition costs(b)	  	 	—	  	  	 	—	  	  	 	9,331	  	  	 	1,679	  	 	 	4,011	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Adjusted EBITDA	  	$	23,637	  	  	$	44,186	  	  	$	51,520	  	  	$	15,260	  	 	$	21,502	  	

(a)	Interest expense for fiscal 2010, fiscal 2011 and fiscal 2012 and the six month periods ended July 28, 2012 and August 3, 2013 represents certain interest costs and amortization of debt issuance costs on Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. We intend to enter into a new revolving credit facility and new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We also intend to borrow approximately	

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 	$         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
(b)	Adjusted EBITDA does not include the impact of our public company transition costs and certain one-time costs of $9.3 million, $1.7 million and $4.0 million for fiscal 2012, the first six months of fiscal 2012 and the first six months of fiscal 2013, respectively. These costs include transition payments to our founders, charges that are directly attributable to this offering, incremental costs for external legal counsel and consulting fees incurred to effect the Restructuring Transactions and other one-time costs. These charges are excluded due to their non-recurring nature and ability to impact comparability to other periods.	

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 RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose all or part of your investment.
We have divided the risk factors set forth in this section into the following four categories: (i) Risks Related to Vince; (ii) Risks Related to the Restructuring Transactions; (iii) Risks Related to AHC; and (iv) Risks Related to this Offering and Our Common Stock. The risks set forth in the “Risks Related to AHC” section of this “Risk Factors” section relate to risks related to the Apparel Holding Corp. business (which includes the Vince and non-Vince businesses). Although Apparel Holding Corp. is the legal issuer of the shares offered in this offering, an investment in our common stock is an investment in the Vince business and does not constitute an investment in the non-Vince businesses.
Risks Related to Vince
General economic conditions in the U.S. and other parts of the world, including a continued weakening of the economy and restricted credit markets, can affect consumer confidence and consumer spending patterns.
The apparel industry has historically been subject to cyclical variations, recessions in the general economy or uncertainties regarding future economic prospects that affect consumer spending habits which could negatively impact our business overall, the carrying value of our tangible and intangible assets and specifically sales, gross margins and profitability. The success of our operations depends on consumer spending. Consumer spending is impacted by a number of factors, including actual and perceived economic conditions affecting disposable consumer income (such as unemployment, wages, energy costs and consumer debt levels), business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets in which our products are sold.
Recent global economic conditions have included significant recessionary pressures and declines in employment levels, disposable income and actual and/or perceived wealth and further declines in consumer confidence and economic growth. These conditions have led and could lead to continued declines in consumer spending over the foreseeable future and may have resulted in a shift in consumer spending habits that makes it unlikely that spending will return to prior levels for the foreseeable future. The current depressed economic environment has been characterized by a decline in consumer discretionary spending and has disproportionately affected retailers and sellers of consumer goods, particularly those whose goods are viewed as discretionary or luxury purchases, including fashion apparel such as ours. While we have seen occasional signs of stabilization in the North American markets during 2012 and 2013, a shift towards continued recessionary conditions could adversely impact our sales volumes and overall profitability in the future. Further, the European debt crisis resulting from growing concerns that European countries could default on their national debt, has caused instability in the European economy, which is one of the areas that we are currently targeting for international expansion. Continued economic volatility and declines in the value of the Euro or other foreign currencies could negatively impact the global economy as a whole. Such a condition may have a material adverse impact on the profitability and liquidity of our international operations, as well as hinder our ability to grow through expansion in the international markets.
Economic conditions have also led to a highly promotional environment and strong discounting pressure from both our wholesale partners and retail customers, which have had a negative impact on our revenues and profitability. This promotional environment may continue even after economic growth
 
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returns, as we expect consumer spending trends are likely to remain at historically depressed levels for the foreseeable future. The domestic and international political situation also affects consumer confidence. The threat, outbreak or escalation of terrorism, military conflicts or other hostilities around the world could lead to further decreases in consumer spending.
Intense competition in the apparel industry could reduce our sales and profitability.
As an apparel company, we face intense competition from other domestic and foreign apparel, footwear and accessories manufacturers and retailers. Competition may result in pricing pressures, reduced profit margins, lost market share or failure to grow our market share, any of which could substantially harm our business and results of operations. Competition is based on many factors including, without limitation, the following:
 
 	Ÿ 	 	establishing and maintaining favorable brand recognition;	
 
 	Ÿ 	 	developing products that appeal to consumers;	
 
 	Ÿ 	 	pricing products appropriately;	
 
 	Ÿ 	 	determining and maintaining product quality;	
 
 	Ÿ 	 	obtaining access to sufficient floor space in retail locations;	
 
 	Ÿ 	 	providing appropriate services and support to retailers;	
 
 	Ÿ 	 	maintaining and growing market share;	
 
 	Ÿ 	 	hiring and retaining key employees; and	
 
 	Ÿ 	 	protecting intellectual property.	
Competition in the apparel industry is intense and is dominated by a number of very large brands, many of which have longer operating histories, larger customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than we do. These capabilities of our competitors may allow them to better withstand downturns in the economy or apparel industry. Any increased competition, or our failure to adequately address any of these competitive factors, could result in reduced sales, which could adversely affect our business, financial condition and operating results.
Competition, along with such other factors as consolidation within the retail industry and changes in consumer spending patterns, could also result in significant pricing pressure. These factors may cause us to reduce our sales prices to our wholesale partners and retail consumers, which could cause our gross margins to decline if we are unable to appropriately manage inventory levels and/or otherwise offset price reductions with comparable reductions in our operating costs. If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability may decline, which could have a material adverse effect on our business, financial condition and operating results.
Our business depends on a strong brand image, and if we are not able to maintain or enhance our brand, particularly in new markets where we have limited brand recognition, we may be unable to sell sufficient quantities of our merchandise, which would harm our business and cause our results of operations to suffer.
We believe that maintaining and enhancing the Vince brand is critical to maintaining and expanding our customer base. Maintaining and enhancing our brand may require us to make substantial investments in areas such as visual merchandising (including working with our wholesale
 
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partners to transform select Vince displays into branded shop-in-shops), marketing and advertising, employee training and store operations. A primary component of our strategy involves expanding into other geographic markets and working with existing wholesale partners, particularly within the U.S. We anticipate that, as our business expands into new markets and further penetrates existing markets, and as the markets in which we operate become increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Certain of our competitors in the apparel industry have faced adverse publicity surrounding the quality, attributes and performance of their products. Our brand may similarly be adversely affected if our public image or reputation is tarnished by failing to maintain high standards for merchandise quality and integrity. Any negative publicity about these types of concerns may reduce demand for our merchandise. Maintaining and enhancing our brand will depend largely on our ability to be a leader in the contemporary apparel industry and to continue to provide high quality products. If we are unable to maintain or enhance our brand image, our results of operations may suffer and our business may be harmed.
A substantial portion of our revenue is derived from a small number of large wholesale partners, and the loss of any of these wholesale partners could substantially reduce our total revenue.
We have a small number of wholesale partners who account for a significant portion of our net sales. Net sales to the full-price, off-price and e-commerce operations of our four largest wholesale partners were 61% of our total revenue for fiscal 2012 and 63% of our total revenue for the first six months of fiscal 2013. These partners, each of which accounted for more than 10% of our total revenue for fiscal 2012, include Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s. Nordstrom, Saks Fifth Avenue and Neiman Marcus each accounted for more than 10% of our total revenue for the first six months of fiscal 2013 and collectively represented 55.7% of our total revenue in such period. We do not have written agreements with any of our wholesale partners, and purchases generally occur on an order-by-order basis. A decision by any of our major wholesale partners, whether motivated by marketing strategy, competitive conditions, financial difficulties or otherwise, to significantly decrease the amount of merchandise purchased from us or our licensing partners, or to change their manner of doing business with us or our licensing partners, could substantially reduce our revenue and have a material adverse effect on our profitability. Furthermore, due to the concentration of our wholesale partner base, our results of operations could be adversely affected if any of these customers fails to satisfy its payment obligations to us when due. During the past several years, the retail industry has experienced a great deal of ownership change, and we expect such change will continue. For example, Saks Fifth Avenue, one of our top four customers, recently agreed to be acquired by a third party. We cannot guarantee that our relationship with Saks Fifth Avenue will not be impacted by this ownership change and any strategic changes Saks Fifth Avenue may implement as a result. In addition, store closings by our wholesale partners decrease the number of stores carrying our products, while the remaining stores may purchase a smaller amount of our products and may reduce the retail floor space designated for our brand. In the future, retailers may further consolidate, undergo restructurings or reorganizations, realign their affiliations or reposition their stores’ target markets. Any of these types of actions could decrease the number of stores that carry our products or increase the ownership concentration within the retail industry. These changes could decrease our opportunities in the market, increase our reliance on a diminishing number of large wholesale partners and decrease our negotiating strength with our wholesale partners. These factors could have a material adverse effect on our business, financial condition and operating results.
We may not be able to successfully expand our wholesale partnership base or grow our presence with existing wholesale partners.
As part of our growth strategy, we intend to increase productivity and penetration with existing wholesale partners and form relationships with new, international wholesale partners. These initiatives
 
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may include the establishment of additional shop-in-shops within select department stores. The location of Vince displays or shop-in-shops within department stores is controlled in large part by our wholesale partners. Although the investments made by us and our wholesale partners in the development and installation of Vince displays and shop-in-shops decreases the risk that our wholesale partners will require us to move to a less desirable area of their store or reduce the space allocated to such displays and shops, they are not contractually prohibited from doing so or required to grant additional or more desirable space to us. As of August 31, 2013, we had seven shop-in-shops with our U.S. wholesale partners and seven shop-in-shops with our international wholesale partners. While expanding the number of shop-in-shops is part of our growth strategy, there can be no assurances we will be able to align our wholesale partners with this strategy and continue to receive floor space from our wholesale partners to open or expand shop-in-shops.
Our ability to attract customers to our stores depends heavily on successfully locating our stores in suitable locations and any impairment of a store location, including any decrease in customer traffic, could cause our sales to be less than expected.
Our approach to identifying locations for our retail stores typically favors street and mall locations near luxury and contemporary retailers that we believe are consistent with our key customers’ demographics and shopping preferences. Sales at these stores are derived, in part, from the volume of foot traffic in these locations. Changes in areas around our existing retail locations that result in reductions in customer foot traffic or otherwise render the locations unsuitable could cause our sales to be less than expected and the related leases are generally non-cancelable. Store locations may become unsuitable due to, and our sales volume and customer traffic generally may be harmed by, among other things:
 
 	Ÿ 	 	economic downturns in a particular area;	
 
 	Ÿ 	 	competition from nearby retailers selling similar apparel;	
 
 	Ÿ 	 	changing consumer demographics in a particular market;	
 
 	Ÿ 	 	changing preferences of consumers in a particular market;	
 
 	Ÿ 	 	the closing or decline in popularity of other businesses located near our store; and	
 
 	Ÿ 	 	store impairments due to acts of God or terrorism.	
Our ability to successfully open and operate new retail stores depends on many factors, including, among others, our ability to:
 
 	Ÿ 	 	identify new markets where our products and brand image will be accepted or the performance of our retail stores will be successful;	
 
 	Ÿ 	 	obtain desired locations, including store size and adjacencies, in targeted malls or streets;	
 
 	Ÿ 	 	negotiate acceptable lease terms, including desired rent and tenant improvement allowances, to secure suitable store locations;	
 
 	Ÿ 	 	achieve brand awareness, affinity and purchase intent in the new markets;	
 
 	Ÿ 	 	hire, train and retain store associates and field management;	
 
 	Ÿ 	 	assimilate new store associates and field management into our corporate culture;	
 
 	Ÿ 	 	source and supply sufficient inventory levels; and	
 
 	Ÿ 	 	successfully integrate new retail stores into our existing operations and information technology systems, which will initially be provided by Kellwood under the terms of the Shared Services Agreement.	
As of August 31, 2013, we had 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. We plan to double our store base over the next three to five years, including opening a net total of six new stores in fiscal 2013. Our new stores, however, may not be immediately profitable and
 
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we may incur losses until these stores become profitable. Unavailability of desired store locations, delays in the acquisition or opening of new stores, delays or costs resulting from a decrease in commercial development due to capital restraints, difficulties in staffing and operating new store locations or a lack of customer acceptance of stores in new market areas may negatively impact our new store growth and the costs or the profitability associated with new stores. There can be no assurance that we will open the planned number of stores in fiscal 2013 or thereafter. Any failure to successfully open and operate new stores may adversely affect our business, financial condition and operating results.
As we expand our store base, we may be unable to maintain or grow comparable store sales or average sales per square foot at the same rates that we have achieved in the past, which could cause our share price to decline.
As we expand our store base, we may not be able to maintain or grow at the same rates of comparable store sales growth that we have achieved historically. In addition, we may not be able to maintain or grow our historic average sales per square foot as we move into new markets. If our future comparable store sales or average sales per square foot decline or fail to meet market expectations, the price of our common stock could decline. In addition, the aggregate results of operations through our wholesale partners and at our retail locations have fluctuated in the past and can be expected to continue to fluctuate in the future. A variety of factors affect both comparable store sales and average sales per square foot, including, among others, consumer spending patterns, fashion trends, competition, current economic conditions, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our product assortment, the success of marketing programs and weather conditions. If we misjudge the market for our products, we may incur excess inventory for some of our products and miss opportunities for other products. These factors may cause our comparable store sales results and average sales per square foot in the future to be materially lower than recent periods or our expectations, which could harm our results of operations and result in a decline in the price of our common stock.
We have grown rapidly in recent years and we have limited operating experience as a team at our current scale of operations. If we are unable to manage our operations at our current size or are unable to manage any future growth effectively, our business results and financial performance may suffer.
We have expanded our operations rapidly since our inception in 2002, and we have limited operating experience at our current size. Our business has more than doubled over the past two years, as we have grown our total net sales from $111.5 million in fiscal 2010 to $240.4 million in fiscal 2012 and from $90.5 million for the first six months of fiscal 2012 to $114.7 million for the first six months of fiscal 2013. We have made and are making investments to support our near and longer-term growth. If our operations continue to grow over the longer term, of which there can be no assurance, we will be required to expand our sales and marketing, product development and distribution functions, to upgrade our management information systems and other processes, and to obtain more space for our expanding administrative support and other headquarters personnel. Kellwood will continue to provide services to us after this offering under the Shared Services Agreement. Our expansion may exceed the capacity that Kellwood is able to provide, on attractive pricing terms or at all, under the terms of the Shared Services Agreement (as more fully described below in “—Problems with our distribution system could harm our ability to meet customer expectations, manage inventory, complete sales and achieve targeted operating efficiencies”). Our continued growth could strain our existing resources, and we could experience operating difficulties, including obtaining sufficient raw materials at acceptable prices, securing manufacturing capacity to produce our products and experiencing delays in production and shipments. These difficulties would likely lead to a decrease in net revenue, income from operations and the price of our common stock.
 
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Kellwood provides us with certain key services for our business. If Kellwood fails to perform its obligations to us or if we do not find appropriate replacement services, we may be unable to perform these services or implement substitute arrangements on a timely and cost-effective basis on terms favorable to us.
As a business unit of Kellwood, we have historically relied on the financial resources and the administrative and operational support systems of Kellwood to run our business. Some of the Kellwood systems we are using include enterprise resource planning (“ERP”), human resource management systems and distribution applications. Many of these systems are complex and either highly customized or proprietary. In conjunction with our separation from Kellwood, we are in the process of separating our assets from those of Kellwood and either creating our own financial, administrative, operational and other support systems or contracting with third parties to replace Kellwood’s systems that will not be provided to us under the terms of the Shared Services Agreement as discussed below. In order to successfully implement our own systems and operate as a stand-alone business, we must be able to attract and retain a number of highly skilled employees. We must also obtain goods, technology and services without the benefit of Kellwood’s purchasing power. As an entity separate from Kellwood, we may be unable to obtain such goods, technology and services at prices and on terms as favorable as those available to us prior to the separation, which could increase our costs and reduce our profitability.
We will enter into the Shared Services Agreement in connection with the consummation of the IPO Restructuring Transactions. The Shared Services Agreement will govern the provision by Kellwood of certain support services to us, including distribution, information technology and back office support. Kellwood will provide these services until we elect to terminate the provision thereof in accordance with the terms of such agreement or, for services which require a term as a matter of law or which are based on a third-party agreement with a set term, the related termination date specified in the schedule thereto. Upon the termination of certain services, Kellwood may no longer be in a position to provide certain other related services. Assuming we proceed with our request to terminate the original services, such related services shall also be terminated in connection with such termination. The Shared Services Agreement will terminate automatically upon the termination of all services provided thereunder, unless earlier terminated by either party in connection with the other party’s material breach upon 30 days prior notice to such defaulting party. After termination of the agreement, Kellwood will have no obligation to provide any services to us. See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” for a description of these services. The services provided under the Shared Services Agreement (as may be amended from time to time) may not be sufficient to meet our needs and we may not be able to replace these services at favorable costs and on favorable terms, if at all. In addition, Kellwood has experienced financial difficulty in the past. For example, in 2009, Kellwood’s independent auditors raised substantial doubt regarding Kellwood’s ability to continue as a going concern. If Kellwood encounters any issues during the transitional period which impact its ability to provide services pursuant to the Shared Services Agreement, our business could be materially harmed. Any failure or significant downtime in our own financial or administrative systems or in Kellwood’s financial or administrative systems during the transitional period and any difficulty in separating our assets from Kellwood’s assets and integrating newly acquired assets into our business could result in unexpected costs, impact our results or prevent us from paying our suppliers and employees and performing other administrative services on a timely basis and could materially harm our business, financial condition, results of operations and cash flows.
Our limited operating experience and brand recognition in international markets may delay our expansion strategy and cause our business and growth to suffer.
We face additional risks with respect to our strategy to expand internationally, including our efforts to further expand our business in Canada, select European countries, Asia and the Middle East
 
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through arrangements with international partners. Our current operations are based largely in the U.S., with international sales representing approximately 8% of net sales for fiscal 2012 and 10.3% of net sales for the first six months of fiscal 2013. Therefore we have a limited number of customers and experience in operating outside of the U.S. We also do not have extensive experience with regulatory environments and market practices outside of the U.S. and cannot guarantee, notwithstanding our international partners’ familiarity with such environments and market practices, that we will be able to penetrate or successfully operate in any market outside of the U.S. Many of these markets have different operational characteristics, including employment and labor regulations, transportation, logistics, real estate (including lease terms) and local reporting or legal requirements. Furthermore, consumer demand and behavior, as well as style preferences, size and fit, and purchasing trends, may differ in these markets and, as a result, sales of our product may not be successful, or the margins on those sales may not be in line with those that we currently anticipate. In addition, in many of these markets there is significant competition to attract and retain experienced and talented employees. Failure to develop new markets outside of the U.S. or disappointing sales growth outside of the U.S. may harm our business and results of operations.
Our plans to improve and expand our product offerings may not be successful, and the implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our net revenue and profitability.
In addition to our store expansion strategy, we plan to grow our business by increasing our core product offerings, which includes expanding our men’s collection, denim, outerwear, women’s bottoms and dresses assortment. We also plan to develop and introduce select new product categories and pursue select additional licensing opportunities such as intimates/loungewear, men’s footwear and fashion accessories.
The principal risks to our ability to successfully carry out our plans to improve and expand our product offerings are that:
 
 	Ÿ 	 	if our expected product offerings fail to maintain and enhance our brand identity, our image may be diminished or diluted and our sales may decrease;	
 
 	Ÿ 	 	if we fail to find and enter into relationships with external partners with the necessary specialized expertise or execution capabilities, we may be unable to offer our planned product extensions or to realize the additional revenue we have targeted for those extensions; and	
 
 	Ÿ 	 	the use of licensing partners may limit our ability to conduct comprehensive final quality checks on merchandise before it is shipped to our stores or to our wholesale partners.	
In addition, our ability to successfully carry out our plans to improve and expand our product offerings may be affected by economic and competitive conditions, changes in consumer spending patterns and changes in consumer preferences and style trends. These plans could be abandoned, could cost more than anticipated and could divert resources from other areas of our business, any of which could impact our competitive position and reduce our net revenue and profitability.
Our current and future licensing arrangements may not be successful and may make us susceptible to the actions of third parties over whom we have limited control.
Our current and future licensing arrangements may not be successful and may make us susceptible to the actions of third parties over whom we have limited control. We entered into a licensing agreement when we launched women’s footwear in 2012 and signed a licensing agreement in 2013 for the launch of children’s apparel in 2014. In the future, we may enter into select additional
 
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licensing arrangements for product offerings which require specialized expertise. We may also enter into select licensing agreements pursuant to which we may grant third parties the right to distribute and sell our products in certain geographic areas. Although we have taken and will continue to take steps to select potential licensing partners carefully and monitor the activities of our licensing partners (through, among other things, approval rights over product design, production quality, packaging, merchandising, marketing, distribution and advertising), such arrangements may not be successful. Our licensing partners may fail to fulfill their obligations under their license agreements or have interests that differ from or conflict with our own, such as the pricing of our products and the offering of competitive products. In addition, the risks applicable to the business of our licensing partners may be different than the risks applicable to our business, including risks associated with each such partner’s ability to:
 
 	Ÿ 	 	obtain capital;	
 
 	Ÿ 	 	exercise operational and financial control over its business;	
 
 	Ÿ 	 	manage its labor relations;	
 
 	Ÿ 	 	maintain relationships with suppliers;	
 
 	Ÿ 	 	manage its credit and bankruptcy risks; and	
 
 	Ÿ 	 	maintain customer relationships.	
Any of the foregoing risks, or the inability of any of our licensing partners to successfully market our products or otherwise conduct its business, may result in loss of revenue and competitive harm to our operations in regions or product categories where we have entered into such licensing arrangements.
Our business will suffer if we fail to respond to changing customer tastes.
Customer tastes can change rapidly. We may not be able to anticipate, gauge or respond to these changes within a timely manner. We may also not be able to continue to satisfy our customers’ existing tastes and preferences. If we misjudge the market for products or product groups, or if we fail to identify and respond appropriately to changing consumer demands, we may be faced with unsold finished goods inventory, which could materially adversely affect expected operating results and decrease sales, gross margins and profitability.
If we are unable to accurately forecast customer demand for our products, our manufacturers may not be able to deliver products to meet our requirements, and this could result in delays in the shipment of products to our stores and to wholesale partners.
We stock our stores, and provide inventory to our wholesale partners, based on our or their estimates of future demand for particular products. Our inventory management and planning team determines the number of pieces of each product that we will order from our manufacturers based upon past sales of similar products, sales trend information and anticipated demand at our suggested retail prices. However, if our inventory and planning team fails to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products. There can be no assurance that we will be able to successfully manage our inventory at a level appropriate for future customer demand.
Factors that could affect our inventory management and planning team’s ability to accurately forecast customer demand for our products include:
 
 	Ÿ 	 	a substantial increase or decrease in demand for our products or for products of our competitors;	
 
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 	Ÿ 	 	our failure to accurately forecast customer acceptance for our new products;	
 
 	Ÿ 	 	new product introductions or pricing strategies by competitors;	
 
 	Ÿ 	 	more limited historical store sales information for our newer markets;	
 
 	Ÿ 	 	weakening of economic conditions or consumer confidence in the future, which could reduce demand for discretionary items, such as our products; and	
 
 	Ÿ 	 	acts or threats of war or terrorism which could adversely affect consumer confidence and spending or interrupt production and distribution of our products and our raw materials.	
Because of our rapid growth, we have occasionally placed insufficient levels of desirable product with our wholesale partners and in our retail locations such that we were unable to fully satisfy customer demand at those locations. We cannot guarantee that we will be able to match supply with demand in all cases in the future, whether as a result of our inability to produce sufficient levels of desirable product or our failure to forecast demand accurately. As a result of these inabilities or failures, we may encounter difficulties in filling customer orders or in liquidating excess inventory at discount prices and may experience significant write-offs. Additionally, if we over-produce a product based on an aggressive forecast of demand, retailers may not be able to sell the product and cancel future orders or require give backs. These outcomes could have a material adverse effect on brand image and adversely impact sales, gross margins and profitability .
Our senior management team has limited experience working together as a group, and may not be able to manage our business effectively.
Our CEO, Jill Granoff, and CFO, Lisa Klinger, joined the company in 2012. Many of the other members of our senior management team, including our new President, Karin Gregersen, and our new Creative Director, Doo-Ri Chung, have been with us less than one year. As a result, our senior management team has limited experience working together as a group. This lack of shared experience could negatively impact our senior management team’s ability to quickly and efficiently respond to problems and effectively manage our business. If our management team is not able to work together as a group, our results of operations may suffer and our business may be harmed.
Loss of key personnel could disrupt our operations.
Our continued success is dependent on the ability to attract, retain and motivate qualified management, designers, administrative talent and sales associates to support existing operations and future growth. Competition for qualified talent in the apparel industry is intense, and we compete for these individuals with other companies that in many cases have greater financial and other resources. The loss of the services of any members of senior management or the inability to attract and retain other qualified executives could have a material adverse effect on our business, results of operations and financial condition.
Our competitive position could suffer if our intellectual property rights are not protected.
We believe that our trademarks and designs are of great value. From time to time, third parties have challenged, and may in the future try to challenge, our ownership of our intellectual property. In some cases, third parties with similar trademarks or other intellectual property may have pre-existing and potentially conflicting trademark registrations. We rely on cooperation from third parties with similar trademarks to be able to register our trademarks in jurisdictions in which such third parties have already registered their trademarks. We are susceptible to others imitating our products and infringing our intellectual property rights. Imitation or counterfeiting of our products or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our
 
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revenues. The actions we have taken to establish and protect our trademarks and other intellectual property rights may not be adequate to prevent imitation of our products by others or to prevent others from seeking to invalidate our trademarks or block sales of our products as a violation of the trademarks and intellectual property rights of others. In addition, others may assert rights in, or ownership of, our trademarks and other intellectual property rights or in similar marks or marks that we license and/or market and we may not be able to successfully resolve these conflicts to our satisfaction. We may need to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of resources. Successful infringement claims against us could result in significant monetary liability or prevent us from selling some of our products. In addition, resolution of claims may require us to redesign our products, license rights from third parties or cease using those rights altogether. Any of these events could harm our business and cause our results of operations, liquidity and financial condition to suffer.
We license our website domain name from a third-party. Pursuant to the license agreement (the “License Agreement”), our license to use www.vince.com will expire in 2018 and will automatically renew for successive one year periods, subject to our right to terminate the arrangement with or without cause; provided, that we must pay the applicable early termination fee and provide 30 days prior notice in connection with a termination without cause. The licensor has no termination rights under the License Agreement. Any failure by the licensor to perform its obligations under the License Agreement could adversely affect our brand and make it more difficult for users to find our website.
Problems with our distribution system could harm our ability to meet customer expectations, manage inventory, complete sales and achieve targeted operating efficiencies.
In the U.S., we rely on a distribution facility operated by Kellwood in City of Industry, California. Our ability to meet the needs of our wholesale partners and our own retail stores depends on the proper operation of this distribution facility. Kellwood will continue to provide distribution services, until we elect to terminate such services, as part of the Shared Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement.” We also have a warehouse in Belgium operated by a third-party logistics provider to support our wholesale orders for customers located in Europe. There can be no assurance that we will be able to enter into other contracts for an alternate or replacement distribution centers on acceptable terms or at all. Such an event could disrupt our operations. In addition, because substantially all of our products are distributed from one location, our operations could also be interrupted by labor difficulties, or by floods, fires, earthquakes or other natural disasters near such facility. We maintain business interruption insurance and are a beneficiary under similar Kellwood insurance policies related to Kellwood assets or services we will continue to utilize under the Shared Services Agreement. These policies, however, may not adequately protect us from the adverse effects that could result from significant disruptions to our distribution system. If we encounter problems with our distribution system, our ability to meet customer expectations, manage inventory, complete sales and achieve targeted operating efficiencies could be harmed. Any of the foregoing factors could have a material adverse effect on our business, financial condition and operating results.
The extent of our foreign sourcing may adversely affect our business.
Our products are primarily produced by, and purchased or procured from, independent manufacturing contractors located outside of the U.S., with approximately 94% of our total revenue for fiscal 2012 and 93% of our total revenue for the first six months of fiscal 2013 attributable to manufacturing contractors located outside of the U.S. These manufacturing contractors are located mainly in countries in Asia and South America, with approximately 70% and 21% of our purchases for fiscal 2012 and approximately 73% and 21% of our purchases for the first six months of fiscal 2013, attributable to manufacturing contractors located in China and Peru, respectively. A manufacturing contractor’s failure to ship products to us in a timely manner or to meet the required quality standards
 
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could cause us to miss the delivery date requirements of our customers for those items. The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us. As a result of the magnitude of our foreign sourcing, our business is subject to the following risks:
 
 	Ÿ 	 	political and economic instability in countries or regions, especially Asia, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods;	
 
 	Ÿ 	 	imposition of regulations, quotas and other trade restrictions relating to imports, including quotas imposed by bilateral textile agreements between the U.S. and foreign countries;	
 
 	Ÿ 	 	imposition of increased duties, taxes and other charges on imports;	
 
 	Ÿ 	 	labor union strikes at ports through which our products enter the U.S.;	
 
 	Ÿ 	 	labor shortages in countries where contractors and suppliers are located;	
 
 	Ÿ 	 	a significant decrease in availability or an increase in the cost of raw materials;	
 
 	Ÿ 	 	restrictions on the transfer of funds to or from foreign countries;	
 
 	Ÿ 	 	disease epidemics and health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;	
 
 	Ÿ 	 	the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced;	
 
 	Ÿ 	 	increases in the costs of fuel, travel and transportation;	
 
 	Ÿ 	 	reduced manufacturing flexibility because of geographic distance between our foreign manufacturers and us, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and	
 
 	Ÿ 	 	violations by foreign contractors of labor and wage standards and resulting adverse publicity.	
If these risks limit or prevent us from manufacturing products in any significant international market, prevent us from acquiring products from foreign suppliers, or significantly increase the cost of our products, our operations could be seriously disrupted until alternative suppliers are found or alternative markets are developed, which could negatively impact our business.
We do not have written agreements with any of our third-party manufacturing contractors. As a result, any single manufacturing contractor could unilaterally terminate its relationship with us at any time. Two of our manufacturers in China, one of which we have worked with since our inception in 2002 and the other with whom we have worked for over five years, accounted for the production of approximately 25% and 23.5% of our finished products during fiscal 2012 and the first six months of fiscal 2013, respectively. Supply disruptions from these manufacturers (or any of our other manufacturers) could have a material adverse effect on our ability to meet customer demands, if we are unable to source suitable replacement materials at acceptable prices or at all. Our inability to promptly replace manufacturing contractors that terminate their relationships with us or cease to provide high quality products in a timely and cost-efficient manner could have a material adverse effect on our business, financial condition and operating results.
 
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Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs and cause our operating results and financial condition to suffer.
Fluctuations in the price, availability and quality of the fabrics or other raw materials, particularly cotton, leather, and synthetics used in our manufactured apparel, could have a material adverse effect on cost of sales or our ability to meet customer demands. The prices of fabrics depend largely on the market prices of the raw materials used to produce them. The price and availability of the raw materials and, in turn, the fabrics used in our apparel may fluctuate significantly, depending on many factors, including crop yields, weather patterns, labor costs and changes in oil prices. We may not be able to create suitable design solutions that utilize raw materials with attractive prices or, alternatively, to pass higher raw materials prices and related transportation costs on to our customers. We are not always successful in our efforts to protect our business from the volatility of the market price of raw materials, and our business can be materially affected by dramatic movements in prices of raw materials. The ultimate effect of this change on our earnings cannot be quantified, as the effect of movements in raw materials prices on industry selling prices are uncertain, but any significant increase in these prices could have a material adverse effect on our business, financial condition and operating results.
Our reliance on independent manufacturers could cause delays or quality issues which could damage customer relationships.
We use independent manufacturers to assemble or produce all of our products, whether inside or outside the U.S. We are dependent on the ability of these independent manufacturers to adequately finance the production of goods ordered and maintain sufficient manufacturing capacity. The use of independent manufacturers to produce finished goods and the resulting lack of direct control could subject us to difficulty in obtaining timely delivery of products of acceptable quality. We generally do not have long-term contracts with any independent manufacturers. Alternative manufacturers, if available, may not be able to provide us with products or services of a comparable quality, at an acceptable price or on a timely basis. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. There can be no assurance that there will not be a disruption in the supply of our products from independent manufacturers or, in the event of a disruption, that we would be able to substitute suitable alternative manufacturers in a timely manner. The failure of any independent manufacturer to perform or the loss of any independent manufacturer could have a material adverse effect on our business, results of operations and financial condition.
If our independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity.
We have established and currently maintain operating guidelines which promote ethical business practices such as fair wage practices, compliance with child labor laws and other local laws. While we monitor compliance with those guidelines, we do not control our independent manufacturers or their business practices. Accordingly, we cannot guarantee their compliance with our guidelines. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations.
Violation of labor or other laws by our independent manufacturers or the divergence of an independent manufacturer’s labor or other practices from those generally accepted as ethical in the U.S. or other markets in which we do business could also attract negative publicity for us and our brand. From time to time, our audit results have revealed a lack of compliance in certain respects, including with respect to local labor, safety and environmental laws. Other apparel companies have faced criticism after highly-publicized incidents or compliance issues have occurred or been exposed at factories producing their products. To the extent our manufacturers do not bring their operations into
 
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compliance with such laws or resolve material issues identified in any of our audit results, we may face similar criticism and negative publicity. This could diminish the value of our brand image and reduce demand for our merchandise. In addition, other apparel companies have encountered organized boycotts of their products in such situations. If we, or other companies in our industry, encounter similar problems in the future, it could harm our brand image, stock price and results of operations.
Monitoring compliance by independent manufacturers is complicated by the fact that expectations of ethical business practices continually evolve, may be substantially more demanding than applicable legal requirements and are driven in part by legal developments and by diverse groups active in publicizing and organizing public responses to perceived ethical shortcomings. Accordingly, we cannot predict how such expectations might develop in the future and cannot be certain that our guidelines would satisfy all parties who are active in monitoring and publicizing perceived shortcomings in labor and other business practices worldwide.
Our operating results are subject to seasonal and quarterly variations in our net revenue and income from operations, which could cause the price of our common stock to decline.
We have experienced, and expect to continue to experience, seasonal variations in our net revenue and income from operations. Seasonal variations in our net revenue are primarily related to increased sales of our products during our fiscal third and fourth quarters, reflecting our historical strength in sales during the fall and holiday seasons. Historically, seasonable variations in our income from operations have been driven principally by increased net revenue in such fiscal quarters.
Our rapid growth may have overshadowed whatever seasonal or cyclical factors might have influenced our business to date. In addition, as our revenue mix evolves over time to include more sales from additional retail stores, we may see an increase in the percentage of sales occurring during the fourth quarter. Such seasonal or cyclical variations in our business may harm our results of operations in the future, if we do not plan inventory appropriately, if customer shopping patterns fluctuate during such seasonal periods or if bad weather during the fourth quarter constrains shopping activity.
Any future seasonal or quarterly fluctuations in our results of operations may not match the expectations of market analysts and investors to assess the longer-term profitability and strength of our business at any particular point, which could lead to increased volatility in our stock price. Increased volatility could cause our stock price to suffer in comparison to less volatile investments.
We are subject to risks associated with leasing retail space, are generally subject to long-term non-cancelable leases and are required to make substantial lease payments under our operating leases, and any failure to make these lease payments when due would likely harm our business, profitability and results of operations.
We do not own any of our stores, but instead lease all of our retail stores under operating leases. Our leases generally have initial terms of 10 years, and generally can be extended only for one additional 5-year term. All of our leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount. Most of our leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities, and we generally cannot cancel these leases at our option. Additionally, certain of our leases allow the lessor to terminate the lease if we do not achieve a specified gross sales threshold. We have experienced circumstances in the past where landlords have attempted to invoke these contractual provisions. Although we believe we will achieve the required threshold to continue those leases, we cannot assure you that we will do so. Any loss of our store locations due to underperformance may harm our results of operations, stock price and reputation.
 
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Payments under these leases account for a significant portion of our SG&A expenses. For example, as of August 31, 2013, we were a party to operating leases associated with our retail stores requiring future minimum lease payments of $6.8 million in the aggregate through fiscal 2013 and approximately $55.2 million thereafter. We expect that any new retail stores we open will also be leased by us under operating leases, which will further increase our operating lease expenses and require significant capital expenditures. Our substantial operating lease obligations could have significant negative consequences, including, among others:
 
 	Ÿ 	 	increasing our vulnerability to general adverse economic and industry conditions;	
 
 	Ÿ 	 	limiting our ability to obtain additional financing;	
 
 	Ÿ 	 	requiring a substantial portion of our available cash to pay our rental obligations, thus reducing cash available for other purposes;	
 
 	Ÿ 	 	limiting our flexibility in planning for or reacting to changes in our business or in the industry in which we compete; and	
 
 	Ÿ 	 	placing us at a disadvantage with respect to some of our competitors.	
We depend on cash flow from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from borrowings under our new credit facilities or from other sources, we may not be able to service our operating lease expenses, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which would harm our business.
In addition, additional sites that we lease are likely to be subject to similar long-term non-cancelable 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 if we cannot negotiate a mutually acceptable termination payment. 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. Of our existing leases, one retail lease expires in fiscal 2013 and no existing retail leases expire in fiscal 2014. 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.
The Patient Protection and Affordable Care Act may materially increase our costs and/or make it harder for us to compete as an employer.
The Patient Protection and Affordable Care Act imposed new mandates on employers, including a requirement effective January 1, 2014 (which has temporarily been extended to January 1, 2015 due to a recent executive order) that employers with 50 or more full-time employees provide “credible” health insurance to employees or pay a financial penalty. Given our current health plan design, and assuming the law is implemented without significant changes, these mandates could materially increase our costs. Moreover, if we choose to opt out of offering health insurance to our employees, we may become less attractive as an employer and it may be harder for us to compete for qualified employees.
System security risk issues could disrupt our internal operations or information technology services, and any such disruption could negatively impact our net sales, increase our expenses and harm our reputation.
Experienced computer programmers and hackers, and even internal users, may be able to penetrate our network security and misappropriate our confidential information or that of third parties,
 
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including our customers, create system disruptions or cause shutdowns. In addition, employee error, malfeasance or other errors in the storage, use or transmission of any such information could result in a disclosure to third parties outside of our network. As a result, we could incur significant expenses addressing problems created by any such inadvertent disclosure or any security breaches of our network. This risk is heightened because we collect and store customer information, including credit card information, and use certain customer information for our marketing purposes. In addition, we rely on third parties for the operation of our website, www.vince.com , and for the various social media tools and websites we use as part of our marketing strategy.
Consumers are increasingly concerned over the security of personal information transmitted over the internet, consumer identity theft and user privacy, and any compromise of customer information could subject us to customer or government litigation and harm our reputation, which could adversely affect our business and growth. Moreover, we could incur significant expenses or disruptions of our operations in connection with system failures or breaches. In addition, sophisticated hardware and operating system software and applications that we procure form third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems. The costs to us to eliminate or alleviate security problems, viruses and bugs, or any problems associated with the outsourced services could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impeded our sales, distribution or other critical functions. In addition to taking the necessary precautions ourselves, we require that third-party service providers implement reasonable security measures to protect our customers’ identity and privacy. We do not, however, control these third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future.
Changes in laws, including employment laws and laws related to our merchandise, could make conducting our business more expensive or otherwise 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 or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities. If these regulations were to change or were violated by our management, employees, vendors, independent manufacturers or partners, the costs of certain goods could increase, or we could experience delays in shipments of our products, 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.
In addition to increased regulatory compliance requirements, changes in laws could make ordinary conduct of business more expensive or require us to change the way we do business. For example, changes in federal and state minimum wage laws could raise the wage requirements for certain of our employees at our retail locations, which would increase our selling costs and may cause us to reexamine our wage structure for such employees. Other laws related to employee benefits and treatment of employees, including laws related to limitations on employee hours, supervisory status, leaves of absence, mandated health benefits, overtime pay, unemployment tax rates and citizenship requirements, could negatively impact us, by increasing compensation and benefits costs which would in turn reduce our profitability.
Moreover, changes in product safety or other consumer protection laws could lead to increased costs to us for certain merchandise, or additional labor costs associated with readying merchandise for sale. It is often difficult for us to plan and prepare for potential changes to applicable laws and future actions or payments related to such changes could be material to us.
 
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If we are unable to attract, assimilate and retain new employees, we may not be able to grow or successfully operate our business.
To be successful in continuing to grow our business, we will need to continue to attract, assimilate, retain and motivate highly talented employees with a range of skills and experience, especially at the store management levels. Although we have recently hired and trained new store managers and experienced sales associates at several of our retail locations, competition for employees in our industry is intense and we may from time to time experience difficulty in retaining our associates or attracting the additional talent necessary to support the growth of our business. These problems could be exacerbated as we embark on our strategy of opening new retail stores over the next several years. We will also need to attract and retain other professionals across a range of disciplines, including design, production, sourcing and international business, as we develop new product categories and continue to expand our international presence. Furthermore, we will need to recruit employees to provide, or enter into consulting or outsourcing arrangements with respect to the provision of, services to be provided by Kellwood under the Shared Services Agreement when Kellwood no longer provides such services thereunder. If we are unable to attract, assimilate and retain additional employees with the necessary skills, we may not be able to grow or successfully operate our business.
Our operations will be restricted by our new credit facilities.
We intend to enter into a new revolving credit facility and a new term loan facility in connection with the consummation of this offering. We expect that our new credit facilities will contain significant restrictive covenants. These covenants may impair our financing and operational flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements. Specifically, such covenants will likely restrict our ability and, if applicable, the ability of our subsidiaries to, among other things:
 
 	Ÿ 	 	incur additional debt;	
 
 	Ÿ 	 	make certain investments and acquisitions;	
 
 	Ÿ 	 	enter into certain types of transactions with affiliates;	
 
 	Ÿ 	 	use assets as security in other transactions;	
 
 	Ÿ 	 	pay dividends;	
 
 	Ÿ 	 	sell certain assets or merge with or into other companies;	
 
 	Ÿ 	 	guarantee the debt of others;	
 
 	Ÿ 	 	enter into new lines of businesses;	
 
 	Ÿ 	 	make capital expenditures;	
 
 	Ÿ 	 	prepay, redeem or exchange our debt; and	
 
 	Ÿ 	 	form any joint ventures or subsidiary investments.	
Our ability to comply with the covenants and other terms of our debt obligations will depend on our future operating performance. If we fail to comply with such covenants and terms, we would be required to obtain waivers from our lenders to maintain compliance with our debt obligations. If we are unable to obtain any necessary waivers and the debt is accelerated, a material adverse effect on our financial condition and future operating performance would likely result. See “Additional Information Related to Vince—Description of Certain Indebtedness of Vince, LLC.” The terms of our debt obligations may restrict or delay our ability to fulfill our obligations under the Tax Receivable
 
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Agreement. In accordance with the terms of the Tax Receivable Agreement, delayed or unpaid amounts thereunder would accrue interest at a default rate of one-year LIBOR plus 500 basis points until paid. Our obligations under the Tax Receivable Agreement could result in a failure to comply with covenants or financial ratios required by our debt financing agreements and could result in an event of default under such a debt financing. See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement” for more information regarding the terms of the Tax Receivable Agreement.
We could incur significant costs in complying with environmental, health and safety laws or as a result of satisfying any liability or obligation imposed under such laws.
Our operations are subject to various federal, state, local and foreign environmental, health and safety laws and regulations. We could be held liable for the costs to address contamination of any real property ever owned, operated or used as a disposal site. In addition, in the event that Kellwood Company becomes financially incapable of addressing the environmental liability incurred prior to the structural reorganization separating Kellwood Company from Vince, LLC, a third-party may file suit and attempt to allege that AHC engaged in a fraudulent transfer by arguing that the purpose of the separation of the non-Vince assets from AHC was to insulate AHC assets from the environmental liability. For example, pursuant to a Consent Decree with the U.S. Environmental Protection Agency (“EPA”) and the State of Missouri, a non-Vince subsidiary of AHC is conducting a cleanup of contamination at the site of a plant in New Haven, Missouri, which occurred between 1973 and 1985. Kellwood Company has posted a letter of credit in the amount of $5.9 million as a performance guarantee for the estimated cost of the required remediation work. If, despite the financial assurance provided by Kellwood Company as required by the EPA, Kellwood Company became financially unable to address this remediation, and if the corporate separateness of Vince, LLC is disregarded or if a fraudulent transfer is found to have occurred, Vince, LLC could be liable for the full amount of the remediation. If this were to occur or if we were to became liable for other environmental liabilities or obligations, it could have a material adverse effect on our business, financial condition or results of operations.
We will incur significant expenses as a result of being a public company, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer.
We will incur significant legal, accounting, insurance, share-based compensation and other expenses as a result of being a public company. The Sarbanes-Oxley Act, as well as related rules implemented by the U.S. Securities and Exchange Commission (the “SEC”), and the securities regulators and by the NYSE, have required changes in corporate governance practices of public companies. We expect that compliance with these laws, rules and regulations, including compliance with Section 404(b) of the Sarbanes-Oxley Act once we are no longer an emerging growth company, will substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or to incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. To assist in the recruitment of qualified directors, officers and other members of senior management and to help align their interests with those of our stockholders, we intend to make equity grants under the Vince 2013 Incentive Plan. The Vince, LLC audited financial statements included elsewhere in this prospectus do not include charges for shared based compensation. We will, however, in future periods report charges associated with grants made under the Vince 2013 Incentive Plan as we expect that shared based compensation will constitute a
 
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significant component of our executive compensation program. As a result of the foregoing, we expect an increase in legal, accounting, insurance, share based compensation and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer.
Risks Related to the Restructuring Transactions
Our historical financial information may not be representative of our results as a stand-alone public company.
The historical financial information we have included in this prospectus has been derived from the consolidated financial statements of AHC and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we operated separately from the non-Vince businesses during the historical periods presented. The historical costs and expenses reflected in our consolidated financial statements include charges for certain corporate functions historically provided by Kellwood Company, including centralized legal, accounting, tax, treasury, information technology and other services and infrastructure costs. We and Kellwood believe these charges are reasonable reflections of the historical utilization levels of these services in support of our business. The historical financial information is not necessarily indicative of our future results of operations, financial position, cash flows or costs and expenses. We have not made adjustments to reflect many significant changes that will occur in our cost structure, funding and operations as a result of our separation from the non-Vince businesses, including changes in our employee base, changes in our legal structure, and increased costs associated with being a publicly traded, stand-alone company. For additional information, see “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC,” “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” and Vince, LLC’s historical consolidated financial statements and notes thereto included elsewhere in this prospectus.
Any disputes that arise between us and Kellwood with respect to our past and ongoing relationships could harm our business operations.
Disputes may arise between Kellwood and us in a number of areas relating to our past and ongoing relationships, including:
 
 	Ÿ 	 	intellectual property and technology matters;	
 
 	Ÿ 	 	labor, tax, employee benefit, indemnification and other matters arising from our separation from Kellwood;	
 
 	Ÿ 	 	employee retention and recruiting;	
 
 	Ÿ 	 	business combinations involving us;	
 
 	Ÿ 	 	the nature, quality and pricing of transitional services Kellwood has agreed to provide us; and	
 
 	Ÿ 	 	business opportunities that may be attractive to both Kellwood and us.	
We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. We anticipate that following this offering, affiliates of Sun Capital, who will also continue to control Kellwood after consummation of this offering, will own approximately     % of our common stock and Sun Cardinal, LLC, an affiliate of Sun Capital, will have the ability to designate a majority of our directors.
 
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Third parties may seek to hold us responsible for liabilities related to the non-Vince businesses that we will not retain in the IPO Restructuring Transactions and for liabilities associated with Vince assets not yet transferred to us.
In connection with the separation of the non-Vince businesses from the Vince business in the IPO Restructuring Transactions, Kellwood Company, LLC will remain liable for the obligations related to the non-Vince businesses. Despite this fact, third parties may seek to hold us responsible for liabilities related to the non-Vince businesses. Kellwood Company, LLC has agreed to indemnify us for any claims and losses that may arise related to such liabilities. But if Kellwood Company, LLC is not able to satisfy its related indemnification obligations to us, our results of operations could suffer. See “—Risks Related to Vince—Kellwood provides us with certain key services for our business. If Kellwood fails to perform its obligations to us or if we do not find appropriate replacement services, we may be unable to perform these services or implement substitute arrangements on a timely and cost-effective basis on terms favorable to us” and “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Transfer Agreement” for additional information regarding the risks related to Kellwood’s ability to satisfy its obligations to us and the indemnity to be provided to us by Kellwood Company, LLC pursuant to the terms of that certain transfer agreement to be entered into in connection with the IPO Restructuring Transactions.
We will be required to pay for 85% of certain tax benefits, and could be required to make substantial cash payments in which the stockholders purchasing shares in this offering will not participate.
Immediately prior to the consummation of this offering, we intend to enter into the Tax Receivable Agreement with the Pre-IPO Stockholders. Under the Tax Receivable Agreement, we will be obligated to pay to the Pre-IPO Stockholders an amount equal to 85% of the cash savings in federal, state and local income tax realized by us by virtue of our future use of the federal, state and local net operating loss (“NOLs”), and alternative minimum tax credits held by us as of                     , 2013, together with section 197 intangible deductions (collectively, the “Pre-IPO Tax Benefits”). “Section 197 intangible deductions” means amortization deductions with respect to certain amortizable intangible assets which are held by us and our subsidiaries immediately after this offering. Cash tax savings generally will be computed by comparing our actual federal, state and local income tax liability to the amount of such taxes that we would have been required to pay had such Pre-IPO Tax Benefits not been available to us. While payments made under the Tax Receivable Agreement will depend upon a number of factors, including the amount and timing of taxable income we generate in the future and any future limitations that may be imposed on our ability to use the Pre-IPO Tax Benefits, the payments could be substantial. Assuming the federal, state and local corporate income tax rates presently in effect, no material change in applicable tax law and no limitation on our ability to use the Pre-IPO Tax Benefits under Section 382 of the U.S. Internal Revenue Code, as amended (the “Code”), the cash benefit of the full use of these Pre-IPO Tax Benefits would be approximately $         million, of which 85%, or $         million, is potentially payable to the Pre-IPO Stockholders under the terms of the Tax Receivable Agreement. The Tax Receivable Agreement accordingly could require us to make substantial cash payments in which the stockholders purchasing shares in this offering will not participate.
Although we are not aware of any issue that would cause the U.S. Internal Revenue Service (the “IRS”), to challenge any tax benefits arising under the Tax Receivable Agreement, the affiliates of Sun Capital will not reimburse us for any payments previously made if such benefits subsequently were disallowed, although the amount of any tax savings subsequently disallowed will reduce any future payment otherwise owed to the Pre-IPO Stockholders. For example, if our determinations regarding the applicability (or lack thereof) and amount of any limitations on the NOLs under Section 382 of the Code were to be successfully challenged by the IRS after payments relating to such NOLs had been made to the Pre-IPO Stockholders, we would not be reimbursed by the Pre-IPO Stockholders and our
 
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recovery would be limited to the extent of future payments (if any) otherwise remaining under the Tax Receivable Agreement. As a result, in such circumstances we could make payments to the Pre-IPO Stockholders under the Tax Receivable Agreement in excess of our actual cash tax savings. Furthermore, while we will generally only make payments under the Tax Receivable Agreement after we have recognized a cash flow benefit from the utilization of the Pre-IPO Tax Benefits, (other than upon a change of control or other acceleration event), the payments required under the agreement could require us to use a substantial portion of our cash from operations for those purposes.
At the effective date of the Tax Receivable Agreement, any liability recognized will be accounted for in our financial statements as a reduction of additional paid-in capital. Subsequent changes in the Tax Receivable Agreement liability will be recorded through earnings in operating expenses. Although we currently have a valuation allowance on the entire amount of NOLs, if we continue to be profitable, the valuation allowance could be reduced or eliminated. Even if the NOLs are available to us, the Tax Receivable Agreement will operate to transfer significantly all of the benefit to the Pre-IPO Stockholders. Additionally, the payments we make to the Pre-IPO Stockholders under the Tax Receivable Agreement are not expected to give rise to any incidental tax benefits to us, such as deductions or an adjustment to the basis of our assets.
Federal and state laws impose substantial restrictions on the utilization of NOL carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Code. Under the rules, such an ownership change is generally any change in ownership of more than 50 percent of a company’s stock within a rolling three-year period, as calculated in accordance with the rules. The rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning directly or indirectly 5% or more of the stock of the company and any change in ownership arising from new issuances of stock by the company.
At this time, we have not performed a detailed analysis under Section 382 of the Code to determine if the IPO Restructuring Transactions would constitute an ownership change. With this offering and other transactions that have occurred over the past three years, we may trigger or have already triggered an “ownership change” limitation. We may also experience ownership changes in the future as a result of subsequent shifts in stock ownership. As a result, if we earn net taxable income, our ability to use the pre-change NOL carry-forwards (after giving effect to payments to be made to the Pre-IPO Stockholders under the Tax Receivable Agreement) to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. Notwithstanding the foregoing, our preliminary analysis under Section 382 of the Code indicates that the IPO Restructuring Transactions would not trigger an “ownership change” limitation.
If we did not enter into the Tax Receivable Agreement, we would be entitled to realize the full economic benefit of the Pre-IPO Tax Benefits, to the extent allowed by federal, state and local law, including Section 382 of the Code. Subject to exceptions, the Tax Receivable Agreement is designed with the objective of causing our annual cash costs attributable to federal state and local income taxes (without regard to our continuing 15% interest in the Pre-IPO Tax Benefits) to be the same as we would have paid had we not had the Pre-IPO Tax Benefits available to offset our federal, state and local taxable income. As a result, stockholders purchasing shares in this offering will not be entitled to the economic benefit of the Pre-IPO Tax Benefits that would have been available if the Tax Receivable Agreement were not in effect (except to the extent of our continuing 15% interest in the Pre-IPO Tax Benefits).
 
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In certain cases, payments under the Tax Receivable Agreement to the Pre-IPO stockholders may be accelerated and/or significantly exceed the actual benefits we realize in respect of the Pre-IPO Tax Benefits.
Upon the election of an affiliate of Sun Capital to terminate the Tax Receivable Agreement pursuant to a change in control (as defined in the Tax Receivable Agreement) or upon our election to terminate the Tax Receivable Agreement early, all of our payment and other obligations under the Tax Receivable Agreement will be accelerated and will become due and payable. Additionally, the Tax Receivable Agreement provides that in the event that we breach any of our material obligations under the Tax Receivable Agreement by operation of law as a result of the rejection of the Tax Receivable Agreement in a case commenced under Title 11 of the United States Code (the “Bankruptcy Code”) then all of our payment and other obligations under the Tax Receivable Agreement will be accelerated and will become due and payable.
In the case of any such acceleration, we would be required to make an immediate payment equal to 85% of the present value of the tax savings represented by any portion of the Pre-IPO Tax Benefits for which payment under the Tax Receivable Agreement has not already been made, which upfront payment may be made years in advance of the actual realization of such future benefits. Such payments could be substantial and could exceed our actual cash tax savings from the Pre-IPO Tax Benefits. In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will have sufficient cash available for that we will be able to finance our obligations under the Tax Receivable Agreement.
If we were to elect to terminate the Tax Receivable Agreement immediately after this offering, based on a discount rate equal to monthly LIBOR plus 300 basis points, we estimate that we would be required to pay $         million in the aggregate under the Tax Receivable Agreement. See “Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement.”
Risks Related to AHC
General economic conditions in the U.S., Europe and other parts of the world, including a continued weakening of the economy and restricted credit markets, can affect consumer confidence and consumer spending patterns.
The apparel industry has historically been subject to cyclical variations, recessions in the general economy or uncertainties regarding future economic prospects that affect consumer spending habits which could negatively impact AHC’s business overall, the carrying value of AHC’s tangible assets and intangible assets and specifically sales, gross margins and profitability. The success of AHC’s operations depends on consumer spending. Consumer spending is impacted by a number of factors, including actual and perceived economic conditions affecting disposable consumer income (such as unemployment, wages, energy costs, consumer debt levels, etc.), business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets where AHC’s products are sold.
Recent global economic conditions have included significant recessionary pressures and declines in employment levels, disposable income and actual and/or perceived wealth and further declines in consumer confidence and economic growth. These conditions have led and could lead to continued substantial declines in consumer spending over the foreseeable future and may have resulted in a resetting of consumer spending habits that makes it unlikely that spending will return to prior levels for the foreseeable future. The current depressed economic environment has been characterized by a
 
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dramatic decline in consumer discretionary spending and has disproportionately affected retailers and sellers of consumer goods, particularly those whose goods are viewed as discretionary purchases, including fashion apparel such as AHC brands. While there have been occasional signs of stabilization in the North American markets during 2012, a shift towards continued recessionary conditions could adversely impact AHC’s sales volumes and overall profitability in the future. Further, the European debt crisis resulting from growing concerns that European countries could default on their national debt, have caused instability in the European economy. Continued economic volatility and declines in the value of the Euro could negatively impact the global economy as a whole. Such a condition would have a material adverse impact on the profitability and liquidity of AHC’s international operations, as well as hinder AHC’s ability to grow through expansion in the international markets.
Economic conditions have also led to a highly promotional environment and strong discounting pressure from both AHC’s wholesale and retail customers, which have had a negative effect on its revenues and profitability. This promotional environment may likely continue even after economic growth returns, as AHC expects consumer spending trends are likely to remain at historically depressed levels for the foreseeable future. The domestic and international political situation also affects consumer confidence. The threat, outbreak or escalation of terrorism, military conflicts or other hostilities could lead to further decreases in consumer spending.
Intense competition in the apparel industry could reduce AHC’s sales and profitability.
As an apparel company, AHC faces intense competition from other domestic and foreign apparel, footwear and accessories producers and retailers. Competition may result in pricing pressures, reduced profit margins or lost market share or failure to grow AHC’s market share, any of which could substantially harm its business and results of operations. Competition is based on many factors including, without limitation, the following:
 
 	Ÿ 	 	establishing and maintaining favorable brand recognition;	
 
 	Ÿ 	 	developing products that appeal to consumers;	
 
 	Ÿ 	 	pricing products appropriately;	
 
 	Ÿ 	 	determining and maintaining product quality;	
 
 	Ÿ 	 	obtaining access to sufficient floor space in retail outlets;	
 
 	Ÿ 	 	providing appropriate services and support to retailers;	
 
 	Ÿ 	 	maintaining and growing market share;	
 
 	Ÿ 	 	maintaining key employees; and	
 
 	Ÿ 	 	protecting intellectual property.	
Competition in the apparel industry is intense and is dominated by a number of very large brands, many of which have longer operating histories, larger customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than AHC does. These capabilities of AHC’s competitors may allow them to better withstand downturns in the economy or apparel industry. The aggressive and competitive nature of the apparel industry may result in lower prices for AHC’s products and decreased gross profit margins, either of which may materially adversely affect sales and profitability. Any increased competition, or AHC’s failure to adequately address any of these competitive factors, could result in reduced sales, which could adversely affect AHC’s business, financial condition and operating results.
 
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AHC’s business will suffer if AHC fails to continually anticipate fashion trends and consumer tastes.
Customer tastes and fashion trends can change rapidly. AHC may not be able to anticipate, gauge or respond to these changes within a timely manner. If AHC misjudges the market for its products or product groups, or if AHC fails to identify and respond appropriately to changing consumer demands and fashion trends, it may be faced with unsold finished goods inventory, which could materially adversely affect expected operating results and decrease sales, gross margins and profitability.
Alternatively, even if AHC reacts appropriately to changes in fashion trends and consumer preferences, consumers may consider its various brand images to be outdated or associate its brands with styles that are no longer popular or trend-setting. Any of these outcomes could have a material adverse effect on AHC’s brands, business and results of operations.
The apparel industry has relatively long lead times for the design and production of products. Consequently, AHC must in some cases commit to production in advance of orders based on forecasts of customer and consumer demand. If AHC fails to forecast demand accurately, it may under-produce or over-produce a product and encounter difficulty in filling customer orders or in liquidating excess inventory. Additionally, if AHC over-produces a product based on an aggressive forecast of demand, retailers may not be able to sell the product and cancel future orders or require retrospective price adjustments. These outcomes could have a material adverse effect on sales and brand image and adversely impact sales, gross margins and profitability.
A substantial portion of AHC’s revenue is derived from a small number of large wholesale partners, and the loss of any of these wholesale partners could substantially reduce AHC’s total revenue.
A small number of AHC’s wholesale partners account for a significant portion of its total revenue. Total revenue to AHC’s ten largest wholesale partners was 55% of its total revenue for fiscal 2012 and 60% for the first six months of fiscal 2013. AHC does not have written agreements with any of its wholesale partners, and purchases generally occur on an order-by-order basis. A decision by any of AHC’s major wholesale partners, whether motivated by marketing strategy, competitive conditions, financial difficulties or otherwise, to decrease significantly the amount of merchandise purchased from AHC or its licensing partners, or to change their manner of doing business with AHC or its licensing partners, could substantially reduce AHC’s revenue and have a material adverse effect on its profitability. During the past several years, the retail industry has experienced a great deal of consolidation and other ownership changes, and AHC expects such changes will continue. In addition, store closings by AHC’s wholesale partners decrease the number of stores carrying its products, while the remaining stores may purchase a smaller amount of AHC’s products and may reduce the retail floor space designated for AHC’s brands. In the future, retailers may further consolidate, undergo restructurings or reorganizations, realign their affiliations or reposition their stores’ target markets. Any of these types of actions could decrease the number of stores that carry AHC’s products or increase the ownership concentration within the retail industry. These changes could decrease AHC’s opportunities in the market, increase its reliance on a diminishing number of large wholesale partners and decrease AHC’s negotiating strength with its wholesale partners. These factors could have a material adverse effect on AHC’s business, financial condition and operating results.
Consolidation and change in the retail industry may eliminate existing or potential customers.
A number of apparel retailers have experienced significant changes and difficulties over the past several years, including consolidation of ownership, increased centralization of buying decisions,
 
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restructurings, bankruptcies and liquidations. During past years, various apparel retailers, including some of AHC’s customers, have experienced financial problems including bankruptcy that have increased the risk of extending credit to those retailers. Financial problems with respect to any of AHC’s customers could cause it to reduce or discontinue business with those customers or require AHC to assume more credit risk relating to those customers’ receivables, either of which could have a material adverse effect on Kellwood’s business, results of operations and financial condition.
There has been, and continues to be, merger, acquisition and consolidation activity in the retail industry. In 2012, the apparel industry experienced a number of consolidation agreements and acquisitions by private-equity investors. If consumer confidence and overall economic conditions continue to recover in the foreseeable future, AHC would expect consolidation and merger activity to continue. Future consolidation could reduce the number of AHC’s customers and potential customers. A smaller market for AHC’s products could have a material adverse impact on its business and results of operations. In addition, it is possible that the larger customers, which result from mergers or consolidations, could decide to perform many of the services that AHC currently provides. If that were to occur, it could cause AHC’s business to suffer.
With increased consolidation in the retail industry, AHC is increasingly dependent upon key retailers whose bargaining strength and share of AHC’s business is growing. Accordingly, AHC faces greater pressure from these customers to provide more favorable trade terms, often in form of customers requiring AHC to provide price concessions on prior shipments as a prerequisite for obtaining future orders. AHC could be negatively affected by changes in the policies or negotiating positions of its customers. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of AHC’s products at retail. To the extent AHC’s customers have more of its goods on hand at the end of the season, there will be greater pressure for AHC to grant markdown concessions on prior shipments. Additionally, AHC could be negatively affected by changes in the policies or negotiating positions of its customers. AHC’s inability to develop satisfactory programs and systems to satisfy these customers could adversely affect operating results in any reporting period.
AHC is reliant on its retail customers for the sale of its goods.
AHC is primarily a wholesale manufacturer and marketer of womens, juniors and girls apparel. AHC’s customers are primarily retailers who sell AHC’s goods in their retail stores or online. AHC’s success in selling its products is largely dependent on its retail customers’ success in selling to their customers, the end users of AHC’s products. The success of AHC’s retail customers is in turn subject to a number of factors, many of which are outside of AHC’s and their control.
Loss of key personnel could disrupt AHC’s operations.
AHC’s continued success is dependent on its ability to attract, retain and motivate qualified management, designers, administrative and sales personnel to support existing operations and future growth. Competition for qualified personnel in the apparel industry is intense, and AHC competes for these individuals with other companies that in many cases have greater financial and other resources. The loss of the services of any members of senior management or the inability to attract and retain other qualified personnel could have a material adverse effect on AHC’s business, results of operations and financial condition.
The extent of AHC’s foreign sourcing may adversely affect AHC’s business.
AHC’s products are primarily produced by, and purchased or procured from, independent manufacturing contractors located mainly in countries in Asia. A manufacturing contractor’s failure to
 
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ship products to AHC in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of AHC’s customers for those items. The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on it. As a result of the magnitude of AHC’s foreign sourcing, its business is subject to the following risks:
 
 	Ÿ 	 	political and economic instability in countries, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods;	
 
 	Ÿ 	 	imposition of regulations and quotas relating to imports, including quotas imposed by bilateral textile agreements between the United States and foreign countries;	
 
 	Ÿ 	 	imposition of increased duties, taxes and other charges on imports;	
 
 	Ÿ 	 	significant fluctuation of the value of the dollar against foreign currencies;	
 
 	Ÿ 	 	labor shortages in countries where contractors and suppliers are located;	
 
 	Ÿ 	 	a significant decrease in availability or an increase in the cost of raw materials;	
 
 	Ÿ 	 	restrictions on the transfer of funds to or from foreign countries;	
 
 	Ÿ 	 	disease epidemics and health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;	
 
 	Ÿ 	 	the migration and development of manufacturing contractors, which could affect where AHC’s products are or are planned to be produced;	
 
 	Ÿ 	 	increases in the costs of fuel, travel and transportation;	
 
 	Ÿ 	 	reduced manufacturing flexibility because of geographic distance between AHC’s foreign manufacturers and us, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product;	
 
 	Ÿ 	 	increases in manufacturing costs in the event of a decline in the value of the United States dollar against major world currencies, particularly the Chinese Yuan, and higher labor costs being experienced by our foreign manufacturers in China; and	
 
 	Ÿ 	 	violations by foreign contractors of labor and wage standards and resulting adverse publicity.	
If these risks limit or prevent AHC from selling or manufacturing products in any significant international market, prevent AHC from acquiring products from foreign suppliers, or significantly increase the cost of its products, AHC’s operations could be seriously disrupted until alternative suppliers are found or alternative markets are developed, which could negatively impact its business.
The success of AHC’s licenses depends on the value of the licensed brands.
Some of AHC’s products are produced under license agreements with third parties. Similarly, AHC licenses some of its brand names to other companies. Brands that AHC licenses from third parties are integral to its business as is the implementation of AHC’s strategies for growing and expanding these brands and trademarks. AHC markets some of its products under the names and brands of recognized designers. AHC’s sales of these products could decline if any of those designer’s images or reputations were to be negatively impacted. Additionally, AHC relies on continued good relationships with both licensees and licensors, of certain trademarks and brand names. Adverse actions by any of these third parties could damage the brand equity associated with these trademarks
 
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and brands, which could have a material adverse effect on AHC’s business, results of operations and financial condition.
AHC’s competitive position could suffer if its intellectual property rights are not protected.
AHC believes that its trademarks, patents and designs are of great value. From time to time, third parties have challenged, and may in the future try to challenge, AHC’s ownership of its intellectual property. AHC is susceptible to others imitating its products and infringing its intellectual property rights. AHC Imitation or counterfeiting of AHC’s products or infringement of its intellectual property rights could diminish the value of AHC’s brands or otherwise adversely affect AHC’s revenues. The actions AHC has taken to establish and protect its trademarks and other intellectual property rights may not be adequate to prevent imitation of its products by others or to prevent others from seeking to invalidate AHC’s trademarks or block sales of its products as a violation of the trademarks and intellectual property rights of others. In addition, others may assert rights in, or ownership of, AHC’s trademarks and other intellectual property rights or in similar marks or marks that AHC licenses and/or market and AHC may not be able to successfully resolve these conflicts to its satisfaction. AHC may need to resort to litigation to enforce its intellectual property rights, which could result in substantial costs and diversion of resources. Successful infringement claims against AHC could result in significant monetary liability or prevent AHC from selling some of its products. In addition, resolution of claims may require AHC to redesign its products, license rights from third parties or cease using those rights altogether. Any of these events could harm AHC’s business and cause its results of operations, liquidity and financial condition to suffer.
AHC currently owns the exclusive right to use various domain names containing or relating to its brands. AHC may be unable to prevent third parties from acquiring and using domain names that infringe or otherwise decrease the value of its trademarks and other proprietary rights. Failure to protect AHC’s domain names could adversely affect its brands and make it more difficult for users to find AHC’s websites.
Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs and cause AHC’s operating results and financial condition to suffer.
Fluctuations in the price, availability and quality of the fabrics or other raw materials, particularly cotton, leather, and synthetics used in AHC’s manufactured apparel, could have a material adverse effect on cost of sales or AHC’s ability to meet customer demands. The prices of fabrics depend largely on the market prices of the raw materials used to produce them. The price and availability of the raw materials and, in turn, the fabrics used in AHC’s apparel may fluctuate significantly, depending on many factors, including crop yields, weather patterns, labor costs and changes in oil prices. AHC may not be able to pass higher raw materials prices and related transportation costs on to its customers. AHC is not always successful in its efforts to protect its business from the volatility of the market price of raw materials, and AHC’s business can be materially affected by dramatic movements in prices of raw materials. The ultimate effect of this change on AHC’s earnings cannot be quantified, as the effect of movements in raw materials prices on industry selling prices are uncertain, but any significant increase in these prices could have a material adverse effect on its business, financial condition and operating results.
Problems with AHC’s distribution system could harm its ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies.
AHC operates two distribution facilities in City of Industry, California and St. George, Utah, as well as utilizing seven third-party distribution facilities. AHC’s ability to meet the needs of its wholesale partners and its own retail stores depends on the proper operation of these distribution facilities.
 
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Because a substantial portion of AHC’s products are distributed from these locations, AHC’s operations could also be interrupted by labor difficulties, or by floods, fires, earthquakes or other natural disasters near such either facility. AHC maintains business interruption insurance, but it may not adequately protect AHC from the adverse effects that could result from significant disruptions to its distribution system, such as the long-term loss of customers or an erosion of AHC’s brand image. If AHC encounters problems with its distribution system, its ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies could be harmed. Any of the foregoing factors could have a material adverse effect on AHC’s business, financial condition and operating results.
AHC’s ability to source its merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome.
The majority of AHC’s products are currently manufactured for it outside of the U.S. The U.S. and the countries in which AHC’s products are produced or sold internationally have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels. Countries impose, modify and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for AHC to predict future developments regarding tariffs and other trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost or reduce the supply of products available to AHC or may require AHC to modify its supply chain organization or other current business practices, any of which could harm AHC’s business, financial condition and results of operations.
If AHC is unable to accurately forecast customer demand for its products AHC’s manufacturers may not be able to deliver products to meet its requirements, and this could result in delays in the shipment of products to AHC’s wholesale partners.
AHC provides stock to its wholesale partners, based on its estimates of future demand for particular products. AHC’s inventory management and planning teams determine the number of pieces of each product that AHC will order from its manufacturers based upon past sales of similar products, feedback from focus groups, sales trend information and anticipated retail price. However, if AHC’s inventory and planning teams fail to accurately forecast customer demand, AHC may experience excess inventory levels or a shortage of products.
Factors that could affect AHC’s inventory and planning team’s ability to accurately forecast customer demand for its products include:
 
 	Ÿ 	 	a substantial increase or decrease in consumer demand for AHC’s products or for products of AHC’s competitors;	
 
 	Ÿ 	 	AHC’s failure to accurately forecast customer acceptance for its new products;	
 
 	Ÿ 	 	new product introductions or pricing strategies by competitors;	
 
 	Ÿ 	 	more limited historical store sales information for AHC’s newer markets;	
 
 	Ÿ 	 	weakening of economic conditions or consumer confidence in future economic conditions, which could reduce demand for discretionary items, such as AHC’s products; and	
 
 	Ÿ 	 	acts or threats of war or terrorism which could adversely affect consumer confidence and spending or interrupt production and distribution of AHC’s products and AHC’s raw materials.	
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discount prices, which would cause our gross margin to suffer and could impair the strength and exclusivity of AHC’s brand.
 
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In addition, if AHC underestimates customer demand for its products, AHC’s manufacturers may not be able to deliver products to meet its requirements, and this could result in delays in the shipment of products to AHC’s wholesale partners and may damage our reputation and customer relationships. There can be no assurances that AHC will be able to successfully manage its inventory at a level appropriate for future customer demand.
We could incur significant costs in complying with environmental, health and safety laws or as a result of satisfying any liability or obligation imposed under such laws.
Our operations are subject to various federal, state, local and foreign environmental, health and safety laws and regulations. We could be held liable for the costs to address contamination of any real property we have ever owned, operated or used as a disposal site. For example, pursuant to a Consent Decree with the EPA and the State of Missouri, we are conducting a cleanup of contamination at the site of a plant in New Haven, Missouri, which occurred between 1973 and 1985. As of February 2, 2013 AHC’s best estimate of the discounted value of the total obligation for required and voluntary remedial activities at this New Haven site is $9.6 million. If AHC’s estimated amount of the
discounted value is incorrect or if AHC were to become liable for other environmental liabilities or obligations, it could have a material adverse effect on its business, financial condition or results of operations.
System security risk issues could disrupt AHC’s internal operations or information technology services, and any such disruption could harm AHC’s net sales, increase our expenses and harm its reputation.
Experienced computer programmers and hackers, and even internal users, may be able to penetrate AHC’s network security and misappropriate AHC’s confidential information or that of third parties, including our customers, create system disruptions or cause shutdowns. In addition, employee error, malfeasance or other errors in the storage, use or transmission of any such information could result in a disclosure to third parties outside of AHC’s network. As a result, AHC could incur significant expenses addressing problems created by any such inadvertent disclosure or any security breaches of its network. This risk is heightened because AHC collects and stores customer information, including credit card information, and use certain customer information for its marketing purposes. In addition, AHC relies on third parties for the operation of its various websites and for the various social media tools and websites AHC uses as part of its marketing strategy.
Consumers are increasingly concerned over the security of personal information transmitted over the internet, consumer identity theft and user privacy, and any compromise of customer information could subject AHC to customer or government litigation and harm AHC’s reputation, which could adversely affect AHC’s business and growth. Moreover, AHC could incur significant expenses or disruptions of its operations in connection with system failures or breaches. In addition, sophisticated hardware and operating system software and applications that AHC procures from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of AHC’s systems. The costs to AHC to eliminate or alleviate security problems, viruses and bugs, or any problems associated with the outsourced services, could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impeded AHC’s sales, distribution or other critical functions. In addition to taking the necessary precautions, AHC requires that third-party service providers implement reasonable security measures to protect its customers’ identity and privacy. AHC does not, however, control these third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future.
 
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There are claims made against AHC from time to time that can result in litigation or regulatory proceedings which could distract management from AHC’s business activities and result in significant liability.
AHC faces the risk of litigation and other claims against it. Litigation and other claims may arise in the ordinary course of its business and include commercial disputes, intellectual property issues, product-oriented allegations and slip and fall claims. In addition, AHC could face a wide variety of associate claims against it, including general discrimination, privacy, labor and employment, ERISA and disability claims. Any claims could result in litigation against AHC and could also result in regulatory proceedings being brought against AHC by various federal and state agencies that regulate its business, including the U.S. Equal Employment Opportunity Commission. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant management time and expense. Litigation and other claims and regulatory proceedings against AHC could result in unexpected expenses and liability, and could also materially and adversely affect AHC’s operations and reputation.
Changes in laws, including employment laws and laws related to AHC’s merchandise, could make conducting AHC’s business more expensive or otherwise change the way AHC does business.
AHC is 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 or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities. If these regulations were to change or were violated by AHC’s management, associates, vendors, buying agents or trading companies, the costs of certain goods could increase, or AHC could experience delays in shipments of its products, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for AHC’s merchandise and hurt its business and results of operations.
In addition to increased regulatory compliance requirements, changes in laws could make ordinary conduct of business more expensive or require us to change the way AHC does business. Other laws related to employee benefits and treatment of associates, including laws related to limitations on associate hours, supervisory status, leaves of absence, mandated health benefits or overtime pay, could negatively impact AHC, such as by increasing compensation and benefits costs for overtime and medical expenses.
Moreover, changes in product safety or other consumer protection laws could lead to increased costs to AHC for certain merchandise, or additional labor costs associated with readying merchandise for sale. It is often difficult for AHC to plan and prepare for potential changes to applicable laws and future actions or payments related to such changes could be material to AHC.
AHC is subject to potential challenges relating to overtime pay and other regulations that impact its employees, which could cause its business, financial condition, results of operations or cash flows to suffer.
U.S. federal and state labor laws govern AHC’s relationship with its employees and affect its operating costs. These laws include minimum wage requirements, overtime pay, unemployment tax rates, workers’ compensation rates and citizenship requirements. These laws change frequently and may be difficult to interpret and apply. In particular, as a retailer, AHC may be subject to challenges regarding the application of overtime and related pay regulations to its employees. A determination that AHC does not comply with these laws could harm its brand image, business, financial condition and results of operation. Additional government-imposed increases in minimum wages, overtime pay, paid
 
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leaves of absence or mandated health benefits could also cause our business, financial condition, results of operations or cash flows to suffer.
Risks Related to this Offering and Our Common Stock
We cannot assure that a market will develop for our common stock or what the price of our common stock will be.
Before this offering, there was no public trading market for our common stock, and we cannot assure you that one will develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price or at all. We cannot predict the prices at which our common stock will trade. The initial public offering price for our common stock will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which our common stock will trade after this offering or to any other established criteria of the value of our business. It is possible that, in future quarters, our operating results may be below the expectations of securities analysts and investors. As a result of these and other factors, the price of our common stock may decline, possibly materially.
Our stock price may be volatile and your investment in our common stock could suffer a decline in value.
Broad market and industry factors may harm the price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuation in the price of our common stock may include, among other things:
 
 	Ÿ 	 	actual or anticipated fluctuations in quarterly operating results or other operating metrics, such as comparable store sales, that may be used by the investment community;	
 
 	Ÿ 	 	changes in financial estimates by us or by any securities analysts who might cover our stock;	
 
 	Ÿ 	 	speculation about our business in the press or the investment community;	
 
 	Ÿ 	 	conditions or trends affecting our industry or the economy generally;	
 
 	Ÿ 	 	stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in the apparel, accessories and retail industries;	
 
 	Ÿ 	 	announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;	
 
 	Ÿ 	 	announcements by our wholesale partners of negative business performance or the projection that future business performance will be negative;	
 
 	Ÿ 	 	changes in product assortment between high and low margin products;	
 
 	Ÿ 	 	capital commitments;	
 
 	Ÿ 	 	our entry into new markets;	
 
 	Ÿ 	 	timing of new store openings;	
 
 	Ÿ 	 	percentage of sales from new stores versus established stores;	
 
 	Ÿ 	 	additions or departures of key business leaders;	
 
 	Ÿ 	 	actual or anticipated sales of our common stock, including sales by our directors, officers or significant stockholders;	
 
 	Ÿ 	 	significant developments relating to our manufacturing, distribution, or supplier relationships;	
 
 	Ÿ 	 	customer purchases of new products from us and our competitors;	
 
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 	Ÿ 	 	investor perceptions of the apparel, accessories and retail industries in general and our company in particular;	
 
 	Ÿ 	 	major catastrophic events;	
 
 	Ÿ 	 	volatility in our stock price, which may lead to higher stock-based compensation expense under applicable accounting standards;	
 
 	Ÿ 	 	changes in accounting standards, policies, guidance, interpretation or principles; and	
 
 	Ÿ 	 	material litigation or government investigations.	
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation, even if it does not result in liability for us, could result in substantial costs to us and divert management’s attention and resources.
We are a “controlled company,” controlled by investment funds advised by affiliates of Sun Capital, whose interests in our business may be different from yours.
Upon consummation of this offering, affiliates of Sun Capital will own approximately     % of our outstanding common stock, assuming the underwriters do not exercise their option to purchase additional shares. As such, affiliates of Sun Capital will, for the foreseeable future, have significant influence over our reporting and corporate management and affairs, and will be able to control virtually all matters requiring stockholder approval. For so long as affiliates of Sun Capital own 30% or more of our outstanding shares of common stock, Sun Cardinal, LLC, a Sun Capital affiliate (“Sun Cardinal”), will have the right to designate a majority of our board of directors. For so long as Sun Cardinal has the right to designate a majority of our board of directors, the directors designated by Sun Cardinal are expected to constitute a majority of each committee of our board of directors, other than the Audit Committee, and the chairman of each of the committees, other than the Audit Committee, is expected to be a director serving on such committee who is designated by Sun Cardinal, provided that, at such time as we are not a “controlled company” under the NYSE corporate governance standards, our committee membership will comply with all applicable requirements of those standards and a majority of our board of directors will be “independent directors,” as defined under the rules of the NYSE.
As a “controlled company,” the rules of the NYSE exempt us from the obligation to comply with certain corporate governance requirements, including the requirements that a majority of our board of directors consists of “independent directors,” as defined under such rules and that we have nominating and corporate governance and compensation committees that are each composed entirely of independent directors. These exemptions do not modify the requirement for a fully independent audit committee, which is permitted to be phased-in as follows: (1) one independent committee member at the time of listing; (2) a majority of independent committee members within 90 days of our initial public offering; and (3) all independent committee members within one year of our initial public offering. Similarly, once we are no longer a “controlled company,” we must comply with the independent board committee requirements as they relate to the nominating and corporate governance and compensation committees, on the same phase-in schedule as set forth above, with the trigger date being the date we are no longer a “controlled company” as opposed to our initial public offering date. Additionally, we will have 12 months from the date we cease to be a “controlled company” to have a majority of independent directors on our board of directors.
Affiliates of Sun Capital will control actions to be taken by us and our board of directors, including amendments to our amended and restated certificate of incorporation and amended and restated bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets. The directors designated by Sun Cardinal will have the authority, subject to the terms of our indebtedness and the rules and regulations of the NYSE, to issue additional stock, implement
 
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stock repurchase programs, declare dividends and make other decisions. The NYSE independence standards are intended to ensure that directors who meet the independence standard are free of any conflicting interest that could influence their actions as directors. Our amended and restated certificate of incorporation will provide that the doctrine of “corporate opportunity” will not apply against Sun Capital or its affiliates, or any of our directors who are associates of, or affiliated with, Sun Capital, in a manner that would prohibit them from investing in competing businesses or doing business with our partners or customers. It is possible that the interests of Sun Capital and its affiliates may in some circumstances conflict with our interests and the interests of our other stockholders, including you . For example, Sun Capital may have different tax positions from other stockholders which could influence their decisions regarding whether and when we should dispose of assets, whether and when we should incur new or refinance existing indebtedness, especially in light of the existence of the Tax Receivable Agreement that we will enter into in connection with this offering, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder. In addition, the structuring of future transactions may take into consideration tax or other considerations of Sun Capital and its affiliates even where no similar benefit would accrue to us. See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement.”
If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution.
If you purchase shares of common stock in this offering, you will incur immediate and substantial dilution in the amount of $         per share, because the assumed initial public offering price of $        , which is the midpoint of the price range listed on the cover page of this prospectus, is substantially higher than the net tangible book value per share of our outstanding common stock. This dilution is due in large part to the fact that affiliates of Sun Capital paid substantially less than the initial public offering price when they acquired their shares of our capital stock in February 2008.
Our business and stock price may suffer as a result of our lack of public company operating experience. In addition, if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
We are a privately-held company. Our lack of recent public company operating experience may make it difficult to forecast and evaluate our future performance. If we are unable to execute our business strategy, either as a result of our inability to effectively manage our business in a public company environment or for any other reason, our business performance, financial condition and results of operations may be harmed. In addition, the trading market for our common stock will depend in part on 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 our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price 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 stock could decrease, which could cause our stock price and trading volume to decline.
We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any dividends on our common stock. We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on
 
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your investment in our common stock if the market price of our common stock increases. Our board of directors retains the discretion to change this policy.
We are a holding company and we are dependent upon distributions from our subsidiaries to pay dividends and taxes and other expenses.
Vince Holding Corp. will be a holding company with no material assets other than its ownership of membership interests in Vince Intermediate Holding, LLC, a holding company that will have no material assets other than its interest in Vince, LLC. Neither Vince Holding Corp. nor Vince Intermediate Holding, LLC will have any independent means of generating revenue. To the extent that we need funds, for a cash dividend to holders of our common stock or otherwise, and Vince Intermediate Holding, LLC or Vince, LLC is restricted from making such distributions under applicable law or regulation or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.
We will file consolidated income tax returns on behalf of Vince Holding Corp. and Vince Intermediate Holding, LLC. Most of our future tax obligations will likely be attributed to the operations of Vince, LLC. Accordingly, most of the payments against the Tax Receivable Agreement will be attributed to the operations of Vince, LLC. We intend to cause Vince, LLC to pay dividends or make funds available to us in an amount sufficient to allow us to pay our taxes and any payments due to the Pre-IPO Stockholders under the Tax Receivable Agreement. If, as a consequence of these various limitations and restrictions, we do not have sufficient funds to pay tax or other liabilities, we may have to borrow funds and thus our liquidity and financial condition could be materially adversely affected. To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest at a default rate of one-year LIBOR plus 500 basis points until paid. See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement” for more information regarding the terms of the Tax Receivable Agreement.
We will have broad discretion over the use of proceeds from this offering after repayment of the Kellwood Note Receivable, and such remaining proceeds will be limited. Additionally, drawings under our new term loan facility will also be used to help repay the Kellwood Note Receivable and we will have no availability under such facility after giving effect to such repayment.
Most of the net proceeds from this offering are being used, along with the borrowings under our new term loan facility, to repay the Kellwood Note Receivable that will be issued to Kellwood Company, LLC in connection with the IPO Restructuring Transactions. Kellwood Company, LLC will use proceeds from the repayment of the Kellwood Note Receivable to (i) repay or retire long-term indebtedness (including accrued and unpaid interest thereon and any related fees and expenses) that was incurred to fund the operation and growth of the Vince and non-Vince businesses, (ii) pay a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (iii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements,” all partially offset by (iv) indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. It is currently estimated that the restructuring fee described in clause (ii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million. Since most of the proceeds from this offering, along with the borrowings under our new term loan facility, are being used to repay the Kellwood Note Receivable, which Kellwood Company, LLC will use to repay, discharge or repurchase debt incurred to acquire and operate the non-Vince businesses of Apparel
 
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Holding Corp. or to pay fees associated with the operation of such businesses, investors should expect that these proceeds will not directly benefit the Vince business or be used to fund its expansion or growth. Additionally, we will have broad discretion over the use of the net proceeds from this offering that are not used to repay the Kellwood Note Receivable, and you will be relying on the judgment of our board of directors and management regarding the application of any such remaining proceeds. Although we expect to use a portion of such remaining net proceeds for new store openings and other general corporate purposes, which may include general and administrative expenses, we have not allocated these net proceeds for specific purposes. Furthermore, it is possible that a substantial portion of the remaining net proceeds will be invested in a way that does not yield a favorable, or any, return for us. Finally, as drawings under our new term loan facility will be used to help repay the Kellwood Note Receivable (in an amount equal to the entire availability under such facility), no portion of such facility will available to support our future growth and operations and we may need to draw on our new revolving credit facility to fund such future growth and operations.
Anti-takeover provisions of Delaware law and our amended and restated certificate of incorporation and bylaws could delay and discourage takeover attempts that stockholders may consider to be favorable.
Our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors. These provisions include:
 
 	Ÿ 	 	the classification of our board of directors so that not all members of our board of directors are elected at one time;	
 
 	Ÿ 	 	the authorization of the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;	
 
 	Ÿ 	 	stockholder action can only be taken at a special or regular meeting and not by written consent following the time that Sun Capital and its affiliates cease to beneficially own a majority of our common stock;	
 
 	Ÿ 	 	advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings;	
 
 	Ÿ 	 	removal of directors only for cause following the time that Sun Capital and its affiliates cease to beneficially own a majority of our common stock;	
 
 	Ÿ 	 	allowing Sun Cardinal to fill any vacancy on our board of directors for so long as affiliates of Sun Capital own 30% or more of our outstanding shares of common stock and thereafter, allowing only our board of directors to fill vacancies on our board of directors; and	
 
 	Ÿ 	 	following the time that Sun Capital and its affiliates cease to beneficially own a majority of our common stock, super-majority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.	
Our amended and restated certificate of incorporation will also contain a provision that provides us with protections similar to Section 203 of the Delaware General Corporation Law (“DGCL”), and will prevent us from engaging in a business combination, such as a merger, with a person or group who acquires at least 15% of our voting stock for a period of three years from the date such person became an interested stockholder, unless board or stockholder approval is obtained prior to acquisition.
 
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However, our amended and restated certificate of incorporation will also provide that both Sun Capital and its affiliates and any persons to whom a Sun Capital affiliate sells its common stock will be deemed to have been approved by our board of directors.
These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change of control of our company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
A total of             , or     %, of our total outstanding shares after the offering are restricted from immediate resale, but may be sold on the NYSE in the near future. The large number of shares eligible for public sale or subject to rights requiring us to register them for public sale could depress the market price of our common stock.
The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock in the market after this offering. The sales, or the perception that these sales might occur, could depress the market price of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
Upon consummation of this offering and after giving effect to the IPO Restructuring Transactions, we will have              shares of common stock outstanding, assuming no exercise of the underwriters’ option to purchase additional shares. The shares of common stock offered in this offering will be freely tradable without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is required under the Securities Act or an exemption from registration is available. In addition, pursuant to our Registration Agreement, affiliates of Sun Capital have rights to require us to file registration statements registering additional sales of shares of common stock or to include sales of such shares of common stock in registration statements that we may file for ourselves. Subject to compliance with applicable lock-up restrictions and satisfaction of certain conditions, shares of common stock sold under these registration statements can be freely sold in the public market. In the event such registration rights are exercised and a large number of shares of common stock are sold in the public market, such sales could reduce the trading price of our common stock. These sales could also impede our ability to raise future capital. Additionally, we will bear all expenses in connection with any such registrations (other than underwriting discounts and commissions). See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Registration Agreement.”
We and the holders of substantially all of our common stock outstanding on the date of this prospectus, including each of our executive officers and directors, have agreed with the underwriters, that for a period of 180 days after the date of this prospectus, we or they will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or hedge any shares of our common stock, or any options or warrants to purchase any shares of our common stock or any securities convertible into or exchangeable for shares of common stock, subject to specified exceptions. The representatives of the underwriters may, in their discretion, at any time without prior notice, release all or any portion of the shares from the restrictions in any such agreement. See “Other Information Related to this Offering—Underwriting” for more information. Substantially all of our shares of common stock outstanding as of the date of this prospectus may be sold in the public market by existing stockholders 90 days after the date of this prospectus, subject to the lock-up agreements and applicable volume and other limitations imposed under federal securities laws. See “Other Information Related to this Offering—Shares Eligible for Future Sale” for a more detailed description of the
 
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restrictions on selling shares of our common stock after this offering. Sales by our existing stockholders of a substantial number of shares in the public market, or the perception that these sales might occur, could cause the market price of our common stock to decrease significantly.

Number of shares and % of total outstanding	 	Date Available for Sale into Public Market	
            , or     %	 	Immediately after this offering	

            , or     %	 	180 days after the date of this prospectus due to contractual obligations and lock-up agreements between the holders of these shares and the underwriters. However, the underwriters can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time, provided their respective one-year holding periods under Rule 144 have expired.	
		
            , or     %	 	From time to time after the date 180 days after the date of this prospectus upon expiration of their respective holding periods.	
In the future, we may also issue our securities in connection with investments or acquisitions. The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
Any issuance of preferred stock could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.
Upon consummation of this offering, our board of directors will have the authority to issue preferred stock and to determine the preferences, limitations and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our common stock at a premium over the market price, and adversely affect the market price and the voting and other rights of the holders of our common stock.
We are an “emerging growth company” and may elect to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.
After giving effect to the IPO Restructuring Transactions, we will continue to be an “emerging growth company,” as defined by the JOBS Act. For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various public company reporting requirements. These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years after the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act, which such fifth anniversary will occur in 2018. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed
 
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$1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we would cease to be an emerging growth company prior to the end of such five-year period. We will become a large accelerated filer the year after we have an aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of $700 million or more. We have taken advantage of certain of the reduced disclosure obligations regarding executive compensation in this prospectus and may elect to take advantage of other reduced burdens in future filings. As a result, the information we provide to holders of our common stock may be different than you might receive from other public reporting companies in which you hold equity interests. We cannot predict if investors will find our common stock less attractive as a result of our reliance on these exemptions. If some investors find our common stock less attractive as a result of any choice we make to reduce disclosure, there may be a less active trading market for our common stock and the price for our common stock may be more volatile.
As an emerging growth company we will not be required to comply with the rules of the SEC implementing Section 404(b) of the Sarbanes-Oxley Act and therefore our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting until the year following the year we cease to be an emerging growth company. Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Section 302 and 404 other than 404(b) of the Sarbanes-Oxley Act. These rules will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following the year our first annual report is required to be filed with the SEC. If we are unable to conclude that we have effective internal control over financial reporting, our independent registered public accounting firm is unable to provide us with an unqualified report as and when required by Section 404 or we are required to restate our financial statements, we may fail to meet our public reporting obligations and investors could lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. However, we have irrevocably elected not to avail ourselves of this extended transition period for complying with new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
 
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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus constitute forward-looking statements, including in the sections captioned “Prospectus Summary,” “Risk Factors,” “Additional Information Related to AHC—AHC Business,” “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC,” “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” and “Additional Information Related to Vince—Vince Business,” Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the introduction of new merchandise, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.
The forward-looking statements contained in this prospectus reflect our views as of the date of this prospectus about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in “Risk Factors,” “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC” and “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” These factors include without limitation:
 
 	Ÿ 	 	changes in consumer spending and general economic conditions;	
 
 	Ÿ 	 	our ability to respond to market competition;	
 
 	Ÿ 	 	our dependence on a strong brand image;	
 
 	Ÿ 	 	our ability to maintain and expand our relationships with our significant wholesale partners;	
 
 	Ÿ 	 	our ability to locate suitable locations to open new stores and to attract customers to our stores;	
 
 	Ÿ 	 	our ability to maintain recent levels of comparable store sales or average sales per square foot;	
 
 	Ÿ 	 	our ability to manage our operations at our current size or manage future growth effectively;	
 
 	Ÿ 	 	our reliance on Kellwood to provide us with certain key services for our business;	
 
 	Ÿ 	 	our ability to successfully improve and expand our product offerings;	
 
 	Ÿ 	 	the success of our current and future licensing arrangements;	
 
 	Ÿ 	 	our ability to successfully anticipate customer tastes;	
 
 	Ÿ 	 	our ability to forecast customer demand for our products and deliver products to our stores and wholesale partners;	
 
 	Ÿ 	 	our ability to successfully expand in the U.S. and other new markets;	
 
 	Ÿ 	 	the ability of our senior management team to work together as a group;	
 
 	Ÿ 	 	our ability to attract and retain the services of our senior management and key employees;	
 
 	Ÿ 	 	our inability to protect our trademarks or other intellectual property rights;	
 
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 	Ÿ 	 	the ability of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner;	
 
 	Ÿ 	 	our reliance on foreign sourcing for our product offerings;	
 
 	Ÿ 	 	our ability to respond to fluctuations in the price, availability and quality of raw materials;	
 
 	Ÿ 	 	harm to our brand image due to the failure of our independent manufacturers to use ethical business practices;	
 
 	Ÿ 	 	our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;	
 
 	Ÿ 	 	risks associated with leasing retail space subject to long-term non-cancelable leases;	
 
 	Ÿ 	 	changes in laws and regulations applicable to our business;	
 
 	Ÿ 	 	system security risk issues that could disrupt our internal operations or information technology services;	
 
 	Ÿ 	 	the success of our advertising, marketing and promotional strategies;	
 
 	Ÿ 	 	our ability to source our merchandise profitably or at all;	
 
 	Ÿ 	 	restrictions imposed by our indebtedness on our current and future operations;	
 
 	Ÿ 	 	increased costs as a result of being a public company; and	
 
 	Ÿ 	 	our failure to maintain adequate internal controls.	
Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. All of the forward-looking statements we have included in this prospectus are based on information available to us on the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.
 
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 RESTRUCTURING TRANSACTIONS
Effective September 1, 2012, Kellwood Company, a wholly-owned subsidiary of Apparel Holding Corp., contributed the assets and liabilities constituting our business to Vince, LLC in the Vince Transfer. Affiliates of Sun Capital contributed, effective June 18, 2013, $407.5 million of indebtedness under the following instruments as a capital contribution to Apparel Holding Corp. in the Sun Capital Contribution: (i) that certain Loan Authorization Agreement, originally dated February 13, 2008 (the “Sun Capital Loan Agreement”), by and between Apparel Holding Corp. and certain Sun Capital affiliates for a $72.0 million line of credit, (ii) that certain $225,000,000 Senior Subordinated Promissory Note, dated May 2, 2008 (as amended, the “First Sun Promissory Note”), of Apparel Holding Corp. in favor of a certain Sun Capital affiliate and (iii) that certain $75,000,000 Senior Subordinated Promissory Note, dated as of May 2, 2008 (as amended on July 19, 2012, the “Second Sun Promissory Note” and collectively with the First Sun Promissory Note, the “Sun Promissory Notes”), of Apparel Holding Corp. in favor of a certain Sun Capital affiliate (such transactions in clauses (i)-(iii), the “Sun Capital Contribution”).
We have elected to complete the IPO Restructuring Transactions discussed in this section so that investors may invest in a stand-alone Vince business. In addition, the IPO Restructuring Transactions preserve the value of certain of AHC’s pre-offering tax attributes and allow the Pre-IPO Stockholders and Vince Holding Corp. to benefit from those pre-offering tax attributes after the consummation of this offering. We have elected to complete the IPO Restructuring Transactions contemporaneously with the consummation of this offering to reduce the risk of incurring the costs and expenses related to the IPO Restructuring Transactions if the offering is not completed.
The chart below is a summary of Apparel Holding Corp.’s current structure prior to the consummation of this offering after giving effect to the Vince Transfer and the Sun Capital Contribution.

 
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(1)	Consists of the Sun Term Loan A Agreement and the Sun Term Loan B/C/D/E/F/G Agreement, as described below.	
(2)	Vince, LLC is currently a borrower party or guarantor to the Wells Fargo Facility, the Cerberus Term Loan, the Sun Term Loan Agreements and the 12.875% Notes (each as defined below). Vince, LLC will be released from such obligations in connection with the repayment, discharge or refinancing, as applicable, by Kellwood Company, LLC of such obligations, which will happen contemporaneously with the consummation of this offering.	
Prior to consummation of this offering, the following IPO Restructuring Transactions will take place:
 
 	Ÿ 	 	the conversion of all of our issued and outstanding non-voting common stock into common stock on a one-for-one basis and the subsequent stock split of our common stock on a             for             basis, at which time Apparel Holding Corp. will become Vince Holding Corp.;	
 
 	Ÿ 	 	Vince Intermediate Holding, LLC will be formed and become a direct subsidiary of Vince Holding Corp.;	
 
 	Ÿ 	 	Kellwood Company, LLC (which is to be converted from Kellwood Company in connection with the IPO Restructuring Transactions) will be contributed to Vince Intermediate Holding, LLC;	
 
 	Ÿ 	 	Kellwood Company, LLC will distribute 100% of Vince, LLC’s membership interests to Vince Intermediate Holding, LLC, who will issue the Kellwood Note Receivable to Kellwood Company, LLC. The principal amount of the Kellwood Note Receivable will represent, among other things, the amount of the indebtedness to be repaid, discharged or repurchased by Kellwood Company, LLC with proceeds from this offering as described below and in “Use of Proceeds;”	
 
 	Ÿ 	 	Kellwood Holding, LLC will be formed by Vince Intermediate Holding, LLC and Vince Intermediate Holding, LLC will, through a series of steps, contribute 100% of the membership interests of Kellwood Company, LLC to Kellwood Intermediate Holding, LLC (which will be formed as a wholly-owned subsidiary of Kellwood Holding, LLC);	
 
 	Ÿ 	 	100% of the membership interests of Kellwood Holding, LLC will be distributed to the Pre-IPO Stockholders; and	
 
 	Ÿ 	 	Vince Holding Corp. will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement;”	
 
 	Ÿ 	 	Vince, LLC will enter into the Shared Services Agreement with Kellwood Company, LLC, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement;” and	
 
 	Ÿ 	 	Vince Intermediate Holding, LLC will enter into the Transfer Agreement with Kellwood Company, LLC, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Transfer Agreement.”	
As a result of the IPO Restructuring Transactions, the non-Vince businesses will be separated from the Vince business, the Pre-IPO Stockholders (through their ownership of Kellwood Holding, LLC) will retain the ownership and control of the non-Vince businesses and a stand-alone Vince business will remain.
After consummation of this offering and as described below, Vince Holding Corp. will contribute $          of net proceeds from this offering to Vince Intermediate Holding, LLC. Vince Intermediate Holding, LLC will use such proceeds and $           of borrowings under its new term loan facility (as described in “Additional Information Related to Vince—Description of Certain Indebtedness of Vince, LLC”) to repay the $           million Kellwood Note Receivable (which includes $         million of accrued and unpaid interest on the indebtedness Kellwood Company, LLC will repay with the proceeds of the Kellwood Note Receivable). The Kellwood Note Receivable will include (i) the amounts to be repaid, discharged or repurchased by Kellwood Company, LLC in connection with the closing of this offering,
 
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(ii) the 1% restructuring fee payable to Sun Capital Management and (iii) the debt recovery bonus payable to our Chief Executive Officer, all partially offset by (iv) certain indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. The Kellwood Note Receivable will not include amounts outstanding under the Wells Fargo Facility. As discussed in “Additional Information Related to AHC—Description of Certain Indebtedness of AHC,” Kellwood currently intends to refinance the Wells Fargo Facility in connection with the consummation of this offering. Vince, LLC will not guarantee or be a borrower party to the refinanced credit facility.
Kellwood Company, LLC (currently known as Kellwood Company) will use the proceeds from the repayment of the Kellwood Note Receivable to, after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates, (i) repay, at closing, all indebtedness outstanding under (A) the $45 million term loan with Cerberus Business Finance, LLC (the “Cerberus Term Loan”) and (B) that certain Fifth Amended and Restated B/C/D/E/F/G Loan Agreement (the “Sun Term Loan B/C/D/E/F/G Agreement”) between Kellwood Company and certain Sun Capital affiliates and (C) that certain Second Amended and Restated Sun Term Loan A Agreement (the “Sun Term Loan A Agreement” and collectively with the Sun Term Loan B/C/D/E/F/G Agreement, the “Sun Term Loan Agreements”) between Kellwood Company and certain Sun Capital affiliates, and which Sun Term Loan Agreements collectively totaled $118.0 million in the aggregate as of August 3, 2013, (ii) discharge or repurchase at par all of Kellwood Company’s 12.875% Second-Priority Senior Secured Payment-In-Kind Notes due 2014 (the “12.875% Notes”), which totaled $146.8 million as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon, (iii) pay a restructuring fee equal to 1% of the aggregate of the offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement and (iv) pay a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements.” It is currently estimated that the restructuring fee described in clause (iii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.
In addition, Kellwood Company, LLC may, at or after closing, use proceeds remaining from the repayment of the Kellwood Note Receivable to discharge, refinance or repurchase at par the following indebtedness, for which Vince, LLC is neither a guarantor nor an obligor: (A) all of Kellwood Company’s 7.625% 1997 Debentures due 2017 (the “7.625% Notes”), which totaled $87.0 million in aggregate principal amount as of August 3, 2013; and (B) all of Kellwood Company’s 3.5% 2004 Convertible Debentures due June 15, 2034 (the “3.5% Convertible Notes”), which totaled $0.2 million in aggregate principal amount as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon.
Kellwood Company, LLC shall enter into an escrow agreement with Vince Intermediate Holding, LLC and the Escrow Agent, pursuant to which Vince Intermediate Holding, LLC will, on behalf of Kellwood Company, LLC, escrow an amount with                          (the “Escrow Agent”) equal to the face amount of all the indebtedness described in the prior paragraph (with the proceeds from the repayment of the Kellwood Note Receivable and after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates) which is not repaid, repurchased or discharged at closing until such time as it is discharged, refinanced or repaid in full. No interest will accrue on the funds placed into escrow with the Escrow Agent and both Vince Intermediate Holding, LLC and Kellwood Company, LLC must consent to any distributions from the escrow account in accordance with the terms of the Transfer Agreement. The escrow agreement will automatically terminate upon the release of all funds from the escrow account, in accordance with the terms thereof.
In addition, Kellwood Company, LLC will, in connection with this offering, refinance Kellwood Company’s $155 million revolving credit facility (the “Wells Fargo Facility”), to among other things,
 
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remove Vince, LLC as an obligor thereunder. See “Use of Proceeds” and “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC” for additional information.
After completion of these various transactions and payments and application of the net proceeds from this offering, Vince, LLC’s obligations under the Wells Fargo Facility, the Cerberus Term Loan, the Sun Term Loan Agreements and the 12.875% Notes will be terminated or discharged. Vince, LLC has no obligations under the 7.625% Notes or the 3.5% Convertible Notes. Thereafter, Vince Holding Corp., and by extension the investors in this offering, will not be responsible for the obligations described above and the only outstanding obligations of Vince Holding Corp. and its subsidiaries immediately after the consummation of this offering will be the $         million outstanding under its new term loan facility.
The chart below is a summary of our corporate structure and that of the assets constituting the non-Vince businesses upon consummation of this offering.

 

(1)	The Kellwood Note Receivable will be repaid in connection with the closing of this offering with most of the net proceeds from this offering, along with the borrowings under our new term loan facility. See “Use of Proceeds.”	
 
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 USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of 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 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 intend to retain approximately $         million of the net proceeds from this offering to fund new store openings and for other general corporate purposes. We intend to use the remaining net proceeds from this offering, together with cash from our new term loan facility, to repay the Kellwood Note Receivable.
As discussed in “Restructuring Transactions” prior to consummation of this offering, Vince Intermediate Holding, LLC will issue the Kellwood Note Receivable to Kellwood Company, LLC in connection with Vince Intermediate Holding, LLC’s acquisition of Vince, LLC. The Kellwood Note Receivable will include (i) the amounts to be repaid, discharged or repurchased by Kellwood Company, LLC, (ii) the 1% restructuring fee payable to Sun Capital Management and (iii) the debt recovery bonus payable to our Chief Executive Officer, all partially offset by (iv) certain indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. The Kellwood Note Receivable will not include amounts outstanding under the Wells Fargo Facility. As discussed in “Additional Information Related to AHC—Description of Certain Indebtedness of AHC,” Kellwood currently intends to refinance the Wells Fargo Facility in connection with the consummation of this offering. Vince, LLC will not guarantee or be a borrower party to the refinanced credit facility. When issued, the Kellwood Note Receivable will be in an aggregate principal amount of $         million. It will not bear interest and will be due the date of its issuance. Vince Holding Corp. will contribute approximately $           million of the net proceeds from this offering to Vince Intermediate Holding, LLC. Vince Intermediate Holding, LLC will use such proceeds and approximately $           million of borrowings under its new term loan facility to repay the Kellwood Note Receivable.
As described below, Kellwood Company, LLC will use the proceeds from the repayment of the Kellwood Note Receivable to, after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates, (i) repay, at closing, all indebtedness outstanding under (A) the $45 million Cerberus Term Loan and (B) the Sun Term Loan Agreements, which collectively totaled $118.0 million in the aggregate as of August 3, 2013, (ii) discharge or repurchase at par all of the outstanding 12.875% Notes, which totaled $146.8 million as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon, (iii) pay a restructuring fee equal to the aggregate of 1% of the offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement and (iv) pay a debt recovery bonus of up to $6.0 million to our Chief Executive Officer. It is currently estimated that the restructuring fee described in clause (iii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.
In addition, Kellwood Company, LLC may, at or after closing, use proceeds from the repayment of the Kellwood Note Receivable to discharge, refinance or repurchase at par the following indebtedness, for which Vince, LLC is neither a guarantor nor an obligor: (A) all of the outstanding 7.625% Notes, which totaled $87.0 million in aggregate principal amount as of August 3, 2013; and (B) all of the outstanding 3.5% Convertible Notes, which totaled $0.2 million in aggregate principal amount as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon.
 
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Kellwood Company, LLC shall enter into an escrow agreement with Vince Intermediate Holding, LLC and the Escrow Agent, pursuant to which Vince Intermediate Holding, LLC will, on behalf of Kellwood Company, LLC, escrow an amount equal to the face amount of all the indebtedness described in the prior paragraph (with the proceeds from the repayment of the Kellwood Note Receivable and after giving effect to the debt forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates) with the Escrow Agent which is not repaid, repurchased or discharged at closing until such time as it is discharged, refinanced or repaid in full. No interest will accrue on the funds placed into escrow with the Escrow Agent and both Vince Intermediate Holding, LLC and Kellwood Company, LLC must consent to any distributions from the escrow account in accordance with the terms of the Transfer Agreement. The escrow agreement will automatically terminate upon the release of all funds from the escrow account, in accordance with the terms thereof.
After consummation of this offering, neither Vince Holding Corp. nor any subsidiary thereof (including Vince, LLC) will have any obligations under any of the following agreements or instruments, which are to be repaid, refinanced, repurchased or discharged by Kellwood Company, LLC in connection with this offering:
 
 	Ÿ 	 	Wells Fargo Facility .    The Wells Fargo Facility terminates upon the earliest to occur of (i) October 19, 2016, (ii) 90 days prior to the scheduled December 31, 2014 maturity date of the 12.875% Notes (including any extension effective on or prior to such 90th day prior to such scheduled maturity date) and (iii) 90 days prior to the scheduled maturity date of the Cerberus Term Loan. All borrowings under the Wells Fargo Facility bear interest at a rate per annum equal to the applicable margin (ranging from 2.5% to 3.0% per annum for LIBOR loans and 1.25% to 1.75% for base rate loans, based on average availability, plus, at the borrowers’ election, LIBOR or an applicable base rate). As discussed in “Additional Information Related to AHC—Description of Certain Indebtedness of AHC” and “Restructuring Transactions.” Kellwood currently intends to refinance the Wells Fargo Facility in connection with the consummation of this offering.	
 
 	Ÿ 	 	Cerberus Term Loan .    The Cerberus Term Loan terminates upon the earliest to occur of (i) October 19, 2015, (ii) the date on which the Wells Fargo Facility has been paid in full and all commitments thereunder have been terminated, (iii) 60 days prior to the scheduled December 31, 2014 maturity date of the 12.875% Notes (including any extensions thereof agreed to after October 19, 2011) and (iv) the date on which the loans under the Sun Term Loan Agreements are accelerated. All borrowings under the Cerberus Term Loan bear interest at a rate per annum equal to the applicable margin (which ranges from 10.75% to 11.25% per annum for LIBOR rate loans, based on leverage and income tests contained therein, plus, at the borrowers’ election, LIBOR or an applicable reference rate).	
 
 	Ÿ 	 	Sun Term Loan Agreements .    The Sun Term Loan Agreements terminate upon the earliest to occur of (i) January 19, 2017 and (ii) the scheduled maturity of the Cerberus Term Loan (unless such maturity has been extended, in which case the maturity set forth in clause (i) shall be extended by the same amount of time). All borrowings under the Sun Term Loan A Agreement and the Term B Loan, Term C Loan and Term D Loan under the Sun Term Loan B/C/D/E/F/G Agreement bear interest at a rate equal to 10% per annum. All borrowings under the Term E Loan, Term F Loan and Term G Loan under the Sun Term Loan B/C/D/E/F/G Agreement bear interest at a rate equal to 12% per annum. The Term G Loan was entered into on June 28, 2013 and there are currently no amounts outstanding under the Term G Loan. The Term G Loan was entered into to fund working capital, capital expenditures and other general corporate purposes of the Company.	
 
 	Ÿ 	 	Public Bonds and 3.5% Convertible Notes .    The 12.875% Notes are scheduled to mature on December 31, 2014. Interest on such notes is paid (i) in cash, at a rate of 7.875% per annum, payable in January and July and (ii) in the form of PIK interest at a rate of 5% per annum. The	
 
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 	7.625% Notes are scheduled to mature on October 15, 2017 and the interest on such notes accrues at a rate of 7.625% per annum. The 3.5% Convertible Notes are scheduled to mature on June 15, 2034, and the interest on such notes accrues at a rate of 3.5% per annum.	
Additionally, in connection with the consummation of this offering and the payment of a restructuring fee equal to the aggregate of 1% of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management from proceeds from the repayment of the Kellwood Note Receivable, the Management Services Agreement will be terminated, as will Vince, LLC’s guarantee of obligations thereunder. It is currently estimated that this restructuring fee will total $3.5 million. Additionally, Kellwood Company, LLC will use proceeds from the repayment of the Kellwood Note Receivable to pay a debt recovery bonus of up to $6.0 million to our Chief Executive Officer.
All of the indebtedness under the facilities or agreements described above was incurred to fund the operation and growth of the Vince and non-Vince businesses, including to finance certain acquisitions made by AHC since 2008. See “Risk Factors—Risks Related to this Offering and Our Common Stock—We will have broad discretion over the use of proceeds from this offering after repayment of the Kellwood Note Receivable, and such remaining proceeds will be limited. Additionally, drawings under our new term loan facility will also be used to help repay the Kellwood Note Receivable and we will have no availability under such facility after giving effect to such repayment.”
A $1.00 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 the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
 
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 DIVIDEND POLICY OF AHC
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, because we are a holding company, our ability to pay dividends on our common stock will be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our new revolving credit facility or new term loan facility. See “Additional Information Related to Vince—Description of Certain Indebtedness of Vince, LLC.” Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements, general business conditions, expansion plans and other factors that our board of directors may deem relevant.
 
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 CAPITALIZATION OF AHC
The following table sets forth our cash and cash equivalents, short-term borrowings and capitalization as of August 3, 2013 on:
 
 	Ÿ 	 	an actual basis;	
 
 	Ÿ 	 	on a pro forma basis to give effect to the Sun Capital Contribution and the IPO Restructuring Transactions (including the conversion of all of our issued and outstanding non-voting common stock on a one-for-one basis), and	
 
 	Ÿ 	 	on a pro forma, as adjusted basis to further reflect (i) our receipt of the estimated net proceeds from the sale of             shares of common stock by us in this offering at an assumed initial public offering price of $         per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the assumed underwriting discount and commissions payable by us and our estimated fees and expenses; and (ii) our use of these proceeds and the incurrence of $         million of borrowings under our new term loan facility, as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable.	
You should read this table together with the sections entitled “Use of Proceeds,” “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC” and the notes thereto and “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” included elsewhere in this prospectus.
 
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 	  	August 3, 2013	 	
 	  	Actual	 	 	Pro Forma	 	 	Pro Forma,
As Adjusted	 	
(In thousands)	  	 	 	 	 	 	 	 	 	
 	  	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
Cash and restricted cash:	  				 				 				
Cash and cash equivalents	  	$	2,178	  	 	$	325	  	 	$	                	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Short-term borrowings:	  				 				 				
Wells Fargo Facility(1)(2)	  	$	115,601	  	 	$	—	  	 	$	 	  	
Kellwood Note Receivable(3)	  	 	—	  	 	 	385,000	  	 				
	  	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt:	  				 				 				
New Vince revolving credit facility	  	$	—	  	 	$	—	  	 	$	 	  	
New Vince term loan facility	  	 	—	  	 	 	—	  	 				
Cerberus Term Loan(2)	  	 	45,660	  	 	 	—	  	 				
12.875% Notes(2)	  	 	143,962	  	 	 	—	  	 				
7.625% Notes	  	 	78,991	  	 	 	—	  	 				
3.5% Convertible Notes	  	 	214	  	 	 	—	  	 				
Sun Term Loan Agreements(2)	  	 	118,015	  	 	 	—	  	 				
	  	 	 	 	 	 	 	 	 	 	 	 	
Total long-term debt	  	 	386,842	  	 	 	—	  	 				
Stockholders’ (Deficit) Equity:	  				 				 				
Preferred Stock, $0.001 par value per share actual, $0.01 par value per share pro forma and pro forma, as adjusted; 100,000 shares authorized actual,             shares authorized pro forma and pro forma, as adjusted; no shares issued and outstanding actual, pro forma and pro forma, as adjusted	  	 	—	  	 	 	—	  	 				
Non-Voting Common Stock, $0.001 par value per share actual; 1,700,000 shares authorized actual, no shares authorized pro forma and pro forma, as adjusted;              shares issued and outstanding actual, no shares issued or outstanding, pro forma and pro forma, as adjusted	  				 	 	—	  	 				
Common Stock, $0.001 par value per share actual, $0.01 par value per share pro forma and pro forma, as adjusted; 1,200,000 shares authorized actual,             shares authorized pro forma and pro forma, as adjusted;              shares issued and outstanding actual,              shares issued and outstanding pro forma and             shares issued and outstanding pro forma, as adjusted	  				 				 				
Additional paid in capital	  	$	794,528	  	 	$	770,295	  	 	$	 	  	
Accumulated deficit	  	 	(973,523	) 	 	 	(973,523	) 	 				
Accumulated other comprehensive loss	  	 	(108	) 	 	 	(108	) 	 				
	  	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ (deficit) equity	  	 	(            	) 	 	 	(            	) 	 				
	  	 	 	 	 	 	 	 	 	 	 	 	
Total capitalization	  	$	 	  	 	$	 	  	 	$	 	  	

(1)	Includes $12.6 million of outstanding letters of credit. Kellwood Company, LLC will refinance the Wells Fargo Facility in connection with this offering. See “Use of Proceeds” and “Restructuring Transactions.”	
(2)	Vince, LLC is a borrower party or guarantor under the agreements governing the Wells Fargo Facility, the Cerberus Term Loan, the Sun Term Loan Agreements and the 12.875% Notes. Vince, LLC’s obligations under all of the above, other than with respect to the Wells Fargo Facility, which will be refinanced by Kellwood Company, LLC in connection with this offering as described in footnote (1) above, will be terminated or discharged in connection with the repayment of such indebtedness with net proceeds from this offering and borrowings under our new term loan facility, as described in “Use of Proceeds.”	
(3)	As a result of the IPO Restructuring Transactions, Vince Intermediate Holding, LLC will acquire Vince, LLC from Kellwood Company, LLC in exchange for the Kellwood Note Receivable. The net proceeds from this offering (after giving effect to underwriting discounts, fees and expenses related to this offering and $         million of proceeds to be retained by us), along with $         of indebtedness under our new term loan facility, will be used to repay the Kellwood Note Receivable. The principal amount of the Kellwood Note Receivable represents (i) the face value of the indebtedness, including accrued and unpaid interest and any related fees and expenses, to be repaid, discharged or repurchased by Kellwood Company, LLC in connection with the consummation of this offering, (ii) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (iii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements,” all partially offset by (iv) indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. It is currently estimated that the restructuring fee described in clause (ii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.	
 
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A $1.00 increase or decrease in the assumed initial public offering price of $         per share, which is the midpoint of the range set forth on the cover of this prospectus, would increase or decrease the pro forma, as adjusted amount for each of cash and cash equivalents, additional paid in capital, total stockholders’ equity or loss and total capitalization by approximately $         million assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions an estimated offering expenses payable by us.
 
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 DILUTION
If you invest in our common stock in this offering, you will experience immediate and substantial dilution in the pro forma net tangible book value of your shares of our common stock. The pro forma net tangible book value of our common stock as of             , 2013 was $         million, or approximately $         per share. Pro forma net tangible book value per share represents the amount of total pro forma tangible assets reduced by the amount of our total pro forma liabilities divided by the pro forma number of shares of common stock that would have been outstanding on             , 2013, prior to the sale of              shares of our common stock in this offering. Pro forma net tangible book value as of             , 2013 gives pro forma effect to the Sun Capital Contribution and the IPO Restructuring Transactions (including (i) the conversion of all of our issued and outstanding non-voting common stock into common stock on a one-for-one basis; and (ii) the subsequent stock split of our common stock on a             for             basis).
On February 12, 2008, affiliates of Sun Capital acquired Kellwood Company for aggregate consideration of $955.4 million, including the assumption of our debt (or approximately $         per pro forma share, as compared to the initial public offering price of $         per share based on the midpoint of the range set forth on the cover page of this prospectus).
Dilution to new investors in pro forma net tangible book value per share represents the difference between the amount per share paid by new investors purchasing shares of common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after the consummation of this offering. After giving effect to the sale of shares of our common stock in this offering based upon an assumed initial public offering price of $        , the midpoint of the range set forth on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, the Sun Capital Contribution and IPO Restructuring Transactions and the application of the estimated net proceeds therefrom, our pro forma, as adjusted net tangible book value as of             , 2013 would have been $         million, or $         per share. This represents an immediate increase in pro forma net tangible book value of $         per share to the Pre-IPO Stockholders and an immediate dilution of $         per share to new investors purchasing shares of common stock in this offering at the initial public offering price. The following table illustrates this per share dilution:

Assumed initial public offering price per share	  				  	$	            	  	
	  				  	 	 	 	
Pro forma net tangible book value per share as of             , 2013 (before giving effect to this offering)	  	$	            	  	  				
Increase in pro forma net tangible book value per share attributable to new investors in this offering	  				  				
	  	 	 	 	  				
Pro forma, as adjusted net tangible book value per share as of May 4, 2013 (after giving effect to this offering)	  				  				
	  				  	 	 	 	
Dilution per share to new investors	  				  	$	            	  	
	  				  	 	 	 	
A $1.00 increase or decrease in the assumed initial public offering price of $         per share, the midpoint of the range set forth on the cover of this prospectus, would increase or decrease our pro forma net tangible book value of this offering by $         million, our pro forma net tangible book value per share after this offering by $         per share and the dilution in pro forma net tangible book value to new investors in this offering by $         per share (assuming the number of shares set forth on the cover of this preliminary prospectus remains the same and after deducting the assumed underwriting discounts and commissions payable by us).
 
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The following table sets forth, on a pro forma basis as adjusted as of             , 2013, after giving effect to the IPO Restructuring Transactions as described in “Restructuring Transactions” included elsewhere in this prospectus and the sale of             shares of our common stock in this offering, the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid to us by the Pre-IPO Stockholders and by new investors who purchase shares of common stock in this offering, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming an initial public offering price of $         per share:

 	  	Shares Purchased	 	Total Consideration	 	Average Price
Per Share	
 	  	Number	  	Percent	 	Amount	  	Percent	 		
						
Pre-IPO Stockholders	  		  	            %	 		  	            %	 		
						
New investors	  		  	            %	 		  	            %	 		

Total	  		  	            %	 		  	            %	 		
	  	 	  	 	 	 	  	 	 		
A $1.00 increase or decrease in the assumed initial public offering price of $         per share, the midpoint of the range set forth on the cover of this prospectus, would increase or decrease total consideration paid by new investors by approximately $         million, and increase or decrease the percent of total consideration paid by new investors by     %, assuming the number of shares set forth on the cover of this preliminary prospectus remains the same.
Upon consummation of this offering, the Pre-IPO Stockholders will own     %, and new investors will own     % of the total number of shares of common stock outstanding after this offering. Except as otherwise indicated, the discussion and tables above assume no exercise of the underwriters’ option to purchase additional shares. If the underwriters exercise their option to purchase additional shares in full, the Pre-IPO Stockholders would own     % and new investors would own     % of the total number of shares of common stock outstanding after this offering.
The foregoing discussion and the tables and calculations above exclude an aggregate of             shares of common stock reserved for issuance under the Vince 2013 Incentive Plan, which we plan to adopt in connection with this offering. To the extent that any options or equity incentive grants are issued in the future, including pursuant to the Vince 2013 Incentive Plan, with an exercise or purchase price below the initial offering price, new investors will experience further dilution. See “Additional Information Related to Vince—Vince Executive Compensation—Employee Stock Plans—Vince 2013 Incentive Plan.”
 
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 ADDITIONAL INFORMATION RELATED TO AHC
The information appearing in this section includes additional information regarding the non-Vince businesses that are to be transferred to Kellwood Holding, LLC and its subsidiaries in the IPO Restructuring Transactions. The Pre-IPO Stockholders will continue to own and operate 100% of the non-Vince businesses through their ownership of Kellwood Holding, LLC after giving effect to the IPO Restructuring Transactions. Vince Holding Corp., the issuer of common stock in this offering, will have no interest in the non-Vince businesses after giving effect to the IPO Restructuring Transactions.
As used in this Additional Information Related to AHC Section, unless the context otherwise requires:
 
 	Ÿ 	 	“Kellwood” refers to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions, or to the non-Vince businesses of AHC prior to the consummation of the IPO Restructuring Transactions, as the context requires; and	
 
 	Ÿ 	 	“AHC” refers to Apparel Holding Corp. and its consolidated subsidiaries (including Kellwood Company) prior to consummation of the IPO Restructuring Transactions. Apparel Holding Corp. is the historical owner and operator of the Vince and non-Vince business.	
 
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 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF AHC
The following tables set forth selected historical consolidated financial data of Apparel Holding Corp. and its consolidated subsidiaries. They include assets and liabilities associated with the Kellwood business that will be transferred to Kellwood Holding, LLC and its consolidated subsidiaries in the IPO Restructuring Transactions. They also include the assets and liabilities of the Vince business transferred to Vince, LLC in connection with the Vince Transfer in September 2012. The Vince, LLC assets and liabilities have no relation to the non-Vince businesses. The following reflects the results of operations associated with the combined Vince and non-Vince assets. An investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business. We will not have ongoing involvement with the non-Vince businesses following separation, with the exception of our payments to Kellwood for certain services to be provided under the Shared Services Agreement as further described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” contained elsewhere in this prospectus. Similarly, Kellwood will not have ongoing involvement in our business, other than pursuant to the Shared Services Agreement. You should read the information set forth below in conjunction with “Use of Proceeds,” “Capitalization of AHC,” “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC” and AHC’s audited historical consolidated financial statements and notes thereto included elsewhere in this prospectus.
The statement of operations data for each of fiscal 2010, fiscal 2011 and fiscal 2012 and the historical balance sheet data as of fiscal 2010, fiscal 2011 and fiscal 2012 set forth below are derived from AHC’s audited consolidated financial statements included elsewhere in this prospectus. The statements of operations data for each of the six month periods ended July 28, 2012 and August 3, 2013 and the balance sheet data as of August 3, 2013 set forth below are derived from AHC’s unaudited quarterly consolidated financial statements included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of AHC’s financial position and results of operations for the periods presented. Operating results for the six month periods are not necessarily indicative of results for a full financial year, or any other periods. Historical results are not necessarily indicative of results to be expected for future periods.
After consummation of this offering and the IPO Restructuring Transactions, AHC’s results of the non-Vince businesses will be reported as discontinued operations for accounting purposes and AHC’s continuing operations will consist solely of the non-Vince businesses. See “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC” for additional information regarding the operations and assets and liabilities of Vince, LLC.
 
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 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010(1)	 	 	2011(1)	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except per share data)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statement of Operations Data:	  				 				 				 				 				
Net sales	  	$	586,574	  	 	$	662,846	  	 	$	707,995	  	 	$	319,445	  	 	$	363,967	  	
Cost of products sold	  	 	430,801	  	 	 	490,110	  	 	 	507,905	  	 	 	235,293	  	 	 	256,031	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	155,773	  	 	 	172,736	  	 	 	200,090	  	 	 	84,152	  	 	 	107,936	  	
Operating expenses:	  				 				 				 				 				
Selling, general and administrative expenses	  	 	140,567	  	 	 	155,220	  	 	 	177,755	  	 	 	83,526	  	 	 	93,503	  	
Amortization of intangible assets	  	 	954	  	 	 	1,941	  	 	 	1,899	  	 	 	950	  	 	 	950	  	
Restructuring, environmental remediation and other charges(3)	  	 	9,729	  	 	 	2,651	  	 	 	5,091	  	 	 	2,264	  	 	 	827	  	
Impairment of long-lived assets (excluding goodwill)	  	 	438	  	 	 	2,504	  	 	 	2,349	  	 	 	717	  	 	 	—	  	
Impairment of goodwill	  	 	—	  	 	 	10,821	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net(2)	  	 	—	  	 	 	(1,578	) 	 	 	(7,162	) 	 	 	(4,507	) 	 	 	(54	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	151,688	  	 	 	171,559	  	 	 	179,932	  	 	 	82,950	  	 	 	95,226	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	4,085	  	 	 	1,177	  	 	 	20,158	  	 	 	1,202	  	 	 	12,710	  	
Interest expense, net	  	 	103,074	  	 	 	127,148	  	 	 	122,383	  	 	 	74,151	  	 	 	43,671	  	
Gain on acquisition, net of tax(2)	  	 	(939	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment(2)	  	 	(15,912	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, net	  	 	2,442	  	 	 	1,914	  	 	 	2,723	  	 	 	1,215	  	 	 	1,233	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	  	 	(84,580	) 	 	 	(127,885	) 	 	 	(104,948	) 	 	 	(74,164	) 	 	 	(32,194	) 	
Provision for income taxes	  	 	3,507	  	 	 	3,401	  	 	 	708	  	 	 	2,245	  	 	 	2,679	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations(2)(3)	  	 	(88,087	) 	 	 	(131,286	) 	 	 	(105,656	) 	 	 	(76,409	) 	 	 	(34,873	) 	
Net (loss) income from discontinued operations(3)(4)	  	 	(16,391	) 	 	 	(16,580	) 	 	 	(2,053	) 	 	 	(4,798	) 	 	 	9,230	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic loss per share (basic and diluted)	  	$	 	  	 	$	 	  	 	$	 	  	 	$	 	  	 	$	 	  	
Weighted average shares outstanding:	  				 				 				 				 				
Basic and diluted	  				 				 				 				 				

(1)	In January 2011, AHC acquired Rebecca Taylor, a women’s contemporary apparel and accessory company. In July 2011, AHC acquired Zobha, a women’s athletic apparel brand, primarily focused on the yoga market. See “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC—Basis of Presentation” for information regarding AHC’s decision to divest the Zobha business during the second quarter of fiscal 2013.	
 
(2)	Net loss from continuing operations includes net gains affecting comparability of the following:	
 
 	Ÿ 	 	$16.8 million in fiscal 2010 comprised of a $0.9 million gain on the acquisition of certain net assets from the Adam operations as the fair value of the identifiable assets less the liabilities assumed exceeded the fair value of the consideration, and a $15.9 million gain on debt extinguishment as a result of AHC’s repurchase of $29.7 million of face value of certain notes outstanding from an affiliate of Sun Capital for $9.1 million in cash;	
 
 	Ÿ 	 	$1.6 million in fiscal 2011 due to a reduction in the estimated contingent payments related to the acquisitions of Rebecca Taylor and Zobha as those purchase agreements contain provisions for contingent consideration that will be paid to the respective sellers if certain performance targets are met within a specified timeframe and during the periods presented expectations related to the achievement of these targets were revised; and	
 
 	Ÿ 	 	$7.2 million in fiscal 2012, of which $4.5 million was recognized during the six months ended July 28, 2012, due to further reductions in the estimated contingent payments related to the acquisitions of Rebecca Taylor and Zobha.	
 
(3)	During the years presented AHC performed several rationalization efforts aimed at improving AHC’s operational efficiency to streamline the fashion apparel business and recreational apparel and products businesses. These restructuring activities, along with impairment of long-lived assets, environmental remediation charges and other charges included in net loss from continuing operations are $10.2 million in fiscal 2010, $15.1 million in fiscal 2011, $7.4 million in fiscal 2012, $3.0 million in the first six months of fiscal 2012, and $0.8 million in the first six months of fiscal 2013. These restructuring activities, along with impairment of long-lived assets and other charges included in net (loss) income from discontinued operations are $27.7 million in fiscal 2010, $6.3 million in fiscal 2011, $4.8 million in fiscal 2012, $0.2 million in the first six months of fiscal 2012, and $0.9 million in the first six months of fiscal 2013.	
 
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(4)	During fiscal 2011, AHC discontinued its Adam operations and Koret wholesale operations. AHC had previously acquired the net assets which comprised its Adam operations during fiscal 2010. During fiscal 2012, AHC discontinued its Baby Phat wholesale and Lamb & Flag businesses. Additionally, AHC sold its Royal Robbins and BLK DNM businesses. During the first quarter of fiscal 2013, AHC discontinued its Phat Licensing business because AHC sold the related trademarks. During the second quarter of fiscal 2013, AHC divested its Zobha business. As such, these operations have been reflected as discontinued operations for all periods presented.	

 	  	As of	 	
 	  	January 29,
2011	 	 	January 28,
2012	 	 	February 2,
2013	 	 	August 3,
2013	 	
(In thousands)	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	
Balance Sheet Data:	  				 				 				 				
Cash and cash equivalents	  	$	5,194	  	 	$	1,839	  	 	$	1,881	  	 	$	2,178	  	
Total current assets	  	 	186,673	  	 	 	211,254	  	 	 	199,792	  	 	 	228,891	  	
Total assets	  	 	410,718	  	 	 	468,445	  	 	 	442,124	  	 	 	467,791	  	
Total current liabilities	  	 	180,939	  	 	 	213,403	  	 	 	190,046	  	 	 	221,230	  	
Long-term debt	  	 	758,473	  	 	 	934,354	  	 	 	761,752	  	 	 	386,842	  	
Total stockholders’ deficit	  	 	(595,219	) 	 	 	(743,021	) 	 	 	(561,265	) 	 	 	(179,102	) 	
Total liabilities and stockholders’ deficit	  	 	410,718	  	 	 	468,445	  	 	 	442,124	  	 	 	467,791	  	
 
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 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AHC
The following unaudited selected consolidated financial data presents AHC’s historical consolidated statements of operations and consolidated balance sheet after giving effect to the transactions and adjustments as described in the accompanying notes. The unaudited pro forma consolidated financial data was prepared (i) on a basis consistent with that used in preparing AHC’s audited consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that AHC considers necessary for a fair presentation of its financial position and results of operations for the unaudited periods and (ii) consistent with the requirements of Article 11 of Regulation S-X.
This unaudited pro forma consolidated financial data should be read in conjunction with the information contained in “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC,” “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC,” the audited financial statements of Vince, LLC and the related notes thereto appearing elsewhere in this prospectus, “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC,” “Additional Information Related to AHC—Selected Historical Consolidated Financial Data of AHC,” the audited consolidated financial statements of AHC and related notes thereto appearing elsewhere in this prospectus and “Restructuring Transactions.”
As used in this section, unless the context requires otherwise:
 
 	Ÿ 	 	“our,” “us,” “we” and “Vince Holding Corp.” refer to Vince Holding Corp. (currently known as Apparel Holding Corp.) and its consolidated subsidiaries (including Vince, LLC) after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince” refers to the Vince business after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince, LLC” refers to the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering and the application of the proceeds of this offering as described herein. Apparel Holding Corp. is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC;	
 
 	Ÿ 	 	“AHC” refers to Apparel Holding Corp. and its consolidated subsidiaries (including Kellwood Company) prior to the completion of the IPO Restructuring Transactions. Apparel Holding Corp. is the historical owner and operator of the Vince and non-Vince businesses; and	
 
 	Ÿ 	 	“Kellwood” refers to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions, as the future owner and operator of the non-Vince businesses, or to the non-Vince businesses of AHC prior to the completion of the IPO Restructuring Transactions, as the context requires.	
This unaudited pro forma consolidated financial data gives effect to anticipated transactions that we believe are relevant to the understanding of the business being offered and will have a material impact on the comparability of our results of operations. They are described below and are as follows: (i) “—Kellwood Separation,” (ii) “—Sun Capital Contribution and Tax Receivable Agreement,” and (iii) “—This Offering.”
The Kellwood Separation
As described within “Restructuring Transactions” included elsewhere in this prospectus, AHC will use a series of transactions to legally separate the Vince business from the non-Vince businesses immediately prior to consummation of this offering. We refer to this series of transactions as the
 
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“Kellwood Separation”. Once these transactions have occurred, the non-Vince businesses will be owned and operated separately from us. After consummation of this offering, the Vince business will be our only assets, liabilities, and operations. Although Apparel Holding Corp. is the legal issuer of the shares offered in this offering, an investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business. Following the consummation of this offering, we expect to report the non-Vince operations as discontinued operations in accordance with ASC Topic 205 Presentation of Financial Statements beginning with our first financial statements filed after the effectiveness of the registration statement of which this prospectus forms a part. All pro forma adjustments to our historical financial statements that relate to the separation from the non-Vince businesses are described as “Kellwood Separation Adjustments” and they are included under the caption “—Kellwood Separation.”
In addition, set forth below is supplemental disclosure of the allocation of the pro forma results of operations and financial position of the “Kellwood Separation Adjustments”. This supplemental disclosure is referred to as “Allocation of Pro Forma” and represents the allocation of the unaudited pro forma results of operations and financial position among Apparel Holding Corp., Vince Intermediate Holding, LLC and Vince, LLC after giving effect to the Kellwood Separation. Apparel Holding Corp., Vince Intermediate Holding, LLC and Vince, LLC, collectively, will represent the three corporate or limited liability company entities that represent the consolidated group that will constitute the Vince business after consummation of the IPO Restructuring Transactions. The financial results of Vince, LLC are presented since after giving effect to the IPO Restructuring Transactions, Vince, LLC will be the sole operating subsidiary of the business in which you are investing in this offering. The Vince, LLC financials have been prepared on a standalone, carve-out basis. As such we present an adjustment column within the “Allocation of Pro Forma” table to reconcile the Vince, LLC financials on a stand-alone carve-out basis with the pro forma presentation of AHC after giving effect to the Kellwood Separation.
Sun Capital Contribution and Tax Receivable Agreement
Additional restructuring activities that have occurred or will occur in order to effect the consummation of this offering, include the following:
 
 	Ÿ 	 	effective June 18, 2013, affiliates of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes as a capital contribution to Apparel Holding Corp. in the Sun Capital Contribution; and	
 
 	Ÿ 	 	we will enter into the Tax Receivable Agreement, (referred to in this “Unaudited Pro Forma Consolidated Financial Data of AHC” as the “TRA”), with the Pre-IPO Stockholders as described in “Other Information Related to the Offering—Certain Relationships and Related Party transactions of AHC—Tax Receivable Agreement.”	
Pro forma adjustments related to these additional restructuring activities are described as “Sun Capital Contribution and TRA Adjustments.”
This Offering
Pro forma adjustments to reflect (i) our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $        per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the assumed underwriting discount and commissions and estimated fees and expenses payable by us; and (ii) our use of these proceeds and the incurrence of $         million of borrowings under our new term loan facility, as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable, are described as “ Offering Adjustments.”
 
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Unaudited Pro Forma Statements of Operations
In accordance with Article 11 of Regulation S-X we have provided AHC’s unaudited pro forma consolidated statements of operations for fiscal 2010, fiscal 2011, fiscal 2012 and the first six months of fiscal 2012 and the first six months of fiscal 2013, presented on a pro forma basis to give effect to the Kellwood Separation as if it had occurred at the beginning of fiscal 2010.
Additionally, the unaudited pro forma consolidated statements of operations for fiscal 2012 and the first six months of fiscal 2013 are presented on a pro forma basis, to give effect to the Sun Capital Contribution and entry into the TRA, as if such transactions had been consummated on the first day of fiscal 2012; and finally, the unaudited pro forma consolidated statements of operations are presented for fiscal 2012 and the first six months of fiscal 2013 on a pro forma, as adjusted basis, to further reflect the impact of the Offering Adjustments.
 
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Table of Contents
Fiscal 2010 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(1)	 	 	Pro
Forma	 	 	 	 	AHC	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince, LLC(3)	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands, except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	586,574	  	 	$	(475,082	)(a) 	 	$	111,492	  	 		 	$	—	  	 	$	 —	  	 	$	111,492	  	 	$	—	  	 	$	111,492	  	
Cost of products sold	 	 	430,801	  	 	 	(375,106	)(a) 	 	 	55,695	  	 		 	 	—	  	 	 	—	  	 	 	55,695	  	 	 	—	  	 	 	55,695	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	155,773	  	 	 	(99,976	) 	 	 	55,797	  	 		 	 	—	  	 	 	—	  	 	 	55,797	  	 	 	—	  	 	 	55,797	  	
Operating Expenses:	 				 				 				 		 				 				 				 				 				
Selling, general and administrative expenses	 	 	140,567	  	 	 	(107,829	)(b) 	 	 	32,738	  	 		 	 	34	(g) 	 	 	—	  	 	 	32,704	(i) 	 	 	—	  	 	 	32,738	  	
Amortization of intangible assets	 	 	954	  	 	 	(356	) 	 	 	598	  	 		 	 	—	  	 	 	—	  	 	 	598	  	 	 	—	  	 	 	598	  	
Restructuring, environmental remediation and other charges	 	 	9,729	  	 	 	(9,729	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of long-lived assets (excluding goodwill)	 	 	438	  	 	 	(438	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	151,688	  	 	 	(118,352	) 	 	 	33,336	  	 		 	 	34	  	 	 	—	  	 	 	33,302	  	 	 	—	  	 	 	33,336	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations	 	 	4,085	  	 	 	18,376	  	 	 	22,461	  	 		 	 	(34	) 	 	 	—	  	 	 	22,495	  	 	 	—	  	 	 	22,461	  	
Interest expense, net	 	 	103,074	  	 	 	(35,124	)(c) 	 	 	67,950	  	 		 	 	67,950	(h) 	 	 	—	  	 	 	7,172	(j) 	 	 	(7,172	)(k) 	 	 	67,950	  	
Gain on acquisition, net of tax	 	 	(939	) 	 	 	939	(d) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	 	 	(15,912	) 	 	 	15,912	(e) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, net	 	 	2,442	  	 	 	(2,092	) 	 	 	350	  	 		 	 	—	  	 	 	—	  	 	 	350	  	 	 	—	  	 	 	350	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before provision for income taxes	 	 	(84,580	) 	 	 	38,741	  	 	 	(45,839	) 	 		 	 	(67,984	) 	 	 	—	  	 	 	14,973	  	 	 	7,172	  	 	 	(45,839	) 	
Provision for income taxes	 	 	3,507	  	 	 	5,462	(f) 	 	 	8,969	  	 		 	 	—	  	 	 	—	  	 	 	5,923	  	 	 	3,046	(l) 	 	 	8,969	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) from continuing operations	 	$	(88,087	) 	 	$	33,279	  	 	$	(54,808	) 	 		 	$	(67,984	) 	 	$	—	  	 	$	9,050	  	 	$	4,126	  	 	$	(54,808	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Weighted average number of common shares outstanding, basic	 				 				 				 		 				 				 				 				 				
Weighted average number of common shares outstanding, diluted	 				 				 				 		 				 				 				 				 				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Fiscal 2011 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(1)	 	 	Pro
Forma	 	 	 	 	AHC	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince, LLC(3)	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands, except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	662,846	  	 	$	(487,591	)(a) 	 	$	175,255	  	 		 	$	—	  	 	$	 —	  	 	$	175,255	  	 	$	—	  	 	$	175,255	  	
Cost of products sold	 	 	490,110	  	 	 	(400,565	)(a) 	 	 	89,545	  	 		 	 	—	  	 	 	—	  	 	 	89,545	  	 	 	—	  	 	 	89,545	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	172,736	  	 	 	(87,026	) 	 	 	85,710	  	 		 	 	—	  	 	 	—	  	 	 	85,710	  	 	 	—	  	 	 	85,710	  	
Operating Expenses:	 				 				 				 		 				 				 				 				 				
Selling, general and administrative expenses	 	 	155,220	  	 	 	(113,027	)(b) 	 	 	42,193	  	 		 	 	45	(g) 	 	 	—	  	 	 	42,148	(i) 	 	 	—	  	 	 	42,193	  	
Amortization of intangible assets	 	 	1,941	  	 	 	(1,342	) 	 	 	599	  	 		 	 	—	  	 	 	—	  	 	 	599	  	 	 	—	  	 	 	599	  	
Restructuring, environmental remediation and other charges	 	 	2,651	  	 	 	(2,651	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of long-lived assets (excluding goodwill)	 	 	2,504	  	 	 	(2,504	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	10,821	  	 	 	(10,821	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net	 	 	(1,578	) 	 	 	1,578	(m) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	171,559	  	 	 	(128,767	) 	 	 	42,792	  	 		 	 	45	  	 	 	—	  	 	 	42,747	  	 	 	—	  	 	 	42,792	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations	 	 	1,177	  	 	 	41,741	  	 	 	42,918	  	 		 	 	(45	) 	 	 	—	  	 	 	42,963	  	 	 	—	  	 	 	42,918	  	
Interest expense, net	 	 	127,148	  	 	 	(45,785	)(c) 	 	 	81,363	  	 		 	 	81,363	(h) 	 	 	—	  	 	 	15,004	(j) 	 	 	(15,004	)(k) 	 	 	81,363	  	
Other expense, net	 	 	1,914	  	 	 	(1,436	) 	 	 	478	  	 		 	 	—	  	 	 	—	  	 	 	478	  	 	 	—	  	 	 	478	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) Income before provision for income taxes	 	 	(127,885	) 	 	 	88,962	  	 	 	(38,923	) 	 		 	 	(81,408	) 	 	 	—	  	 	 	27,481	  	 	 	15,004	  	 	 	(38,923	) 	
Provision for income taxes	 	 	3,401	  	 	 	13,693	(f) 	 	 	17,094	  	 		 	 	—	  	 	 	—	  	 	 	10,812	  	 	 	6,282	(l) 	 	 	17,094	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(131,286	) 	 	$	75,269	  	 	$	(56,017	) 	 		 	$	(81,408	) 	 	$	—	  	 	$	16,669	  	 	$	8,722	  	 	$	(56,017	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Weighted average number of common shares outstanding, basic	 				 				 				 		 				 				 				 				 				
Weighted average number of common shares outstanding, diluted	 				 				 				 		 				 				 				 				 				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Table of Contents
Fiscal 2012 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(1)	 	 	Pro
Forma	 	 	 	 	AHC	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince,
LLC(3)	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands, except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	707,995	  	 	$	(467,643	)(a) 	 	$	240,352	  	 		 	$	—	  	 	$	 —	  	 	$	240,352	  	 	$	—	  	 	$	240,352	  	
Cost of products sold	 	 	507,905	  	 	 	(375,749	)(a) 	 	 	132,156	  	 		 	 	—	  	 	 	—	  	 	 	132,156	  	 	 	—	  	 	 	132,156	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	200,090	  	 	 	(91,894	) 	 	 	108,196	  	 		 	 	—	  	 	 	—	  	 	 	108,196	  	 	 	—	  	 	 	108,196	  	
Operating Expenses:	 				 				 				 		 				 				 				 				 				
Selling, general and administrative expenses	 	 	177,755	  	 	 	(111,094	)(b) 	 	 	66,661	  	 		 	 	22	(g) 	 	 	—	  	 	 	66,639	(i) 	 	 	—	  	 	 	66,661	  	
Amortization of intangible assets	 	 	1,899	  	 	 	(1,301	) 	 	 	598	  	 		 	 	—	  	 	 	—	  	 	 	598	  	 	 	—	  	 	 	598	  	
Restructuring, environmental remediation and other charges	 	 	5,091	  	 	 	(5,091	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of long-lived assets (excluding goodwill)	 	 	2,349	  	 	 	(2,349	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net	 	 	(7,162	) 	 	 	7,162	(m) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	179,932	  	 	 	(112,673	) 	 	 	67,259	  	 		 	 	22	  	 	 	—	  	 	 	67,237	  	 	 	—	  	 	 	67,259	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations	 	 	20,158	  	 	 	20,779	  	 	 	40,937	  	 		 	 	(22	) 	 	 	—	  	 	 	40,959	  	 	 	—	  	 	 	40,937	  	
Interest expense, net	 	 	122,383	  	 	 	(53,700	)(c) 	 	 	68,683	  	 		 	 	68,683	(h) 	 	 	—	  	 	 	22,903	(j) 	 	 	(22,903	)(k) 	 	 	68,683	  	
Other expense, net	 	 	2,723	  	 	 	(1,944	) 	 	 	779	  	 		 	 	—	  	 	 	—	  	 	 	779	  	 	 	—	  	 	 	779	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	 	 	(104,948	) 	 	 	76,423	  	 	 	(28,525	) 	 		 	 	(68,705	) 	 	 	—	  	 	 	17,277	  	 	 	22,903	  	 	 	(28,525	) 	
Provision for income taxes	 	 	708	  	 	 	15,512	(f) 	 	 	16,220	  	 		 	 	—	  	 	 	—	  	 	 	6,964	  	 	 	9,256	(l) 	 	 	16,220	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(105,656	) 	 	$	60,911	  	 	$	(44,745	) 	 		 	$	(68,705	) 	 	$	—	  	 	$	10,313	  	 	$	13,647	  	 	$	(44,745	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 	 	 				 				 				 				 				
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 	 	 				 				 				 				 				
Weighted average number of common shares outstanding, basic	 				 				 				 		 				 				 				 				 				
Weighted average number of common shares outstanding, diluted	 				 				 				 		 				 				 				 				 				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Table of Contents
First Six Months of Fiscal 2012 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(1)	 	 	Pro
Forma	 	 	 	 	AHC	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince,
LLC(3)	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands, except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	319,445	  	 	$	(228,914	)(a) 	 	$	90,531	  	 		 	$	—	  	 	$	—	  	 	$	90,531	  	 	$	—	  	 	$	90,531	  	
Cost of products sold	 	 	235,293	  	 	 	(185,174	)(a) 	 	 	50,119	  	 		 	 	—	  	 	 	—	  	 	 	50,119	  	 	 	—	  	 	 	50,119	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	84,152	  	 	 	(43,740	) 	 	 	40,412	  	 		 	 	—	  	 	 	—	  	 	 	40,412	  	 	 	—	  	 	 	40,412	  	
Operating Expenses:	 				 				 				 		 				 				 				 				 				
Selling, general and administrative expenses	 	 	83,526	  	 	 	(56,457	)(b) 	 	 	27,069	  	 		 	 	12	(g) 	 	 	—	  	 	 	27,057	(i) 	 	 	—	  	 	 	27,069	  	
Amortization of intangible assets	 	 	950	  	 	 	(651	) 	 	 	299	  	 		 	 	—	  	 	 	—	  	 	 	299	  	 	 	—	  	 	 	299	  	
Restructuring, environmental remediation and other charges	 	 	2,264	  	 	 	(2,264	) 	 				 		 				 				 				 				 				
Impairment of long-lived assets (excluding goodwill)	 	 	717	  	 	 	(717	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net	 	 	(4,507	) 	 	 	4,507	(m) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	82,950	  	 	 	(55,582	) 	 	 	27,368	  	 		 	 	12	  	 	 	—	  	 	 	27,356	  	 	 	—	  	 	 	27,368	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations	 	 	1,202	  	 	 	11,842	  	 	 	13,044	  	 		 	 	(12	) 	 	 	—	  	 	 	13,056	  	 	 	—	  	 	 	13,044	  	
Interest expense, net	 	 	74,151	  	 	 	(26,256	)(c) 	 	 	47,895	  	 		 	 	47,895	(h) 	 	 	—	  	 	 	10,690	(j) 	 	 	(10,690	)(k) 	 	 	47,895	  	
Other expense, net	 	 	1,215	  	 	 	(819	) 	 	 	396	  	 		 	 	—	  	 	 	—	  	 	 	396	  	 	 	—	  	 	 	396	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	 	 	(74,164	) 	 	 	38,917	  	 	 	(35,247	) 	 		 	 	(47,907	) 	 	 	—	  	 	 	1,970	  	 	 	10,690	  	 	 	(35,247	) 	
Provision for income taxes	 	 	2,245	  	 	 	2,872	(f) 	 	 	5,117	  	 		 	 	—	  	 	 	—	  	 	 	789	  	 	 	4,328	(l) 	 	 	5,117	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(76,409	) 	 	$	36,045	  	 	$	(40,364	) 	 		 	$	(47,907	) 	 	$	—	  	 	$	1,181	  	 	$	6,362	  	 	$	(40,364	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Weighted average number of common shares outstanding, basic	 				 				 				 		 				 				 				 				 				
Weighted average number of common shares outstanding, diluted	 				 				 				 		 				 				 				 				 				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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First Six Months of Fiscal 2013 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments(1)	 	 	Pro
Forma	 	 	 	 	AHC	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince,
LLC(3)	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands, except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	363,967	  	 	$	(249,310	)(a) 	 	$	114,657	  	 		 	$	—	  	 	$	—	  	 	$	114,657	  	 	$	—	  	 	$	114,657	  	
Cost of products sold	 	 	256,031	  	 	 	(192,525	)(a) 	 	 	63,506	  	 		 	 	—	  	 	 	—	  	 	 	63,506	  	 	 	—	  	 	 	63,506	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	107,936	  	 	 	(56,785	) 	 	 	51,151	  	 		 	 	—	  	 	 	—	  	 	 	51,151	  	 	 	—	  	 	 	51,151	  	
Operating Expenses:	 				 				 				 		 				 				 				 				 				
Selling, general and administrative expenses	 	 	93,503	  	 	 	(59,537	)(b) 	 	 	33,966	  	 		 	 	12	(g) 	 	 	—	  	 	 	33,954	(i) 	 	 	—	  	 	 	33,966	  	
Amortization of intangible assets	 	 	950	  	 	 	(650	) 	 	 	300	  	 		 	 	—	  	 	 	—	  	 	 	300	  	 	 	—	  	 	 	300	  	
Restructuring, environmental remediation and other charges	 	 	827	  	 	 	(827	) 	 				 		 				 				 				 				 				
Impairment of long-lived assets (excluding goodwill)	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration, net	 	 	(54	) 	 	 	54	(m) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	95,226	  	 	 	(60,960	) 	 	 	34,266	  	 		 	 	12	  	 	 	—	  	 	 	34,254	  	 	 	—	  	 	 	34,266	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations	 	 	12,710	  	 	 	4,175	  	 	 	16,885	  	 		 	 	(12	) 	 	 	—	  	 	 	16,897	  	 				 	 	16,885	  	
Interest expense, net	 	 	43,671	  	 	 	(27,788	)(c) 	 	 	15,883	  	 		 	 	15,883	(h) 	 	 	—	  	 	 	12,429	(j) 	 	 	(12,429	)(k) 	 	 	15,883	  	
Other expense, net	 	 	1,233	  	 	 	(721	) 	 	 	512	  	 		 	 	—	  	 	 	—	  	 	 	512	  	 	 	—	  	 	 	512	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	 	 	(32,194	) 	 	 	32,684	  	 	 	490	  	 		 	 	(15,895	) 	 	 	—	  	 	 	3,956	  	 	 	12,429	  	 	 	490	  	
Provision for income taxes	 	 	2,679	  	 	 	3,909	(f) 	 	 	6,588	  	 		 	 	—	  	 	 	—	  	 	 	1,556	  	 	 	5,035	(l) 	 	 	6,588	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from continuing operations	 	$	(34,873	) 	 	$	28,775	  	 	$	(6,098	) 	 		 	$	(15,895	) 	 	$	—	  	 	$	2,400	  	 	$	7,397	  	 	$	(6,098	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Diluted earnings (loss) per share	 	$	 	  	 				 	$	 	  	 		 				 				 				 				 				
	 	 	 	 	 				 	 	 	 	 		 				 				 				 				 				
Weighted average number of common shares outstanding, basic	 				 				 				 		 				 				 				 				 				
Weighted average number of common shares outstanding, diluted	 				 				 				 		 				 				 				 				 				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Fiscal 2012 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	  	 	 	 	Sun Capital Contribution
and TRA	 	  	This Offering(5)	 	
 	  	Pro Forma
for
Kellwood
Separation(4)	 	 	Sun Capital
Contribution
and TRA
Adjustments	 	 	Pro Forma	 	  	Adjustments	 	  	Pro Forma,
As
Adjusted	 	
(In thousands, except per share amounts)	  	 	 	 	 	 	 	 	 	  	 	 	  	 	 	
Net sales	  	$	240,352	  	 	$	—	  	 	$	240,352	  	  	$	 	  	  	$	 	  	
Cost of products sold	  	 	132,156	  	 	 	—	  	 	 	132,156	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Gross profit	  	 	108,196	  	 	 	—	  	 	 	108,196	  	  				  				
Operating Expenses:	  				 				 				  				  				
Selling, general and administrative expenses	  	 	66,661	  	 	 	—	  	 	 	66,661	  	  				  				
Amortization of intangible assets	  	 	598	  	 	 	—	  	 	 	598	  	  				  				
Restructuring, environmental remediation and other charges	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
Impairment of long-lived assets (excluding goodwill)	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
Impairment of goodwill	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
Change in fair value of contingent consideration, net	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Total operating expenses	  	 	67,259	  	 	 	—	  	 	 	67,259	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Income from operations	  	 	40,937	  	 	 	—	  	 	 	40,937	  	  				  				
Interest expense, net	  	 	68,683	  	 	 	(68,683	)(n) 	 	 	—	  	  				  				
Other expense, net	  	 	779	  	 	 	—	  	 	 	779	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
(Loss) income before provision for income taxes	  	 	(28,525	) 	 	 	68,683	  	 	 	40,158	  	  				  				
Provision for income taxes	  	 	16,220	  	 	 	—	  	 	 	16,220	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Net (loss) income from continuing operations	  	$	(44,745	) 	 	$	68,683	  	 	$	23,938	  	  	$	    	  	  	$	    	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Basic earnings (loss) per share	  	$	 	  	 				 	$	 	  	  				  				
	  	 	 	 	 				 	 	 	 	  	 	 	 	  	 	 	 	
Diluted earnings (loss) per share	  	$	 	  	 				 	$	 	  	  				  				
	  	 	 	 	 				 	 	 	 	  	 	 	 	  	 	 	 	
Weighted average number of common shares outstanding, basic	  				 				 				  				  				
Weighted average number of common shares outstanding, diluted	  				 				 				  				  				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Table of Contents
First Six Months of Fiscal 2013 Unaudited Pro Forma Statement of Operations of Historical Consolidated AHC

 	  	 	 	 	Sun Capital Contribution
and TRA	 	  	This Offering(5)	 	
 	  	Pro Forma for
Kellwood
Separation (4)	 	 	Sun Capital
Contribution
and TRA
Adjustments	 	 	Pro
Forma	 	  	Adjustments	 	  	Pro Forma,
As
Adjusted	 	
(In thousands, except per share amounts)	  	 	 	 	 	 	 	 	 	  	 	 	  	 	 	
Net sales	  	$	114,657	  	 	$	—	  	 	$	114,657	  	  	$	 	  	  	$	 	  	
Cost of products sold	  	 	63,506	  	 	 	—	  	 	 	63,506	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Gross profit	  	 	51,151	  	 	 	—	  	 	 	51,151	  	  				  				
Operating Expenses:	  				 				 				  				  				
Selling, general and administrative expenses	  	 	33,966	  	 	 	—	  	 	 	33,966	  	  				  				
Amortization of intangible assets	  	 	300	  	 	 	—	  	 	 	300	  	  				  				
Impairment of long-lived assets (excluding goodwill)	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
Impairment of goodwill	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
Change in fair value of contingent consideration, net	  	 	—	  	 	 	—	  	 	 	—	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Total operating expenses	  	 	34,266	  	 	 	—	  	 	 	32,466	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Income from operations	  	 	16,885	  	 	 	—	  	 	 	16,885	  	  				  				
Interest expense, net	  	 	15,883	  	 	 	(15,883	)(n) 	 	 	—	  	  				  				
Other expense, net	  	 	512	  	 	 	—	  	 	 	512	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Net income before provision for income taxes	  	 	490	  	 	 	15,883	  	 	 	16,373	  	  				  				
Provision for income taxes	  	 	6,588	  	 	 	—	  	 	 	6,588	  	  				  				
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
(Loss) income from continuing operations	  	$	(6,098	) 	 	$	15,883	  	 	$	9,785	  	  	$	    	  	  	$	    	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Basic (loss) income per share	  	$	 	  	 				 	$	 	  	  				  	$	 	  	
	  	 	 	 	 				 	 	 	 	  				  	 	 	 	
Diluted (loss) income per share	  	$	 	  	 				 	$	 	  	  				  	$	 	  	
	  	 	 	 	 				 	 	 	 	  				  	 	 	 	
Weighted average number of common shares outstanding, basic	  				 				 				  				  				
Weighted average number of common shares outstanding, diluted	  				 				 				  				  				
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet
AHC’s unaudited consolidated balance sheet is presented as of August 3, 2013 on:
 
 	Ÿ 	 	an actual basis;	
 
 	Ÿ 	 	a pro forma basis to give effect to the Kellwood Separation as if it occurred on such date;	
 
 	Ÿ 	 	a pro forma basis to give effect to entry into the TRA as if such transaction occurred on such date; and	
 
 	Ÿ 	 	a pro forma, as adjusted basis to give further effect to this offering and the application of the proceeds therefrom as if such transactions occurred on such date.	
August 3, 2013 Unaudited Pro Forma Balance Sheet of Historical Consolidated AHC

 	 	 	 	 	Kellwood Separation	 	 	 	 	Allocation of Pro Forma(2)	 	
 	 	Historical
Consolidated
AHC	 	 	Kellwood
Separation
Adjustments (6) 	 	 	Pro
Forma	 	 	 	 	AHC 	 	 	Vince
Intermediate
Holding,
LLC	 	 	Vince,
LLC (3) 	 	 	Adjustments	 	 	Pro
Forma	 	
(In thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
ASSETS	 				 				 				 		 				 				 				 				 				
Current assets:	 				 				 				 		 				 				 				 				 				
Cash and cash equivalents	 	$	2,178	  	 	$	(1,853	) 	 	$	325	  	 		 	$	219	  	 	$	—	  	 	$	106	  	 	$	—	  	 	$	325	  	
Receivables, net	 	 	115,718	  	 	 	(75,815	) 	 	 	39,903	  	 		 	 	—	  	 	 	—	  	 	 	39,903	  	 	 	—	  	 	 	39,903	  	
Inventories, net	 	 	93,858	  	 	 	(65,853	) 	 	 	28,005	  	 		 	 	—	  	 	 	—	  	 	 	28,005	  	 	 	—	  	 	 	28,005	  	
Prepaid expenses and other current assets	 	 	17,001	  	 	 	(2,342	)(o) 	 	 	14,659	(o) 	 		 	 	—	  	 	 	—	  	 	 	14,589	  	 	 	70	(k) 	 	 	14,659	  	
Current assets of discontinued operations	 	 	136	  	 	 	(136	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	228,891	  	 	 	(145,999	) 	 	 	82,892	  	 		 	 	219	  	 	 	—	  	 	 	82,603	  	 	 	70	  	 	 	82,892	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	20,261	  	 	 	(10,763	) 	 	 	9,498	  	 		 	 	—	  	 	 	—	  	 	 	9,498	  	 				 	 	9,498	  	
Intangible assets, net	 	 	145,331	  	 	 	(34,789	) 	 	 	110,542	  	 		 	 	—	  	 	 	—	  	 	 	110,542	  	 	 	—	  	 	 	110,542	  	
Goodwill	 	 	65,876	  	 	 	(2,130	) 	 	 	63,746	  	 		 	 	—	  	 	 	—	  	 	 	63,746	  	 	 	—	  	 	 	63,746	  	
Other assets	 	 	7,405	  	 	 	115,497	(o) 	 	 	122,902	(o) 	 		 	 	—	  	 	 	69,744	(t) 	 	 	24,173	  	 	 	28,985	(u) 	 	 	122,902	  	
Long-term assets of discontinued operations	 	 	27	  	 	 	(27	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total assets	 	$	467,791	  	 	$	(78,211	) 	 	$	389,580	  	 		 	$	219	  	 	$	69,744	  	 	$	290,562	  	 	$	29,055	  	 	$	389,580	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ DEFICIT	 				 				 				 		 				 				 				 				 				
Current liabilities:	 				 				 				 		 				 				 				 				 				
Short-term borrowings	 	 	115,601	  	 	 	(115,601	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	115,601	(j) 	 	 	(115,601	)(k) 	 	 	—	  	
Accounts payable	 	 	73,510	  	 	 	(45,572	) 	 	 	27,938	  	 		 	 	—	  	 	 	—	  	 	 	27,938	  	 	 	—	  	 	 	27,938	  	
Accrued salaries and employee benefits	 	 	13,886	  	 	 	(11,561	) 	 	 	2,325	  	 		 	 	—	  	 	 	—	  	 	 	2,325	  	 	 	—	  	 	 	2,325	  	
Other accrued expenses	 	 	16,535	  	 	 	(14,275	) 	 	 	2,260	  	 		 	 	181	  	 	 	—	  	 	 	2,141	  	 	 	(62	)(k) 	 	 	2,260	  	
Kellwood Note Receivable	 	 	—	  	 	 	385,000	(p) 	 	 	385,000	  	 		 	 	—	  	 	 	385,000	(p) 	 	 	—	  	 	 	—	  	 	 	385,000	 	
Current liabilities of discontinued operations	 	 	1,698	  	 	 	(1,698	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	221,230	  	 	 	196,293	  	 	 	417,523	  	 		 	 	181	  	 	 	385,000	  	 	 	148,005	  	 	 	(115,663	) 	 	 	417,523	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt	 	 	386,842	  	 	 	(386,842	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	163,675	  	 	 	(163,675	) 	 	 	—	  	
Deferred income taxes and other	 	 	36,409	  	 	 	(33,167	)(o) 	 	 	3,242	(o) 	 		 	 	—	  	 	 	—	  	 	 	5,041	  	 	 	(1,799	) 	 	 	3,242	  	
Tax Receivable Agreement due	 	 	—	  	 				 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Long-term liabilities of discontinued operations	 	 	2,412	  	 	 	(2,412	) 	 	 	—	  	 		 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ deficit invested equity	 	 	(179,102	) 	 	 	147,917	(q) 	 	 	(31,185	) 	 		 	 	38	  	 	 	(315,256	) 	 	 	(26,159	) 	 	 	310,192	  	 	 	(31,185	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and stockholders’ deficit/invested equity	 	$	467,791	  	 	$	(78,211	) 	 	$	389,580	  	 		 	$	219	  	 	$	69,744	  	 	$	290,562	  	 	$	29,055	  	 	$	389,580	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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August 3, 2013 Unaudited Pro Forma Balance Sheet of Historical Consolidated AHC

																	
 	 	Pro Forma
for
Kellwood
Separation(4)	 	 	Sun Capital
Contribution and TRA	 	 	This Offering(7)	
 	 			 	Sun Capital
Contribution
and TRA
Adjustments	 	  	Pro
Forma	 	 	Adjustments	 	Pro Forma,
As Adjusted	
(In thousands)	 	 	 	 	 	 	  	 	 	 	 	 	 	
ASSETS	 				 				  				 		 		
Current assets:	 				 				  				 		 		
Cash and cash equivalents	 	$	325	  	 	$	—	  	  	$	325	  	 		 		
Receivables, net	 	 	39,903	  	 	 	—	  	  	 	39,903	  	 		 		
Inventories, net	 	 	28,005	  	 	 	—	  	  	 	28,005	  	 		 		
Prepaid expenses and other current assets	 	 	14,659	  	 	 	—	  	  	 	14,659	  	 		 		
Current assets of discontinued operations	 	 	—	  	 	 	—	  	  	 	—	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	 	 	82,892	  	 	 	—	  	  	 	82,892	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	9,498	  	 	 	—	  	  	 	9,498	  	 		 		
Intangible assets, net	 	 	110,542	  	 	 	—	  	  	 	110,542	  	 		 		
Goodwill	 	 	63,746	  	 	 	—	  	  	 	63,746	  	 		 		
Other assets	 	 	122,902	  	 	 	—	  	  	 	122,902	  	 		 		
Long-term assets of discontinued operations	 	 	—	  	 	 	—	  	  	 	—	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total assets	 	$	389,580	  	 	$	—	  	  	$	389,580	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ DEFICIT	 				 				  				 		 		
Current liabilities:	 				 				  				 		 		
Short-term borrowings	 	 	—	  	 	 	—	  	  	 	—	  	 		 		
Accounts payable	 	 	27,938	  	 	 	—	  	  	 	27,938	  	 		 		
Accrued salaries and employee benefits	 	 	2,325	  	 	 	—	  	  	 	2,325	  	 		 		
Other accrued expenses	 	 	2,260	  	 	 	—	  	  	 	2,260	  	 		 		
Kellwood Note Receivable	 	 	385,000	  	 	 	—	  	  	 	385,000	  	 		 		
Current liabilities of discontinued operations	 	 	—	  	 	 	—	  	  	 	—	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current liabilities	 	 	417,523	  	 	 	—	  	  	 	417,523	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Long-term debt	 	 	—	  	 	 	—	  	  	 	—	  	 		 		
Deferred income taxes and other	 	 	3,242	  	 	 	—	  	  	 	3,242	  	 		 		
Tax Receivable Agreement due	 	 	—	  	 	 	172,151	(r) 	  	 	172,151	  	 		 		
Long-term liabilities of discontinued operations	 	 	—	  	 	 	—	  	  				 		 		
Total stockholders’ deficit	 	 	(31,185	) 	 	 	(172,151	)(s) 	  	 	(203,336	) 	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ deficit	 	$	389,580	  	 	$	—	  	  	$	389,580	  	 		 		
	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
See accompanying notes to Unaudited Pro Forma Consolidated Financial Data.
 
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Notes to Unaudited Pro Forma Consolidated Financial Data
 
(1)	As described within “Restructuring Transactions” included elsewhere in this prospectus, AHC will use a series of transactions to legally separate the non-Vince businesses from the Vince business immediately prior to the consummation of this offering. Once these transactions have occurred, the non-Vince businesses will be owned and operated separately from us. After consummation of this offering, the Vince business will be our only assets, liabilities, and operations. An investment in us after giving effect to the IPO Restructuring Transactions is an investment in the Vince business. We will not have ongoing involvement with the non-Vince businesses following separation, with the exception of our payments to Kellwood for certain services to be provided under the Shared Services Agreement as further described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC— Shared Services Agreement” contained elsewhere in this prospectus. Similarly, Kellwood will not have ongoing involvement in our business, other than pursuant to the Shared Services Agreement. Following the consummation of this offering, we expect to report the non-Vince businesses as discontinued operations in accordance with ASC Topic 205 Presentation of Financial Statements beginning with our first financial statements filed after the effectiveness of the registration statement of which this prospectus forms a part. All pro forma adjustments to AHC’s historical financial statements that relate to the separation of the Vince business from the non-Vince businesses are described as Kellwood Separation Adjustments and they are included under the caption “Kellwood Separation.”	
 
    	As the Kellwood Separation is expected to have a material impact on AHC’s results of operations, AHC has included unaudited pro forma financial statements of operations for fiscal 2010, fiscal 2011 and fiscal 2012, as well as for the first six months of fiscal 2012 and fiscal 2013 which gives effect to the Kellwood Separation as though it occurred at the beginning of fiscal 2010. AHC has also included an unaudited pro forma balance sheet as of August 3, 2013, which give effect to the Kellwood Separation as though it had occurred on that date, at which time the non-Vince businesses would be presented as discontinued operations for all historical reporting periods. There will be no gain or loss recognized as a result of the IPO Restructuring Transactions because the entities involved in the transactions are under the common control of affiliates of Sun Capital.	
 
(2)	Set forth within the tables is supplemental disclosure of the allocation of the pro forma results of operations and financial position of the Kellwood Separation Adjustments. This supplemental disclosure is referred to as “Allocation of Pro Forma” and represents the allocation of the unaudited pro forma results of operations and financial position among Apparel Holding Corp., Vince Intermediate Holding, LLC and Vince, LLC after giving effect to the Kellwood Separation. Apparel Holding Corp., Vince Intermediate Holding, LLC and Vince, LLC, collectively, will represent the three corporate or limited liability company entities that represent the consolidated group that will constitute the Vince business after consummation of the IPO Restructuring Transactions. The financial results of Vince, LLC are presented since after giving effect to the IPO Restructuring Transactions as Vince, LLC will be the sole operating subsidiary of the business in which you are investing. The Vince, LLC financials have been prepared on a stand-alone carve-out basis. As such, we present an adjustment column within the “Allocation of Pro Forma” table to reconcile the Vince, LLC financials on a stand-alone carve-out basis with the pro-forma presentation of AHC after giving effect to the Kellwood Separation. The amounts presented for AHC within the Allocation of Pro Forma table are exclusive of AHC’s investment in Vince, LLC.	
 
(3)	Amounts are derived from the Vince, LLC audited financial statements included elsewhere in this prospectus. Those audited statements were prepared on a standalone carve-out basis. The Vince, LLC financial statements include short-term borrowings, long-term debt and interest expense related to certain Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. Such debt instruments and related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder.	
 
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    	Provision for income taxes in the Vince, LLC financial statements has been determined on a stand-alone basis (i.e. on a “separate return” basis.) As such, the assessment of the realization of net deferred tax assets, the need for a valuation allowance and judgments on the recognition of tax benefits were based on Vince, LLC’s own facts and circumstances and excluded from that assessment were any impacts of the overall results of the non-Vince businesses. The provision for income taxes is not necessarily indicative of the income taxes that would have been recorded had the Vince business been owned and operated separately from the non-Vince businesses during the periods presented.	
 
(4)	Reflects the unaudited pro forma results of operations and financial position of AHC after giving effect to the Kellwood Separation.	
 
(5)	Presented on a pro forma, as adjusted basis to further reflect (i) our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $             per share, the midpoint of the range appearing on the cover page of this prospectus, after deducting the assumed underwriting discount and commissions and our estimated fees and expenses payable by us and (ii) our use of these proceeds and the incurrence of $             million of borrowings under our new term loan facility, as described in “Use of Proceeds,” including repayment of the Kellwood Note Receivable. As reflected in the table, the interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $             million or $             million, respectively.	
 
(6)	AHC will use a series of transactions to legally separate the Vince business from the non-Vince businesses immediately prior to consummation of this offering. We refer to this series of transactions as the Kellwood Separation. Once these transactions have occurred, the non-Vince businesses will be owned and operated separately from us and we will present the historical non-Vince businesses as discontinued operations. These pro forma adjustments give effect to the removal of assets and liabilities of the non-Vince businesses, and the net impact of these transactions are reflected as an adjustment to consolidated AHC’s additional paid in capital.	
 
a)	AHC has maintained distinct financial records of the non-Vince businesses, separate from the Vince business, which include all of the direct revenues and charges pertaining to the applicable business, as appropriate. All operating revenues and cost of sales can be identified as specifically pertaining to sales of products of the non-Vince or Vince business, as applicable.	
 
b)	As noted above in note (a), AHC has maintained distinct financial records of its Vince and non-Vince businesses. Any SG&A expenses identified as directly pertaining to the Vince or non-Vince businesses are charged directly to the Vince or non-Vince businesses, as appropriate. Additionally, the Vince business is charged for the use of services provided by centralized Kellwood departments and shared facilities. These charges are based upon the actual cost incurred, without mark-up. These functions and facilities will remain with Kellwood upon separation, and will continue to be an integral part of that business going forward. We will continue to use certain of these services for a period of time through the Shared Services Agreement (as described in “Other information related to the Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement”) and will be charged accordingly. The charges to Vince, LLC may not be representative of what the costs would have been had the Vince business been owned and operated separately from the non-Vince businesses during the periods presented, however management believes the amounts to be charged to Vince, LLC are representative of the incremental cost to Kellwood to service the Vince business.	
 
c)	This pro forma adjustment represents Kellwood Company indebtedness and related interest expense, including under the Wells Fargo Facility, the Cerberus Term Loan, the Sun Term Loan Agreements, the 12.875%, the 7.625% Notes and the 3.5% Convertible Notes. These debt instruments and related interest expense are allocated to discontinued operations as the related indebtedness will be repaid, refinanced, discharged or repurchased in connection with the Kellwood Separation or, with respect to those obligations for which Vince, LLC is neither a	
 
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 	borrower nor a guarantor, they will remain obligations of Kellwood Company. Most of the proceeds from this offering, along with the borrowings under our new term loan facility, will be used to repay, discharge or repurchase the related obligations under such instruments (other than the Wells Fargo Facility which will separately be refinanced by Kellwood Company, LLC in connection with this offering) and to pay (i) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (ii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements.” It is currently estimated that the restructuring fee described in clause (i) above and payable to Sun Capital Management in connection with this offering will total $3.5 million. None of the debt obligations that have been allocated to discontinued operations are expected to be retained by the non-Vince businesses subsequent to the consummation of this offering (except for indebtedness for which Vince, LLC is neither a guarantor or obligor and which is to be repaid, refinanced, discharged or repurchased after the closing of this offering with disbursements from the escrow account, as described in “Use of Proceeds” and “Restructuring Transactions” and after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates).	
 
d)	This pro forma adjustment relates to the $0.9 million gain on the acquisition of the Adam operations in fiscal 2010 as the fair value of the identifiable assets less the liabilities assumed exceeded the fair value of the purchase price consideration.	
 
e)	This pro forma adjustment relates to the $15.9 million gain on debt extinguishment as a result of AHC’s repurchase of $29.7 million of face value of certain notes outstanding from an affiliate of Sun Capital for $9.1 million in cash.	
 
f)	AHC has historically included the operating results of the combined Vince business and non-Vince businesses in its U.S. federal and state income tax returns. Provision for income taxes in this pro forma presentation have been determined assuming the Kellwood Separation had occurred at the beginning of the earliest period presented, and would therefore exclude the historical operating results of the non-Vince businesses. These amounts are not necessarily indicative of the provision for income taxes that would have been recorded had we operated separately from the non-Vince businesses during the periods presented. The adjustment represents the difference between the amount calculated in accordance with the methodology described herein and the historical amounts recorded. The effective tax rate in this pro forma presentation differs from the U.S. statutory tax rate of 35% primarily due to the AHC interest expense that is disallowed for income tax purposes.	
 
g)	AHC has incurred certain costs related to maintaining its corporate existence and other related overhead costs. These have not been allocated to any of AHC’s subsidiaries. These costs will remain in continuing operations subsequent to the Kellwood Separation due to their ongoing nature as related corporate overhead.	
 
h)	The amounts reflected in interest expense, net for the AHC within the “Allocation of Pro Forma” table represent the interest expense related to AHC’s indebtedness to affiliates of Sun Capital under the Sun Capital Loan Agreement and the Sun Promissory Notes. This debt, and related interest expense, will not be allocated to discontinued operations for historical periods as a result of the Kellwood Separation. Effective June 18, 2013, affiliate of Sun Capital contributed the $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Note as a capital contribution to Apparel Holding Corp. in the Sun Capital Contribution. Accordingly, for periods subsequent to June 18, 2013 AHC ceased to accrue any interest expense related to that debt.	
 
i)	The Vince, LLC financial statements were prepared on a standalone carve-out basis and include SG&A expenses related to the Vince business, including the impact of our public company	
 
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 	transition costs and certain other one-time costs. This results in an amount similar to the SG&A expenses reflected within the AHC pro forma column as expenses related to the Kellwood departments and services to be utilized by us under the Shared Services Agreement will be included as part of the discontinued operations in this pro forma presentation.	
 
j)	Short-term borrowings represent borrowings under the Wells Fargo Facility. Long-term debt includes the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments, the related capitalized deferred issuance costs and related accrued interest and interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. Notwithstanding the foregoing, the related obligations under these debt instruments and the associated expenses are excluded from the historical AHC pro forma financials as they will be reported as part of discontinued operations after consummation of the IPO Restructuring Transactions. Additionally, after consummation of this offering, neither Vince Holding Corp. nor any subsidiary thereof (including Vince, LLC) will have any obligations under any of these agreements or instruments, which are to be repaid, refinanced, repurchased or discharged by Kellwood Company, LLC in connection with this offering (after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates, as described in “Restructuring Transactions.”)	
 
k)	The purpose of the adjustment is to reconcile short-term borrowings, long-term debt, accrued interest, deferred debt issuance costs and related interest expense contained in the Vince, LLC financial statements to that of pro forma consolidated AHC financial statements after giving effect to the Kellwood Separation (to remove the Wells Fargo Facility, Cerberus Term Loan and Sun Term Loan Agreements which are contained in the Vince, LLC financial statements).	
 
l)	The provision for income taxes was calculated on a separate-return basis for the Vince, LLC financial statements. The purpose of the adjustment is to reconcile the basis of presentation used in preparing the Vince, LLC financial statements to that of the pro forma consolidated AHC financial statements after giving effect to the Kellwood Separation.	
 
m)	This pro forma adjustment represents the charges to adjust the fair value of contingent consideration for the non-Vince businesses of Rebecca Taylor and Zobha brands due to decreases in estimated contingent purchase price consideration related to the acquisition of such brands.	
 
n)	On June 18, 2013, affiliates of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes to AHC in the Sun Capital Contribution. The contributed indebtedness consisted of $369.5 million of outstanding principal balances and $38.0 million of capitalized PIK interest. This pro forma adjustment gives effect to that contribution for fiscal 2012 and the first six months of fiscal 2013 as of the beginning of fiscal 2012 for the unaudited pro forma consolidated statement of operations. As such, the related interest expense on such indebtedness has been removed from AHC’s pro forma statements of operations for fiscal 2012 and the first six months of fiscal 2013.	
 
o)	Set forth in the tables below is additional detail regarding the composition of the following financial statement line items appearing on the unaudited pro forma balance sheet as of August 3, 2013: prepaid expenses and other current assets, other assets, and deferred income taxes and other. We have provided additional information within these tables to explain the calculation and composition of the aforementioned balances in the pro forma presentation.	
 
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 	  	 	 	  	Kellwood Separation	 	
(in thousands)	  	 	 	  	 	 	 	 	 	
 	  	Historical
Consolidated
AHC	 	  	Kellwood
Separation
Adjustments	 	 	Pro Forma	 	
Prepaid expenses and other current assets	  				  				 				
Net current deferred tax assets	  	$	110	  	  	$	2,662	  	 	$	2,772	(i) 	
Other prepaid expenses and other current assets	  	 	16,891	  	  	 	(5,004	)(iii) 	 	 	11,887	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total prepaid expenses and other current assets	  	$	17,001	  	  	$	(2,342	) 	 	$	14,659	  	

Other assets	  				  				 				
Net long-term deferred tax assets	  	$	116	  	  	$	121,092	  	 	$	121,208	  	
Deferred debt issuance costs	  	 	3,835	  	  	 	(3,835	)(ii) 	 	 	—	  	
Other long-term assets	  	 	3,454	  	  	 	(1,760	)(iii) 	 	 	1,694	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total other assets	  	$	7,405	  	  	$	115,497	  	 	$	122,902	  	

Deferred income taxes and other	  				  				 				
Non-current uncertain tax positions	  	$	388	  	  	$	(388	)(iii) 	 	$	—	  	
Non-current deferred tax liabilities	  	 	3,699	  	  	 	(3,699	) 	 	 	—	(i) 	
Other non-current liabilities	  	 	32,322	  	  	 	(29,080	)(iii) 	 	 	3,242	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total deferred income taxes and other	  	$	36,409	  	  	$	(33,167	) 	 	$	3,242	  	

 	(i)	These transactions have been structured in such a way as to preserve a significant amount of tax assets that may otherwise expire prior to being used. Various federal and state net operating losses are available to offset future taxable income; however a full valuation allowance was placed on these assets as AHC’s historical pretax losses indicated that the realization of these benefits was not more likely than not. As Kellwood Company converts to a limited liability company structure as a result of the IPO Restructuring Transactions and becomes Kellwood Company, LLC, the tax assets which will attach to and be available for use by the Vince business after the Kellwood Separation and as such, the pro forma balance sheet gives effect to such conversion.	
 
 	    	After the Kellwood Separation, there are also deferred tax assets related to Section 197 intangibles of the non-Vince businesses and other net deferred tax liabilities related to Kellwood that will carry over to the Vince business after the consummation of this offering.	

Pro forma deferred income tax assets and liabilities consist of the following (in thousands):	  	
Federal and state net operating losses	  	$	77,640	  	
Section 197 intangible basis of the non-Vince businesses	  	 	39,430	  	
Release of valuation allowance on deferred tax assets of the Vince business	  	 	14,808	  	
Other deferred tax liabilities	  	 	(7,898	) 	
	  	 	 	 	
Total net deferred taxes	  	$	123,980	  	
	  	 	 	 	
Pro forma deferred income tax assets and liabilities included in:	  				
Net current deferred tax assets	  	$	2,772	  	
Net non-current deferred tax assets	  	 	121,208	  	
Non-current deferred tax liabilities	  	 	—  	  	
	  	 	 	 	
Total net deferred income taxes	  	$	123,980	  	

 	    	The net deferred tax assets discussed above are all currently recorded in the financial statements of AHC. However, they are fully offset with a valuation allowance. The valuation allowance is released upon the Kellwood Separation, the offset of which is deemed to be additional paid in capital. The use of these assets is subject to the TRA, as further discussed in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement.” Under the TRA we will be obligated to pay to our pre-IPO stockholders 85% of the cash savings on federal, state and local income taxes realized by us through our use of the net tax assets held by us subsequent to the	
 
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 	Kellwood Separation. The difference between the net deferred income tax assets of $124.0 million and the $172.1 million amount due under the Tax Receivable Agreement is due primarily to the book basis of Vince, LLC Section 197 intangible assets. Such assets have not yet generated a deferred tax asset but the tax amortization will be subject to the Tax Receivable Agreement.	
 
 	(ii)	Deferred debt issuance costs relate to Kellwood indebtedness which will be allocated to discontinued operations in connection with the Kellwood Separation.	
 
 	(iii)	These pro forma adjustments give effect to the removal of assets and liabilities of the non-Vince businesses in the Kellwood Separation.	
 
p)	As a result of the IPO Restructuring Transactions, Vince Intermediate Holding, LLC will acquire Vince, LLC from Kellwood Company, LLC in exchange for the Kellwood Note Receivable. The principal amount of the Kellwood Note Receivable represents (i) the face value amount of the indebtedness, including accrued and unpaid interest and any related fees and expenses, to be repaid, discharged or repurchased by Kellwood Company, LLC in connection with the consummation of this offering and the repayment of the Kellwood Note Receivable by us, (ii) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (iii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements,” all partially offset by (iv) indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. It is currently estimated that the restructuring fee described in clause (ii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million. Most of the proceeds from this offering, along with $             million of indebtedness under our new term loan facility, will be used to repay the Kellwood Note Receivable. As of August 31, 2013, we estimated the amount payable by Vince Intermediate Holding, LLC to Kellwood Company, LLC under the Kellwood Note Receivable to be approximately $385.0 million.	
 
    	All Kellwood Company long-term indebtedness outstanding (including accrued and unpaid interest and any related fees and expenses) will be repaid, discharged or repurchased with proceeds from the Kellwood Note Receivable (after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates).	
Kellwood Company long-term debt as of August 3, 2013 presented in AHC Financial Statements (dollars in thousands:

 	  	Face
Value	 	  	Less:
Discount(1)	 	 	Carrying
Value	 	
Cerberus Term Loan	  	$	45,660	  	  	$	—	  	 	$	45,660	  	
Sun Term Loan Agreements	  	 	118,015	  	  	 	—	  	 	 	118,015	  	
12.875% Notes	  	 	146,768	  	  	 	(2,806	) 	 	 	143,962	  	
7.625% Notes.	  	 	86,953	  	  	 	(7,962	) 	 	 	78,991	  	
3.5% Convertible Debt	  	 	214	  	  	 	—	  	 	 	214	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  	$	397,610	  	  	$	(10,768	) 	 	$	386,842	  	

(1)      Represents original issue discount.	         	
 
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Kellwood Company long-term debt as of August 3, 2013 presented in Vince, LLC Financial Statements (as a borrower party, dollars in thousands):

 	  	Face
Value	 	  	Less:
Discount	 	  	Carrying
Value	 	
Cerberus Term Loan.	  	$	45,660	  	  	$	—	  	  	$	45,660	  	
Sun Term Loan Agreements	  	 	118,015	  	  	 	—	  	  	 	118,015	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total(1)	  	$	163,675	  	  	$	—	  	  	$	163,675	  	

(1)      Does not include the 12.875% Notes in accordance with GAAP requirements as Vince, LLC is only a guarantor, rather than an obligor, of such obligations.	          	
Kellwood Company, LLC’s expected use of the proceeds from the repayment of the Kellwood Note Receivable as of August 3, 2013 is as follows (dollars in thousands):

 	  	Face
Value	 	  	Accrued
Interest	 	  	Total	 	
Cerberus Term Loan.	  	$	45,660	  	  	$	—	  	  	$	45,660	  	
Sun Term Loan Agreements	  	 	118,015	  	  	 	—	  	  	 	118,015	  	
12.875% Notes	  	 	146,768	  	  	 	787	  	  	 	147,555	  	
1% restructuring fee payable to Sun Capital Management	  	 	—	  	  	 	—	  	  	 	3,500	  	
Debt recovery bonus payable to our Chief Executive Officer	  	 	—	  	  	 	—	  	  	 	6,000	  	
7.625% Notes and 3.5% Convertible Debt.	  	 	87,167	  	  	 	1,935	  	  	 	89,102	  	
Estimated related third-party fees and expenses	  	 	—	  	  	 	—	  	  	 	2,000	  	
Debt forgiveness or capital contribution by Sun Capital or its affiliates	  	 	—	  	  	 	—	  	  	 	(26,832	) 	
	  				  				  	 	 	 	
Total uses	  				  				  	$	385,000	  	

q)	Adjustment represents the net impact of the removal of assets and liabilities of the non-Vince businesses with the net impact reflected within stockholders’ deficit as additional paid in capital.	
 
r)	As described in “Other information related to the Offering—Certain Relationships and Related Party transactions of AHC—Tax Receivable Agreement” included elsewhere in this prospectus, we will enter into the TRA with the Pre-IPO Stockholders, where we will be obligated to pay 85% of cash savings on federal, state and local income taxes realized by us through our use of certain net tax assets held by us subsequent to the Kellwood Separation. This pro forma adjustment gives effect to what we believe the expected liability would have been under such agreement after giving effect to the IPO Restructuring Transactions as though such events had occurred on August 3, 2013. We estimate $30.4 million of net cash savings (after the 85% due to the Pre-IPO stockholders) on federal, state and local income taxes realized by us through our use of certain net tax assets held by us subsequent to the Kellwood Separation. Our ability to realize the net cash savings described in the previous sentence will depend upon a number of factors, including the amount and timing of taxable income we generate in the future and any future limitations that may be imposed on our ability to use certain net tax assets.	
(s)	The adjustment to additional paid in capital represents the entry into the TRA of $172.2 million.	
 
(t)	$69.7 million of deferred tax assets are allocated to Vince Intermediate Holding, LLC. These include $77.6 million of deferred tax assets related to historical NOL carry forwards and $7.9 million of other deferred tax liabilities generated by Kellwood Company that will transfer to Vince Intermediate Holding, LLC upon Kellwood Company’s conversion to a limited liability company.	
 
(u)	The $29.0 million proforma adjustment primarily relates to the $39.4 million of deferred tax assets related to the Section 197 intangible basis of the non-Vince businesses that will attach to the Vince Section 197 intangibles upon separation from Kellwood. This additional deferred tax asset is partially offset by a $7.9 million difference in the deferred income taxes computed on a separate-return basis for Vince, LLC and the overall pro forma consolidated AHC deferred income taxes. It is also partially offset by $2.5 million of deferred debt issuance costs which are reported in the Vince, LLC other assets financial statement line item but excluded from the pro forma AHC other assets financial statement line item after giving effect to the Kellwood Separation.	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF AHC
You should read the following discussion together with “Additional Information Related to AHC—Selected Historical Consolidated Financial Data of AHC” and the consolidated financial statements and related notes of Apparel Holding Corp. included elsewhere in this prospectus. The statements in this discussion regarding expectations of AHC’s future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors—Risks Related to AHC” and “Special Note Regarding Forward-Looking Statements.” AHC’s actual results may differ materially from those contained in or implied by any forward-looking statements. As used in this section, unless the context requires otherwise, “AHC” refers to Apparel Holding Corp. and its consolidated subsidiaries prior to giving effect to the IPO Restructuring Transactions, and “Kellwood” refers to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions.
The businesses of AHC described in this section represent its various operations, including the Vince and non-Vince businesses. The non-Vince businesses will not be owned by investors in this offering following the IPO Restructuring Transactions. For a discussion and analysis of the financial information relating solely to the Vince business, please see “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC.”
Business Summary
AHC is a holding company, controlled by the affiliates of Sun Capital. In 2008, AHC acquired Kellwood Company and its subsidiaries. Kellwood Company was founded in 1961 as the successor by merger of fifteen independent suppliers to Sears, Roebuck & Co. (“Sears”). Beginning in 1985, Kellwood implemented a strategy to expand its branded business, broaden its customer base, diversify its distribution channels and further develop its global product sourcing capability. As a result of this strategy, AHC has redirected its focus from the manufacturing of private label apparel and home fashions for Sears to the development of branded fashion apparel and recreational products. As part of this strategy, AHC also acquired various apparel companies or businesses and has divested numerous others. AHC now has a diversified brand portfolio that serves a broad range of customer segments across multiple wholesale partners and through its own retail stores and websites.
AHC did not have any customers that accounted for more than 10% of consolidated net sales from continuing operations during fiscal 2012. In fiscal 2011, sales to Kohl’s accounted for more than 10% of the consolidated net sales of continuing operations. These sales represented 14% of fiscal 2011 net sales. In fiscal 2010, sales to Kohl’s and Macy’s accounted for more than 10% of the consolidated net sales from continuing operations. These sales represented 15% and 12% of fiscal 2010 net sales, respectively.
AHC manufactures, distributes and markets products under many brands, some of which it owns, and others that are under licensing agreements. In addition, AHC has four reportable segments, as set forth below:
 
 	Ÿ 	 	Vince : Contemporary fashion apparel and accessories sold under the Vince ® brand name through wholesale distribution to premier department stores and specialty stores as well as direct-to-consumer through Vince’s retail stores and the www.vince.com website;	
 
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 	Ÿ 	 	American Recreational Products (“ARP”) : Recreational apparel and products sold under Kelty, Sierra Designs, Ultimate Direction, Slumberjack, Wenzel and Isis brand names through wholesale distribution to retailers as well as through websites;	
 
 	Ÿ 	 	Juniors : A collection of denim, dresses and sportswear labels that appeal to girls and young women sold under the Rewind, My Michelle and Jolt brand name as well as private label to wholesale partners. Additionally, AHC licenses the XOXO brand name and produces apparel under that name for wholesale partners within this segment; and	
 
 	Ÿ 	 	Moderate : Moderately priced related separates and pants covering career and casual lifestyle sold through wholesale distribution and produced under private labels as well as under the Sag Harbor and Briggs New York brands.	
Performance results of AHC’s remaining operating segments, primarily apparel sold under the Rebecca Taylor, Democracy, Jax and Sangria brands as well as under the licensed David Meister brand, have been combined in Other, as none of these brands individually meets the quantitative thresholds for disclosures as a reportable segment. Other operations accounted for less than 25% of AHC’s revenues in each of fiscal 2010, fiscal 2011 and fiscal 2012 and the first six months of fiscal 2013.
In connection with this offering, all AHC segments other than the Vince segment will be separated from AHC in the IPO Restructuring Transactions, as defined elsewhere in this prospectus, by Apparel Holding Corp., the entity offering stock in this offering. Apparel Holding Corp. will report operations from all segments other than the Vince segment as discontinued operations in future reporting periods after the consummation of this offering.
Basis of Presentation
AHC operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year.
 
 	Ÿ 	 	References to “fiscal year 2012” or “fiscal 2012” refer to the fiscal year ended February 2, 2013;	
 
 	Ÿ 	 	References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012;	
 
 	Ÿ 	 	References to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011;	
 
 	Ÿ 	 	References to “the first six months of fiscal 2012” refer to the six month period ended July 28, 2012; and	
 
 	Ÿ 	 	References to “the first six months of fiscal 2013” refer to the six month period ended August 3, 2013.	
Fiscal year 2012 consisted of a 53-week period and each of fiscal 2011 and fiscal 2010 consisted of a 52-week period. Each of the first six months of fiscal 2012 and the first six months of fiscal 2013 consisted of a 26-week period.
Net sales.     Net sales consists of revenues from the sale of products, less returns, discounts and allowances and other offsets to net sales as well as shipping and handling fees and licensing fees and royalties. In AHC’s wholesale operations, revenue is recognized when goods are shipped in accordance with customer orders, at which point title passes. Provisions for discounts, returns and other allowances are recorded as a reduction of net sales in the same period as the related sales. In
 
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AHC’s direct to consumer operations, revenue is recognized at the time of customer purchase in retail stores, and at the time of shipment for customer e-commerce orders. During the second quarter of fiscal 2013, AHC divested its Zobha business to focus resources on its larger contemporary and Juniors brands. Accordingly the historical results of operations and financial position of the Zobha business are reported as discontinued operations for all periods presented.
Cost of products sold .    AHC’s cost of products sold includes:
 
 	Ÿ 	 	the cost of purchased merchandise, including raw materials;	
 
 	Ÿ 	 	the cost of inbound transportation, including freight;	
 
 	Ÿ 	 	the cost of production, sourcing and technical design departments;	
 
 	Ÿ 	 	other processing costs associated with acquiring and preparing the inventory for sale;	
 
 	Ÿ 	 	shrink and valuation reserves;	
 
 	Ÿ 	 	royalties for licensed brand names; and	
 
 	Ÿ 	 	depreciation on owned facilities and equipment.	
There may be variations in the costs that other companies use to calculate gross profit. As a result, data in this prospectus regarding AHC’s gross profit dollars and gross margin may not be comparable with similar data made available by other companies.
Gross profit/Gross margin .    Gross profit is defined as net sales less the cost of products sold. Gross margin is the percentage of gross profit to net sales.
Selling, general and administrative expenses .    AHC’s SG&A expenses consist of marketing, advertising, design, occupancy, certain distribution costs, salaries and benefits and other corporate overhead.
Amortization of intangible assets .    Amortization of intangible assets consists of straight-line amortization expense on definite-lived intangible assets over their useful lives (10 or 20 years). These assets are comprised of customer relationships and were valued at the time of AHC’s acquisition of Kellwood Company in 2008. Definite-lived intangible assets are tested for impairment if a triggering event occurs.
Restructuring, environmental remediation and other charges.     AHC’s restructuring, environmental remediation and other charges consist of:
 
 	Ÿ 	 	Restructuring expenses associated with efforts to continuously improve operational and organizational efficiency such as costs for moving facilities, exiting businesses, curtailing/downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions;	
 
 	Ÿ 	 	Charges to adjust environmental remediation obligations related to a former manufacturing facility, as described below; and	
 
 	Ÿ 	 	Charges to record settlement obligations related to unclaimed property.	
During the second quarter of fiscal 2012, Kellwood Company entered into a Consent Decree with the EPA, and Missouri Department of Natural Resources (“MDNR”) to conduct cleanup initiatives for the decontamination of soil and groundwater located near a former metal fabrication plant in New
 
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Haven, Missouri. The agreement became effective August 24, 2012, and was entered into as settlement of a lawsuit filed against Kellwood Company, a wholly-owned subsidiary of AHC, by the EPA and MDNR. The lawsuit alleged that Kellwood Company inappropriately disposed of tetrachloroethylene (“PCE”), an industrial degreaser used to clean metal rods for tent poles, on the surrounding grounds and sewer system of a plant operated by American Recreation Products, a wholly-owned subsidiary of Kellwood Company, between 1973 and 1985.
As of February 2, 2013, AHC recorded $9.6 million for estimated capital costs and ongoing remedial activities at the New Haven site. This amount represents AHC’s best estimate of the discounted value of the total obligation. The recorded liability differs from the $5.9 million letter of credit required by the EPA primarily due to AHC’s use of a lower discount rate, as well as assumption of additional costs not reflected in the EPA’s estimate of the related remediation work. These additional costs include voluntary corrective actions as well as EPA oversight fees.
Impairment of long-lived assets (excluding goodwill).      Definite-lived intangible and long-lived assets are tested for impairment if a triggering event occurs. Under the provisions of ASC Topic 350, AHC tests its indefinite-lived intangible assets, which primarily consist of trademarks, at least annually and in an interim period if a triggering event occurs. During fiscal 2012, AHC tested indefinite-lived intangible assets for impairment under the provisions of ASU 2012-02 and completed its most recent annual impairment testing during the fourth quarter of fiscal 2012.
Impairment of goodwill.     In accordance with ASC Topic 350, goodwill is tested for impairment at least annually and in an interim period if it appears more likely than not that the carrying amount exceeds its fair value. Goodwill represents the excess of the cost of acquired businesses over the fair market value of the identifiable net assets. AHC completed its most recent annual impairment testing of goodwill during the fourth quarter of fiscal 2012.
Change in fair value of contingent consideration.     The purchase agreements related to the acquisitions of the Rebecca Taylor and Zobha businesses contain provisions for contingent consideration that will be paid to the respective sellers if certain performance targets are met within a specified timeframe. These amounts were estimated on the purchase date based on the terms of the purchase agreement and weighted average probability EBITDA forecasts. As forecasted EBITDA amounts change, estimates of future performance are revised and adjustments to the contingent payments are recorded. AHC will continue to estimate these payments through the end of the potential payout period that terminates on January 30, 2016, the last day of fiscal 2015.
Interest expense, net.     AHC’s interest expense consists of interest on its indebtedness with affiliates of Sun Capital and interest on Kellwood Company’s various debt agreements, amortization of deferred debt issuance costs and amortization of debt discounts. The interest associated with the Sun Capital Loan Agreement and the Sun Promissory Notes was contributed as a capital contribution to AHC effective June 18, 2013.
Gain on acquisition, net of tax.     In connection with the acquisition of the Adam operations, the fair value of the identifiable assets acquired less liabilities assumed exceeded the fair value of the consideration and accordingly, the acquisition was accounted for as a bargain purchase and AHC recorded a gain on acquisition during the third quarter of fiscal 2010 when it was acquired. AHC’s Adam operations are now reported within discontinued operations as AHC ceased such operations in the fourth quarter of fiscal 2011.
Gain on debt extinguishment.     Gain on debt extinguishment occurred in fiscal 2010 when Kellwood Company repurchased $29.7 million in aggregate principal amount of its 7.625% Notes from an affiliate of Sun Capital for $9.1 million in cash. The repurchased 7.625% Notes were then retired. Approximately $87.0 million in aggregate principal amount of 7.625% Notes remain outstanding following the repurchase. The extinguishment resulted in a gain of $15.9 million.
 
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Other expense, net.     AHC’s other expense, net consists of miscellaneous income and expenses and management fees paid to Sun Capital Management.
Provision for income taxes .    AHC is subject to taxation in many jurisdictions, and the calculation of its tax liabilities involves dealing with inherent uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. Historically, AHC has been primarily subject to taxation in the U.S. because the majority of products were sold to customers in the U.S. In the future as business expands outside the U.S., AHC could become subject to taxation based on the foreign statutory rates in the countries where these sales occur and its effective tax rate would fluctuate accordingly. AHC is subject to examination of its income tax returns by the IRS and other tax authorities. AHC regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of income tax reserves and expenses. Should actual events differ from current expectations, it could materially impact AHC’s financial position, results of operations and cash flows.
AHC accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. Valuation allowances are determined in accordance with the “more likely than not” recognition criteria. Absent the IPO Restructuring Transactions, based on available information, it is more likely than not that AHC’s net deferred tax assets will not be realized, and accordingly AHC has taken a full valuation allowance against all of its U.S. net deferred tax assets.
As a result of the IPO Restructuring Transactions AHC expects to be able to utilize these net deferred tax assets. As of February 2, 2013 there are deferred tax assets of $67.4 million related to NOL carry-forwards, which has a full valuation allowance recorded against it. AHC had approximately $179.0 million of federal NOL carry-forwards as of February 2, 2013 that will expire between 2029 and 2033 if they are not used prior to the applicable expiration date. In connection with the consummation of this offering, AHC will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement.” As a result of the Tax Receivable Agreement, 85% of any benefits AHC receives from utilization of NOLs and other tax attributes will be paid to the Pre-IPO Stockholders. AHC currently projects that the net benefits from the NOL carry-forwards and other tax attributes covered by the Tax Receivable Agreement will be utilized within ten years. AHC does not anticipate that the existence of the Tax Receivable Agreement, or payments to be made thereunder, will impact its effective tax rate which is estimated to be approximately 38% to 42% both during and after the period AHC will be subject to the Tax Receivable Agreement.
Furthermore, federal and state laws impose substantial restrictions on the utilization of NOL carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Code. Under the rules, such an ownership change is generally any change in ownership of more than 50 percent of a company’s stock within a rolling three-year period, as calculated in accordance with the rules. The rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning directly or indirectly 5% or more of the stock of the company and any change in ownership arising from new issuances of stock by the company.
At this time, AHC has not performed a detailed analysis under Section 382 of the Code to determine if the IPO Restructuring Transactions would constitute an ownership change. With this offering and other transactions that have occurred over the past three years, AHC may trigger or have already triggered an “ownership change” limitation. AHC may also experience ownership changes in the future as a result of subsequent shifts in stock ownership. As a result, if AHC earns net taxable income, the ability to use the pre-change NOL carry-forwards (after giving effect to payments to be
 
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made to the Pre-IPO Stockholders under the Tax Receivable Agreement) to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. Notwithstanding the foregoing, AHC’s preliminary analysis under Section 382 of the Code indicates that the IPO Restructuring Transactions would not trigger an “ownership change” limitation.
Net (loss) income from discontinued operations.     In accordance with ASC Topic 205, AHC reports the results of operations from discontinued businesses that have been disposed of once the operations and cash flows of the business have been or will be eliminated and AHC will not have significant continuing involvement with the disposed businesses. During the second quarter of fiscal 2013, AHC divested the Zobha business to focus resources on its larger contemporary and Juniors brands. During 2012, AHC decided to exit the Baby Phat wholesale business as a result of the decision to exit the urban-wear market generally. AHC also exited its startup Lamb & Flag business as a result of the decision to refocus on core businesses and cease startup activities. Additionally, the BLK DNM and Royal Robbins, LLC businesses (and certain related Canadian assets and liabilities), were sold during 2012. During 2011, AHC discontinued its Adam operations and Koret wholesale business due to poor operating performance.
The following discussion is a summary of the key factors management considers necessary in reviewing AHC’s results of operations, liquidity, capital resources and operating results. The amounts and disclosures included in management’s discussion and analysis of financial condition and results of operations, unless otherwise indicated, are presented on a continuing operations basis. This discussion should be read in conjunction with “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC” and AHC’s consolidated financial statements and related notes thereto, included elsewhere in this prospectus.
The following discussion includes financial information prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), as well as Adjusted EBITDA, which is considered “a non-GAAP financial measure.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of Adjusted EBITDA is intended to supplement understanding of AHC’s operating performance. This non-GAAP financial measure is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than GAAP measures and may not be comparable to similarly titled measures presented by other companies.
Adjusted EBITDA is defined as income or loss from continuing operations before provision for income taxes, net interest expense, depreciation, amortization of intangible assets, restructuring, environmental and other charges, impairment of long-lived assets, impairment of goodwill, and certain gains and losses that affect comparability. AHC believes Adjusted EBITDA assists in comparing performance over various reporting periods and against peers on a consistent basis because it removes from operating results the impact of items that do not reflect our core operating performance. See the “Non-GAAP Reconciliations” section below for reconciliations of this non-GAAP financial measure to its most comparable measure calculated and presented in accordance with GAAP.
All AHC segments, other than the Vince segment, will be separated from AHC in the IPO Restructuring Transactions and reported by Apparel Holding Corp. as discontinued operations in future reporting periods. Affiliates of Sun Capital will control the non-Vince businesses through their ownership of Kellwood Holding, LLC after giving effect to the IPO Restructuring Transactions.
 
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Results of Continuing Operations
The following tables summarize key components of AHC’s results of continuing operations for the periods indicated, both in dollars and as a percentage of AHC’s net sales:

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28, 2012	 	 	August 3, 2013	 	
(In thousands, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statement of Operations Data:	 				 				 				 				 				 				 				 				 				 				
Net sales	 	$	586,574	  	 	 	100	% 	 	$	662,846	  	 	 	100.0	% 	 	$	707,995	  	 	 	100.0	% 	 	$	319,445	  	 	 	100.0	% 	 	$	363,967	  	 	 	100.0	% 	
Cost of products sold	 	 	430,801	  	 	 	73.4	  	 	 	490,110	  	 	 	73.9	  	 	 	507,905	  	 	 	71.7	  	 	 	235,293	  	 	 	73.7	  	 	 	256,031	  	 	 	70.3	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Profit	 	 	155,773	  	 	 	26.6	  	 	 	172,736	  	 	 	26.1	  	 	 	200,090	  	 	 	28.3	  	 	 	84,152	  	 	 	26.3	  	 	 	107,936	  	 	 	29.7	  	
Operating expenses:	 				 				 				 				 				 				 				 				 				 				
Selling, general and administrative expenses	 	 	140,567	  	 	 	24.0	  	 	 	155,220	  	 	 	23.4	  	 	 	177,755	  	 	 	25.1	  	 	 	83,526	  	 	 	26.1	  	 	 	93,503	  	 	 	25.7	  	
Amortization of intangible assets	 	 	954	  	 	 	0.2	  	 	 	1,941	  	 	 	0.3	  	 	 	1,899	  	 	 	0.3	  	 	 	950	  	 	 	0.3	  	 	 	950	  	 	 	0.3	  	
Restructuring, environmental remediation and other charges	 	 	9,729	  	 	 	1.7	  	 	 	2,651	  	 	 	0.4	  	 	 	5,091	  	 	 	0.7	  	 	 	2,264	  	 	 	0.7	  	 	 	827	  	 	 	0.2	  	
Impairment of long-lived assets (excluding goodwill)	 	 	438	  	 	 	0.1	  	 	 	2,504	  	 	 	0.4	  	 	 	2,349	  	 	 	0.3	  	 	 	717	  	 	 	0.2	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	10,821	  	 	 	1.6	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent
consideration	 	 	—	  	 	 	—	  	 	 	(1,578	) 	 	 	(0.2	) 	 	 	(7,162	) 	 	 	(1.0	) 	 	 	(4,507	) 	 	 	(1.4	) 	 	 	(54	) 	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	151,688	  	 	 	25.9	  	 	 	171,559	  	 	 	25.9	  	 	 	179,932	  	 	 	25.4	  	 	 	82,950	  	 	 	26.0	  	 	 	95,226	  	 	 	26.2	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	4,085	  	 	 	0.7	  	 	 	1,177	  	 	 	0.2	  	 	 	20,158	  	 	 	2.8	  	 	 	1,202	  	 	 	0.4	  	 	 	12,710	  	 	 	3.5	  	
Interest expense, net	 	 	103,074	  	 	 	17.6	  	 	 	127,148	  	 	 	19.2	  	 	 	122,383	  	 	 	17.3	  	 	 	74,151	  	 	 	23.2	  	 	 	43,671	  	 	 	12.0	  	
Gain on acquisition, net of tax	 	 	(939	) 	 	 	(0.2	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	 	 	(15,912	) 	 	 	(2.7	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, net	 	 	2,442	  	 	 	0.4	  	 	 	1,914	  	 	 	0.3	  	 	 	2,723	  	 	 	0.4	  	 	 	1,215	  	 	 	0.4	  	 	 	1,233	  	 	 	0.3	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	 	 	(84,580	) 	 	 	(14.4	) 	 	 	(127,885	) 	 	 	(19.3	) 	 	 	(104,948	) 	 	 	(14.8	) 	 	 	(74,164	) 	 	 	(23.2	) 	 	 	(32,194	) 	 	 	(8.8	) 	
Provision for income taxes	 	 	3,507	  	 	 	0.6	  	 	 	3,401	  	 	 	0.5	  	 	 	708	  	 	 	0.1	  	 	 	2,245	  	 	 	0.7	  	 	 	2,679	  	 	 	0.7	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations	 	 	(88,087	) 	 	 	(15.0	) 	 	 	(131,286	) 	 	 	(19.8	) 	 	 	(105,656	) 	 	 	(14.9	) 	 	 	(76,409	) 	 	 	(23.9	) 	 	 	(34,873	) 	 	 	(9.6	) 	
Net (loss) income from discontinued operations	 	 	(16,391	) 	 	 	(2.8	) 	 	 	(16,580	) 	 	 	(2.5	) 	 	 	(2,053	) 	 	 	(0.3	) 	 	 	(4,798	) 	 	 	(1.5	) 	 	 	9,230	  	 	 	2.5	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(104,478	) 	 	 	(17.8	)% 	 	$	(147,866	) 	 	 	(22.3	)% 	 	$	(107,709	) 	 	 	(15.2	)% 	 	$	(81,207	) 	 	 	(25.4	)% 	 	$	(25,643	) 	 	 	(7.0	)% 	

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Non-GAAP Reconciliations
Reconciliations of AHC’s non-GAAP measure to loss of continuing operations before provision for income taxes are included below.

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(in thousands)	  				 				 				 	 	(unaudited	) 	 	 	(unaudited	) 	
Adjusted EBITDA	  				 				 				 				 				
Vince	  	$	23,637	  	 	$	44,186	  	 	$	42,189	  	 	$	13,581	  	 	$	17,491	  	
ARP	  	 	(1,454	) 	 	 	(7,854	) 	 	 	(4,496	) 	 	 	(208	) 	 	 	(528	) 	
Juniors	  	 	13,557	  	 	 	9,411	  	 	 	9,426	  	 	 	3,113	  	 	 	9,384	  	
Moderate	  	 	18,672	  	 	 	250	  	 	 	1,924	  	 	 	(1,003	) 	 	 	832	  	
Other	  	 	(1,301	) 	 	 	10,296	  	 	 	6,916	  	 	 	2,747	  	 	 	3,792	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment Adjusted EBITDA	  	 	53,111	  	 	 	56,289	  	 	 	55,959	  	 	 	18,230	  	 	 	30,971	  	
Unallocated corporate expense	  	 	(31,312	) 	 	 	(32,196	) 	 	 	(30,736	) 	 	 	(15,914	) 	 	 	(15,149	) 	
Interest expense, net	  	 	(103,074	) 	 	 	(127,148	) 	 	 	(122,383	) 	 	 	(74,151	) 	 	 	(43,671	) 	
Depreciation	  	 	(9,035	) 	 	 	(8,491	) 	 	 	(5,611	) 	 	 	(2,905	) 	 	 	(2,622	) 	
Amortization of intangible assets	  	 	(954	) 	 	 	(1,941	) 	 	 	(1,899	) 	 	 	(950	) 	 	 	(950	) 	
Restructuring, environmental and other charges	  	 	(9,729	) 	 	 	(2,651	) 	 	 	(5,091	) 	 	 	(2,264	) 	 	 	(827	) 	
Impairment of long-lived assets (excluding goodwill)	  	 	(438	) 	 	 	(2,504	) 	 	 	(2,349	) 	 	 	(717	) 	 	 	—	  	
Impairment of goodwill	  	 	—	  	 	 	(10,821	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration	  	 	—	  	 	 	1,578	  	 	 	7,162	  	 	 	4,507	  	 	 	54	  	
Gain on acquisition, net of tax	  	 	939	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	  	 	15,912	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss of continuing operations before provision for income taxes	  	$	(84,580	) 	 	$	(127,885	) 	 	$	(104,948	) 	 	$	(74,164	) 	 	$	(32,194	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
First Six Months of Fiscal 2013 Compared to First Six Months of Fiscal 2012
Net sales for continuing operations for the first six months of fiscal 2013 were $364.0 million, increasing $44.5 million, or 13.9%, versus $319.4 million for the first six months of fiscal 2012. The increase in sales compared to the prior year is primarily due to increased sales of contemporary and Juniors brands.
 
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Segment Results of Operations

 	  	Net Sales by Segment	 	  	Segment Adjusted EBITDA	 	
 	  	First Six Months	 	  	First Six Months	 	
 	  	2012	 	    	2013	 	  	2012	 	  	2013	 	
(In thousands)	  	 	 	    	 	 	  	 	 	  	 	 	
 	  	(unaudited)	 	    	(unaudited)	 	  	(unaudited)	 	  	(unaudited)	 	
Net Sales by Segment	  				    				  				  				
Vince	  	$	90,531	  	    	$	114,657	  	  	$	13,581	  	  	$	17,491	  	
ARP	  	 	52,295	  	    	 	51,272	  	  	 	(208	) 	  	 	(528	) 	
Juniors	  	 	89,850	  	    	 	110,575	  	  	 	3,113	  	  	 	9,384	  	
Moderate	  	 	38,509	  	    	 	32,182	  	  	 	(1,003	) 	  	 	832	  	
Other	  	 	48,260	  	    	 	55,281	  	  	 	2,747	  	  	 	3,792	  	
	  	 	 	 	    	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	319,445	  	    	$	363,967	  	  	$	18,230	  	  	$	30,971	  	
	  	 	 	 	    	 	 	 	  	 	 	 	  	 	 	 	
Vince.     Net sales from the Vince segment (which is now operated through Vince, LLC) increased $24.1 million, or 26.6%, to $114.7 million in the first six months of fiscal 2013 from $90.5 million in the first six months of fiscal 2012 due to additional volume at existing as well as new wholesale partners, as well as an increase in the number of retail stores and increased productivity at existing retail stores. The overall increase in net sales was driven primarily by the strength of existing product lines, successful introduction of new products and the increasing recognition of the Vince brand name.
Segment Adjusted EBITDA from the Vince segment increased $3.9 million, or 28.8%, to $17.5 million in the first six months of fiscal 2013 from $13.6 million in the first six months of fiscal 2012 due to the increase in sales noted above, partially offset by higher design, development and marketing expenses to support the growth of the brand and increased corporate costs associated with preparing Apparel Holding Corp. to become a public company.
ARP.     Net sales from the ARP segment decreased $1.0 million, or 2.0% to $51.3 million in the first six months of fiscal 2013 from $52.3 million in the first six months of fiscal 2012, driven by a shift in the timing of product shipments into the third quarter of 2013.
Segment Adjusted EBITDA from the ARP segment decreased $0.3 million, or 153.9%, to $(0.5) million in the first six months of fiscal 2013 from $(0.2) million in the first six months of fiscal 2012, driven by a shift in the timing of product shipments into the third quarter of 2013.
Juniors.     Net sales from the Juniors segment increased $20.7 million, or 23.1% to $110.6 million in the first six months of fiscal 2013 from $89.9 million in the first six months of fiscal 2012 primarily due to increased private label program orders from one of AHC’s wholesale partners, as well an increase in the number of wholesale doors distributing AHC’s products and sales related to its licensed XOXO product. 
Segment Adjusted EBITDA from the Juniors segment increased $6.3 million, or 201.5%, to $9.4 million in the first six months of fiscal 2013 from $3.1 million in the first six months of fiscal 2012 primarily due to increased, higher margin net sales coupled with a reduction in advertising expenses.
Moderate.     Net sales from the Moderate segment decreased $6.3 million, or 16.4% to $32.2 million in the first six months of fiscal 2013 from $38.5 million in the first six months of fiscal 2012 due to reduced orders from AHC’s wholesale partners. The moderate segment has been and continues to be a declining source of sales for AHC as retailers expand their private label offerings.
Segment Adjusted EBITDA from the Moderate segment was $0.8 million in the first six months of fiscal 2013 compared to $(1.0) million in the first six months of fiscal 2012 due to improved gross margin rates and expense reductions in compensation costs and design expenses.
 
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Other.     Net revenue from the Other segment increased $7.0 million, or 14.5% to $55.3 million for the first six months of fiscal 2013 from $48.3 million in the first six months of fiscal 2012 due primarily to additional orders from a certain wholesale partner as they continue to implement an out-sourced strategy for their private label brands, as well as growth at Rebecca Taylor and the addition of a new value program with a certain wholesale partner. This was partially offset by a decrease in revenue related to AHC’s David Meister dress business.
Segment Adjusted EBITDA from the Other segment increased $1.0 million, or 38.0% to $3.8 million for the first six months of fiscal 2013 from $2.7 million in the first six months of fiscal 2012 due to a greater percentage of sales coming from the Rebecca Taylor business, where we generally achieve higher margins.
Cost of products sold from continuing operations for the first six months of fiscal 2013 was $256.0 million increasing $20.7 million, or 8.8%, compared to $235.3 million in the first six months of fiscal 2012. The increase in cost of products sold is due primarily to additional sales volume period over period.
Gross profit/gross margin for continuing operations for the first six months of fiscal 2013 increased 330 basis points to 29.7% from 26.3% in the first six months of fiscal 2012. The increase is due to increased volume of the higher margin Vince and Rebecca Taylor brands. 
Selling, general and administrative expense (“SG&A”) for continuing operations in the first six months of fiscal 2013 was $93.5 million, or 25.7% of net sales, increasing $10.0 million, or 11.9% compared to $83.5 million, or 26.1%, of net sales in the first six months of fiscal 2012. The increase in SG&A expense is primarily due to: (i) increased marketing expense of $0.8 million and increased compensation expense of $5.6 million to support the growth of AHC’s Vince brand and the opening of new retail stores; and (ii) increased legal, consulting and outside services expenses of $2.0 million related to preparation of the IPO Restructuring Transactions and this offering.
Amortization of intangible assets for continuing operations for the first six months of fiscal 2013 and for the first six months of fiscal 2012 remained unchanged at $1.0 million.
Restructuring, environmental remediation and other charges for continuing operations for the first six months of fiscal 2013 were $0.8 million, decreasing $1.4 million from $2.3 million in the first six months of fiscal 2012 for the reasons set forth in “—Impairment, Restructuring, Environmental Remediation and Other Charges.”
Impairment of long-lived assets (excluding goodwill) for continuing operations was $0.7 million for the first six months of fiscal 2012 due to the realization of an impairment loss for the decline in market value of AHC’s exited facility in Trenton, Tennessee. AHC had no impairments on long-lived assets of its continuing operations during the first six months of fiscal 2013.
Interest expense, net for the first six months of fiscal 2013 was $43.7 million, a decrease of $30.5 million compared to $74.2 million in the first six months of fiscal 2012. The decrease is due primarily to lower average outstanding debt balances during the first six months of fiscal 2013 as compared to the first six months of fiscal 2012. During the fourth quarter of fiscal 2012 all capitalized interest accrued prior to July 19, 2012 related to indebtedness with affiliates of Sun Capital was waived. In June 2013, outstanding debt was contributed to equity in the Sun Capital Contribution.
Other expense, net for continuing operations remained consistent at $1.2 million for the first six months of fiscal 2012 and fiscal 2013.
Provision for income taxes.     AHC’s effective tax rates on pretax earnings for continuing operations for the first six months of fiscal 2013 and the first six months of fiscal 2012 were (8.3%) and
 
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(3.0%), respectively. The rate for these periods differs from the U.S. statutory rate of 35% primarily due to the incurrence of additional valuation allowances and nondeductible interest.
Net (loss) income from discontinued operations .    There was $9.2 million of income for the first six months of fiscal 2013 compared to a loss of $4.8 million for the first six months of fiscal 2012 . The change is primarily due to a tax benefit of $11.9 million recognized in the first quarter of fiscal 2013 as a result of releasing a valuation allowance. This release in valuation allowance is due to the allocation of the disallowed tax loss on the sale of the Baby Phat trademark to intangible assets with indefinite lives resulting in fewer deferred tax liabilities that cannot be offset against deferred tax assets for valuation allowance purposes.
Fiscal Year 2012 Compared to Fiscal Year 2011
Net sales for continuing operations for fiscal 2012 were $708.0 million, increasing $45.1 million, or 6.8%, versus $662.8 million for fiscal 2011. The increase in sales compared to the prior year is primarily due to increased sales of the Vince and Rebecca Taylor brands, and recreational apparel and products, partially offset by a decrease in sales in AHC’s Moderate and Juniors brands.
Segment Results of Operations

 	  	Net Sales by Segment	 	  	Segment Adjusted EBITDA	 	
 	  	Fiscal Year	 	  	Fiscal Year	 	
 	  	2011	 	  	2012	 	  	2011	 	 	2012	 	
(In thousands)	  	 	 	  	 	 	  	 	 	 	 	 	
Net Sales by Segment	  				  				  				 				
Vince	  	$	175,255	  	  	$	240,352	  	  	$	44,186	  	 	$	42,189	  	
ARP	  	 	94,606	  	  	 	98,830	  	  	 	(7,854	) 	 	 	(4,496	) 	
Juniors	  	 	190,613	  	  	 	181,582	  	  	 	9,411	  	 	 	9,426	  	
Moderate	  	 	103,817	  	  	 	78,103	  	  	 	250	  	 	 	1,924	  	
Other	  	 	98,555	  	  	 	109,128	  	  	 	10,296	  	 	 	6,916	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  	$	662,846	  	  	$	707,995	  	  	$	56,289	  	 	$	55,959	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Vince.     Net sales from the Vince segment increased $65.1 million, or 37.1%, to $240.4 million in fiscal 2012 from $175.3 million in fiscal 2011 due to additional volume at existing as well as new wholesale partners, as well as an increase in the number of retail stores and increased sales at existing retail stores. The overall increase in net sales was driven primarily by the strength of Vince’s existing product lines, successful introduction of new products and the increasing recognition of the Vince brand name.
Segment Adjusted EBITDA from the Vince segment decreased $2.0 million, or 4.5%, to $42.2 million in fiscal 2012 from $44.2 million in fiscal 2011. This reduction was due primarily to higher compensation costs incurred to support the growth of the brand, one-time transition payments to the Vince founders, and increased corporate costs associated with preparing Apparel Holding Corp. to become a public company.
ARP.     Net sales from the ARP segment increased $4.2 million, or 4.5%, to $98.8 million in fiscal 2012 from $94.6 million in fiscal 2011 driven by additional wholesale volume of camping equipment at recreational retailers, primarily specialty stores, national sporting goods stores and hunting and fishing stores.
Segment Adjusted EBITDA from the ARP segment increased $3.4 million, or 42.8%, to $(4.5) million in fiscal 2012 from $(7.9) million in fiscal 2011 driven primarily but inventory markdowns that occurred in fiscal 2011 but did not recur in fiscal 2012.
 
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Juniors.     Net sales from the Juniors segment decreased $9.0 million, or 4.7% to $181.6 million in fiscal 2012 from $190.6 million in fiscal 2011 primarily due to reduced orders from one of AHC’s wholesale partners who decided to develop one of its Juniors labels internally that AHC previously produced for them. 
Segment Adjusted EBITDA from the Juniors segment remained consistent at $9.4 million for fiscal 2011 and fiscal 2012 despite a decrease in net sales volume from fiscal 2011 to fiscal 2012, primarily due to cost reductions.
Moderate .     Net sales from the Moderate segment decreased $25.7 million, or 24.8%, to $78.1 million in fiscal 2012 from $103.8 million in fiscal 2011 due to reduced orders from AHC’s wholesale partners. The Moderate space has been and continues to be a declining source of sales for AHC as retailers expand their private label offerings.
Segment Adjusted EBITDA from the Moderate segment increased $1.7 million, or 669.6%, to $1.9 million in fiscal 2012 from $0.2 million in fiscal 2011 due primarily to expense reduction actions taken as a result of reduced net sales volume.
Other.     Net revenue from the Other segment increased $10.6 million, or 10.7% to $109.1 million in fiscal 2012 from $98.6 million in fiscal 2011 due primarily to additional orders from a certain wholesale partner for whom AHC is developing certain of its private label brands, as well as growth at Rebecca Taylor.
Segment Adjusted EBITDA from the Other segment decreased $3.4 million, or 32.8% to $6.9 million in fiscal 2012 from $10.3 million in fiscal 2011 due primarily to additional compensation, design and occupancy expense as a result of growing the Rebecca Taylor business.
Cost of products sold for continuing operations for fiscal 2012 was $507.9 million increasing $17.8 million, or 3.6%, versus $490.1 million for fiscal 2011. The increase in cost of products sold is due primarily to the additional sales volume year over year.
Gross profit/gross margin for continuing operations increased 220 basis points to 28.3% in fiscal 2012 from 26.1% in fiscal 2011. The increase in margin rate is due to additional volume in AHC’s higher-margin Vince and Rebecca Taylor brands. 
Selling, general and administrative expenses for continuing operations in fiscal 2012 was $177.8 million, or 25.1% of net sales, increasing $22.5 million, or 14.5% compared to $155.2 million, or 23.4%, of net sales in fiscal 2011. The increase in SG&A expense compared to the prior year is primarily due to (i) increased compensation expense of $16.7 million related to hiring and retention of certain key employees (including one-time transition payments to the Vince founders); (ii) increased occupancy expense of $2.6 million due to new retail store openings; and (iii) increased design, development and marketing expenses of $3.8 million to support the growth of AHC’s contemporary brands and the opening of new retail stores.
Amortization of intangible assets for continuing operations for fiscal 2011 and fiscal 2012 was unchanged at $1.9 million.
Restructuring, environmental remediation and other charges for continuing operations were $5.1 million in fiscal 2012, increasing $2.4 million from $2.7 million in fiscal 2011. The increase is due to recording $2.5 million in fiscal 2012 for the settlement obligations related to unclaimed property.
Impairment of long-lived assets (excluding goodwill) for continuing operations was $2.3 million for fiscal 2012, decreasing $0.2 million from $2.5 million in fiscal 2011. In fiscal year 2011, we recognized
 
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an impairment charge of $2.5 million on a trademark due to declining results of one of our Juniors wholesale businesses. In fiscal year 2012, we recognized an additional impairment charge of $1.2 million on this trademark due to further declines in related operating results, as well as an impairment charge of $0.7 million on our exited facility in Trenton, Tennessee due to a decline in market value.
Impairment of goodwill for continuing operations for fiscal 2011 was $10.8 million. This was due to a decrease in the near-term forecasted EBITDA of Rebecca Taylor. This was primarily due to a delay in expected growth and cost synergies. There were no goodwill impairments during fiscal 2012.
Change in fair value of contingent consideration for continuing operations was $7.2 million for fiscal 2012 and $1.6 million for fiscal 2011 due to decreases in estimated contingent purchase price consideration related to the Rebecca Taylor and Zobha acquisitions. AHC will continue to estimate the Rebecca Taylor payments through the end of the potential payout period that terminates on January 30, 2016, the last day of fiscal 2015.
Interest expense, net for continuing operations for fiscal 2012 was $122.4 million, a decrease of $4.8 million compared to $127.1 million in fiscal 2011. The decrease is due primarily to lower average outstanding debt balances in fiscal 2012 as compared to fiscal 2011. Additionally, a $1.7 million non-cash charge to write-off deferred debt issuance costs occurred in fiscal 2011 as a result of refinancing Kellwood Company’s credit facility. No similar charge was incurred in fiscal 2012.
Other expense, net for continuing operations for fiscal 2012 was $2.7 million, an increase of $0.8 million compared to $1.9 million in fiscal 2011. The change is primarily due to the recognition of the death benefit of a life insurance policy on a former executive during fiscal 2011. 
Provision for income taxes. AHC’s effective tax rates on pretax earnings for continuing operations for fiscal 2012 and 2011 were (0.7%) and (2.7%), respectively. The 2012 and 2011 rates differ from the U.S. statutory rate of 35.0% primarily due to nondeductible interest expense and additional valuation allowance placed on U.S. deferred tax assets.
Net (loss) income from discontinued operations was a loss of $2.1 million for fiscal 2012 and a loss of $16.6 million for fiscal 2011. The change is primarily due to discontinuing unprofitable businesses including the Adam operations and the Koret wholesale operations during the fourth quarter of fiscal 2011, discontinuing the BLK DNM and Lamb & Flag businesses during the second and third quarters of fiscal 2012, respectively, and divesting the Zobha business during the second quarter of 2013.
Fiscal Year 2011 Compared to Fiscal Year 2010
Net sales for continuing operations for fiscal 2011 were $662.8 million, increasing $76.2 million, or 13.0%, versus $586.6 million for fiscal 2010. The increase in sales compared to the prior year is primarily due to increased sales of AHC’s contemporary and Juniors brands, including the sales of AHC’s newly acquired Rebecca Taylor brand, partially offset by the closure of the Koret retail outlet stores and decreasing sales in the Moderate segment.
Segment Results of Operations

 	  	Net Sales by Segment	 	 	Segment Adjusted EBITDA	 	
 	  	Fiscal Year	 	 	               Fiscal Year                	 	
 	  	2010	 	  	2011	 	 	2010	 	 	2011	 	
(In thousands)	  	 	 	  	 	 	 	 	 	 	 	 	
Vince	  	$	111,492	  	  	$	175,255	  	 	$	23,637	  	 	$	44,186	  	
ARP	  	 	98,203	  	  	 	94,606	  	 	 	(1,454	) 	 	 	(7,854	) 	
Juniors	  	 	177,629	  	  	 	190,613	  	 	 	13,557	  	 	 	9,411	  	
Moderate	  	 	141,895	  	  	 	103,817	  	 	 	18,672	  	 	 	250	  	
Other	  	 	57,355	  	  	 	98,555	  	 	 	(1,301	) 	 	 	10,296	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	586,574	  	  	$	662,846	  	 	$	53,111	  	 	$	56,289	  	

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Vince.     Net sales from the Vince segment increased $63.8 million, or 57.2%, to $175.3 million in fiscal 2011 from $111.5 million in fiscal 2010 due to additional volume at existing as well as new wholesale partners, as well as an increase in the number of retail stores and increased sales at existing retail stores. The overall increase in net sales was driven primarily by the strength of Vince’s existing products lines, and the increasing recognition of the Vince brand name.
Segment Adjusted EBITDA from the Vince segment increased $20.6 million, or 86.9%, to $44.2 million in fiscal 2011 from $23.6 million in fiscal 2010. This increase was driven primarily from the increased sales volume noted above and a decrease in operating expenses as a percentage of sales. The decrease in operating expenses as a percentage of sales resulted from our sales growing at a greater rate than our expenses during fiscal 2011.
ARP .    Net sales from the ARP segment decreased $3.6 million, or 3.7%, to $94.6 million in fiscal 2011 from $98.2 million in fiscal 2010 driven by a reduction in wholesale volume of camping equipment at recreational retailers, primarily specialty retailers, national sporting goods stores and hunting and fishing stores.
Segment Adjusted EBITDA from the ARP segment decreased $6.4 million, or 440.2%, to $(7.9) million in fiscal 2011 from $(1.5) million in fiscal 2010 driven by a reduction in wholesale volume of camping equipment at recreational retailers, primarily specialty retailers, national sporting goods stores and hunting and fishing stores and a further reduction in margin on these net sales.
Juniors.     Net sales from the Juniors segment increased $13.0 million, or 7.3%, to $190.6 million in fiscal 2011 from $177.6 million in fiscal 2010 as a result of increased volume to AHC’s wholesale partners as a result of expanded product offerings, new labels and new customers.
Segment Adjusted EBITDA from the Juniors segment decreased $4.1 million, or 30.6%, to $9.4 million in fiscal 2011 from $13.6 million in fiscal 2010 as a result of higher raw material and manufacturing costs driven by expanded product offerings, new labels and new customers.
Moderates .    Net sales from the Moderate segment decreased $38.1 million, or 26.8%, to $103.8 million in fiscal 2011 from $141.9 million in fiscal 2010 due to reduced orders from AHC’s wholesale partners as well as the closure of Koret retail outlet stores. The moderate segment has been and continues to be a declining source of sales for AHC as retailers expand their private label offerings.
Segment Adjusted EBITDA from the Moderate segment decreased $18.4 million, or 98.7%, to $0.2 million in fiscal 2011 from $18.7 million in fiscal 2010 due to net sales volume reductions from AHC’s wholesale partners as well as the closure of Koret retail outlet stores.
Other.     Net sales from the Other segment increased $41.2 million, or 71.8%, to $98.6 million in fiscal 2011 from $57.3 million in fiscal 2010 primarily due to the acquisition of Rebecca Taylor during the fourth quarter of fiscal 2010.
Segment Adjusted EBITDA from the Other segment was $10.3 million in fiscal 2011 compared to $(1.3) million in fiscal 2010 primarily due to the acquisition of Rebecca Taylor during the fourth quarter of fiscal 2010.
Cost of products sold for continuing operations for fiscal 2011 was $490.1 million, increasing $59.3 million, or 13.8%, versus $430.8 million for fiscal 2010 due primarily to additional sales volume.
Gross profit/gross margin for continuing operations decreased 50 basis points to 26.1% in fiscal 2011 from 26.6% in fiscal 2010. The decrease in margin rate is primarily driven by increasing raw material and manufacturing costs and excess inventory in the ARP and Moderate segments, partially offset by increased volume of the higher margin Vince and Rebecca Taylor brands.
 
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Selling, general and administrative expenses for continuing operations in fiscal 2011 was $155.2 million, or 23.4% of net sales, increasing $14.7 million, or 10.4% compared to $140.6 million, or 24.0%, of net sales in fiscal 2010. The increase in selling, general and administrative expenses compared to the prior year is primarily due to (i) increased expenses of $12.8 million related to the newly acquired Rebecca Taylor business; (ii) increased sample and pattern expenses of $1.8 million related to new product offerings; and (iii) increased marketing and advertising expenses of $0.9 million to support the growth of AHC’s contemporary brands and the opening of new retail stores.
Amortization of intangible assets for continuing operations for fiscal 2011 was $1.9 million, increasing $1.0 million compared to $1.0 million in fiscal 2010. The increase in amortization expense was principally due to the new intangible assets arising from AHC’s fiscal 2010 acquisition of Rebecca Taylor.
Restructuring, environmental remediation and other charges for continuing operations were $2.7 million in fiscal 2011, decreasing $7.1 million from $9.7 million in fiscal 2010. The decrease is primarily due to a decrease in employee termination and one-time benefit arrangements of $1.3 million, a decrease in exit costs related to leased facilities of $2.7 million, and a charge of $2.9 million recognized in fiscal 2010 related to an environmental remediation liability at a former manufacturing facility.
Impairment of long-lived assets (excluding goodwill) for continuing operations was $2.5 million for fiscal 2011, increasing $2.1 million from $0.4 million in fiscal 2010. The increase is primarily due to recognizing an impairment charge in fiscal 2011 of $2.5 million on a trademark due to declining results of one of our Juniors wholesale businesses.
Impairment of goodwill for continuing operations for fiscal 2011 was $10.8 million. This was due to a decrease in the near-term forecasted EBITDA of Rebecca Taylor. This was primarily due to a delay in expected growth and cost synergies. There were no goodwill impairments during fiscal 2010.
Change in fair value of contingent consideration for continuing operations was $1.6 million for fiscal 2011 due to decreases in estimated contingent purchase price consideration related to the Rebecca Taylor acquisition. As the acquisition of Rebecca Taylor occurred in January of fiscal 2010, no change in fair value of contingent consideration was recorded in 2010.
Interest expense, net for continuing operations for fiscal 2011 was $127.1 million, an increase of $24.1 million compared to $103.1 million in fiscal 2010. The increase is due primarily to higher average outstanding debt balances as compared to fiscal 2010, as well as a $1.7 million non-cash charge to write-off deferred debt issuance costs recorded in fiscal 2011.
Gain on acquisition, net of tax for continuing operations for fiscal 2010 was $0.9 million. This gain resulted from AHC’s acquisition of the Adam operations. The fair value of the identifiable assets acquired less liabilities assumed of $1.6 million exceeded the fair value of the consideration of $0.1 million and net of tax of $0.6 million. Accordingly, the acquisition has been accounted for as a bargain purchase and, as a result, AHC recognized a gain of $0.9 million associated with the acquisition in the third quarter of fiscal 2010. 
Gain on debt extinguishment for continuing operations for fiscal 2010 was $15.9 million as a result of the repurchase of $29.7 million in aggregate principal of the 7.625% Notes completed during the first quarter of fiscal 2010. 
Other expense, net for continuing operations for fiscal 2011 was $1.9 million, a decrease of $0.5 million compared to $2.4 million in fiscal 2010. The decrease was primarily due to the recognition of the death benefit of a life insurance policy on a former executive during fiscal 2011. 
 
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Provision for income taxes.     AHC’s effective tax rates on pretax earnings for continuing operations for fiscal 2011 and 2010 were (2.7%) and (4.1%), respectively. The fiscal 2011 and 2010 rates differ from the U.S. statutory rate of 35% primarily due to nondeductible interest expense and additional valuation allowance placed on U.S. deferred tax assets.
Net (loss) income from discontinued operations was a loss of $16.6 million for fiscal 2011 and $16.4 million for fiscal 2010, increasing $0.2 million from fiscal 2010 to fiscal 2011. The change is primarily due to increased losses recognized on AHC’s discontinued start-up brands and underperforming businesses in fiscal 2011 as compared to fiscal 2010, substantially offset by impairment charges of $24.1 million recognized on AHC’s Baby Phat and Phat Farm trademarks in fiscal 2010.
Impairment, Restructuring, Environmental Remediation and Other Charges
Restructuring charges are comprised of expenses associated with efforts to continuously improve operational and organizational efficiency. These expenses result from numerous individual actions implemented across AHC’s divisions on an ongoing basis. Restructuring charges include costs for moving facilities, exiting businesses, curtailing/downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions. Unless otherwise indicated, these charges are recorded as part of unallocated corporate expenses and not directly charged to any segment.
Impairment, restructuring, environmental remediation and other charges during the first six months of fiscal 2013 and the first six months of fiscal 2012 included various efforts to create a more efficient operational and organizational structure in AHC’s support operations and apparel businesses. Additionally, AHC recognized an impairment charge of $0.7 million during the first six months of fiscal 2012 due to a decline in the market value of an exited facility in Trenton, Tennessee. Impairment, restructuring, environmental remediation and other charges during fiscal 2012 included:
 
 	Ÿ 	 	charges to accrue future lease payments and other contractual obligations associated with exited businesses;	
 
 	Ÿ 	 	charges to record settlement obligations related to escheat liability;	
 
 	Ÿ 	 	charges to adjust environmental remediation obligations (as described above in “—Basis of Presentation—Restructuring, environmental remediation and other charges”) related to a former manufacturing facility;	
 
 	Ÿ 	 	costs to maintain closed facilities, partially offset by the recovery of charges through the sublease and other use of vacant spaces;	
 
 	Ÿ 	 	impairment charges of $6.7 million related to intangible assets and other long-lived assets, of which $1.2 million was allocated to our Juniors segment, with the remainder allocated to Corporate expenses and discontinued businesses; and	
 
 	Ÿ 	 	severance charges and related costs for exited businesses and various restructuring projects to create a more efficient operational and organizational structure in AHC’s support operations and apparel businesses.	
Impairment, restructuring, environmental remediation and other charges during fiscal 2011 included:
 
 	Ÿ 	 	charges to accrue future lease payments and other contractual obligations associated with exited businesses;	
 
 	Ÿ 	 	charges related to an environmental remediation obligation at a former manufacturing facility;	
 
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 	Ÿ 	 	costs to maintain closed facilities, partially offset by the recovery of charges through the sublease and other use of vacant spaces;	
 
 	Ÿ 	 	impairment charges of $19.4 million related to goodwill, intangible assets, and other long-lived assets, of which $2.5 million and $10.8 million was allocated to the Juniors and Other operating segments, respectively, with the remainder relating to discontinued businesses; and	
 
 	Ÿ 	 	severance charges and related costs for various restructuring projects to create a more efficient operational and organizational structure in AHC’s support operations and apparel businesses.	
Impairment, restructuring, environmental remediation and other charges during fiscal 2010 included:
 
 	Ÿ 	 	charges that related to closing Koret outlet stores and other costs associated with vacant spaces;	
 
 	Ÿ 	 	charges to accrue future lease payments due to early exit of leased spaces;	
 
 	Ÿ 	 	charges related to an environmental remediation obligation at a former manufacturing facility;	
 
 	Ÿ 	 	impairment charges of $24.6 million primarily related to intangible assets of AHC’s discontinued Phat Licensing business; and	
 
 	Ÿ 	 	severance charges and related costs for various restructuring projects to create a more efficient operational and organizational structure in AHC’s support operations and apparel businesses.	
For fiscal 2010, fiscal 2011 and fiscal 2012 and the six months ended July 28, 2012 and August 3, 2013, the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges recorded in continuing and discontinuing operations were as follows:

 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
Fiscal 2010	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	
Fiscal 2011	  	 	15,976	  	  	 	6,627	  	  	 	22,603	  	
Fiscal 2012	  	 	7,440	  	  	 	4,789	  	  	 	12,229	  	
First Six Months Fiscal 2012 (unaudited)	  	 	2,981	  	  	 	221	  	  	 	3,202	  	
First Six Months Fiscal 2013 (unaudited)	  	 	827	  	  	 	942	  	  	 	1,769	  	
For fiscal 2010, fiscal 2011 and fiscal 2012 the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges were recorded as follows:

 	  	Fiscal 2010	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
Restructuring, environmental remediation and other charges	  	$	9,729	  	  	$	3,575	  	  	$	13,304	  	
Impairment of long-lived assets (excluding goodwill)	  	 	438	  	  	 	24,129	  	  	 	24,567	  	
Impairment of goodwill	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	

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 	  	Fiscal 2011	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
Restructuring, environmental remediation and other charges	  	$	2,651	  	  	$	489	  	  	$	3,140	  	
Impairment of long-lived assets (excluding goodwill)	  	 	2,504	  	  	 	5,913	  	  	 	8,417	  	
Impairment of goodwill	  	 	10,821	  	  	 	225	  	  	 	11,046	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	15,976	  	  	$	6,627	  	  	$	22,603	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	15,124	  	  	$	6,333	  	  	$	21,457	  	

													
 	  	Fiscal 2012	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
Restructuring, environmental remediation and other charges	  	$	5,091	  	  	$	409	  	  	$	5,500	  	
Impairment of long-lived assets (excluding goodwill)	  	 	2,349	  	  	 	4,380	  	  	 	6,729	  	
Impairment of goodwill	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	7,440	  	  	$	4,789	  	  	$	12,229	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	7,440	  	  	$	4,789	  	  	$	12,229	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
For the first six months of fiscal 2012 and fiscal 2013, the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges were recorded as follows:

 	  	First Six Months Fiscal 2012	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
 	  	(unaudited)	 	  	(unaudited)	 	  	(unaudited)	 	
Restructuring, environmental remediation and other charges	  	$	2,264	  	  	$	221	  	  	$	2,485	  	
Impairment of long-lived assets (excluding goodwill)	  	 	717	  	  	 	—	  	  	 	717	  	
Impairment of goodwill	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	2,981	  	  	$	221	  	  	$	3,202	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	2,981	  	  	$	221	  	  	$	3,202	  	

													
 	  	First Six Months Fiscal 2013	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
(In thousands)	  	 	 	  	 	 	  	 	 	
 	  	(unaudited)	 	  	(unaudited)	 	  	(unaudited)	 	
Restructuring, environmental remediation and other charges	  	$	827	  	  	$	508	  	  	$	1,335	  	
Impairment of long-lived assets (excluding goodwill)	  	 	—	  	  	 	434	  	  	 	434	  	
Impairment of goodwill	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	827	  	  	$	942	  	  	$	1,769	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	827	  	  	$	942	  	  	$	1,769	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
The results of operations, impairment of long-lived assets, restructuring and other charges for businesses sold and shut down are reported as discontinued operations. The gains and losses on consummated transactions involving the sale of operations are included as part of net (loss) income from discontinued operations.
AHC completed its most recent annual impairment testing of goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2012. AHC recorded no goodwill impairment charges in fiscal 2012 or 2010, but its goodwill impairment charges for fiscal 2011 amounted to $10.8
 
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million and $0.2 million for continuing and discontinued operations, respectively. AHC’s impairment charges for identifiable intangible assets for continuing and discontinued operations amounted to $24.6 million, $8.2 million, and $1.2 million in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, which represent write downs of AHC’s intangible assets to their fair values.
For its long-lived assets, during the fourth quarter of fiscal 2012, AHC determined that its equity investment in the purchaser of BLK DNM was fully impaired due to continued poor operating performance and negative cash flows. AHC retained an equity interest after the sale of its BLK DNM business during the second quarter of fiscal 2012. AHC also recognized impairment charges of $0.7 million related to an exited facility in Trenton, Tennessee due to a decline in market value. This charge was recorded during fiscal 2012 at the time the facility was sold to a third-party. Further AHC recognized an impairment of fixed assets of $4.4 million during fiscal 2012 related to shutting down its Lamb & Flag operations.
Roll-forwards of the major components of the impairment of long-lived assets and restructuring, environmental remediation and other charges for fiscal 2011 and fiscal 2012 and the first six months of fiscal 2013 recorded in continuing operations are as follows:

 	  	Contractual
Obligations	 	 	Employee
Severance
and
Termination
Benefits	 	 	Impairment
of Long-
Lived Assets	 	 	Restructuring,
Environmental
Remediation
and  Other
Charges	 	 	Total	 	
(In thousands)	  	 	 	 	 	 	
Accrual as of January 29, 2011	  	$	894	  	 	$	384	  	 	$	—	  	 	$	10,349	  	 	$	11,627	  	
Provision	  	 	342	  	 	 	1,093	  	 	 	13,325	  	 	 	1,216	  	 	 	15,976	  	
Non-cash utilization	  	 	—	  	 	 	—	  	 	 	(13,325	) 	 	 	—	  	 	 	(13,325	) 	
Utilization	  	 	(763	) 	 	 	(1,236	) 	 	 	—	  	 	 	(2,007	) 	 	 	(4,006	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of January 28, 2012	  	 	473	  	 	 	241	  	 	 	—	  	 	 	9,558	  	 	 	10,272	  	
Provision	  	 	142	  	 	 	1,974	  	 	 	2,349	  	 	 	2,975	  	 	 	7,440	  	
Non-cash utilization	  	 	—	  	 	 	—	  	 	 	(2,349	) 	 	 	—	  	 	 	(2,349	) 	
Utilization	  	 	(467	) 	 	 	(1,777	) 	 	 	—	  	 	 	(464	) 	 	 	(2,708	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of February 2, 2013	  	 	148	  	 	 	438	  	 	 	—	  	 	 	12,069	  	 	 	12,655	  	
Provision (unaudited)	  	 	24	  	 	 	511	  	 	 	—	  	 	 	292	  	 	 	827	  	
Non-cash utilization (unaudited)	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Utilization (unaudited)	  	 	(93	) 	 	 	(856	) 	 	 	—	  	 	 	(363	) 	 	 	(1,312	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of August 3, 2013 (unaudited)	  	$	79	  	 	$	93	  	 	$	—	  	 	$	11,998	  	 	$	12,170	  	

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Roll-forwards of the major components of the impairment of long-lived assets and restructuring, environmental remediation and other charges for fiscal 2011 and fiscal 2012 and the first six months of fiscal 2013 recorded in discontinued operations are as follows:

 	  	Contractual
Obligations	 	 	Employee
Severance
and
Termination
Benefits	 	 	Impairment
of Long-
Lived Assets	 	 	Restructuring,
Environmental
Remediation
and  Other
Charges	 	 	Total	 	
(In thousands)	  	 	 	
Accrual as of January 29, 2011	  	$	22,047	  	 	$	791	  	 	$	—	  	 	$	188	  	 	$	23,026	  	
Provision (reversal)	  	 	(90	) 	 	 	554	  	 	 	6,138	  	 	 	25	  	 	 	6,627	  	
Non-cash utilization	  	 	—	  	 	 	—	  	 	 	(6,138	) 	 	 	—	  	 	 	(6,138	) 	
Utilization	  	 	(7,925	) 	 	 	(805	) 	 	 	—	  	 	 	(213	) 	 	 	(8,943	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of January 28, 2012	  	 	14,032	  	 	 	540	  	 	 	—	  	 	 	—	  	 	 	14,572	  	
Provision (reversal)	  	 	(599	) 	 	 	551	  	 	 	4,380	  	 	 	457	  	 	 	4,789	  	
Non-cash utilization	  	 	—	  	 	 	—	  	 	 	(4,380	) 	 	 	—	  	 	 	(4,380	) 	
Utilization	  	 	(12,215	) 	 	 	(1,031	) 	 	 	—	  	 	 	(170	) 	 	 	(13,416	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of February 2, 2013	  	 	1,218	  	 	 	60	  	 	 	—	  	 	 	287	  	 	 	1,565	  	
Provision (unaudited)	  	 	230	  	 	 	269	  	 	 	434	  	 	 	9	  	 	 	942	  	
Non-cash utilization (unaudited)	  	 	—	  	 	 	—	  	 	 	(434	) 	 	 	—	  	 	 	(434	) 	
Utilization (unaudited)	  	 	(1,211	) 	 	 	(100	) 	 	 	—	  	 	 	(36	) 	 	 	(1,347	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of August 3, 2013 (unaudited)	  	$	237	  	 	$	229	  	 	$	—	  	 	$	260	  	 	$	726	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contractual obligations represent adverse contractual arrangements under which losses are probable and estimable and where there is no future economic benefit. These include make-whole payments to PVH Corp. (“PVH”) as a result of the termination of the Calvin Klein license agreement and minimum lease payments, as well as costs related to vacated leased spaces for the exited Lamb & Flag business.
In continuing and discontinued operations, contractual obligations and employee severance and termination benefits will largely be settled through the first quarter of fiscal 2015 in accordance with the related agreements.
During fiscal 2013, AHC expects actions to be taken that will result in additional restructuring charges to continuing operations of less than $0.5 million and additional net cash outflows related to restructuring activities of approximately $1.2 million. AHC expects actions to be taken that will result in additional restructuring charges to discontinued operations of approximately $0.2 million and additional net cash outflows related to restructuring activities of approximately $0.6 million.
Discontinued Operations
During the second quarter of fiscal 2013, AHC divested its Zobha business in order to focus resources on its larger contemporary and juniors brands.
During the first quarter of fiscal 2013, AHC sold its Baby Phat trademark to a licensee after having also shut down its Baby Phat wholesale operations during the fourth quarter of fiscal 2012. AHC previously sold its Phat Farm trademark to the same licensee in the second quarter of fiscal 2012. The disposal of these trademarks (collectively, “Phat Licensing”) and related wholesale operations resulted from its decision to exit the urban wear market generally and refocus AHC’s efforts on its larger contemporary and Juniors brands.
In the fourth quarter of fiscal 2012, AHC sold the equity interests of Royal Robbins, LLC, and certain assets and liabilities of its Royal Robbins Canada operations to an unrelated third party.
 
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In the third quarter of fiscal 2012, AHC discontinued its Lamb & Flag operations, and in the second quarter of fiscal 2012, AHC sold substantially all the assets and liabilities of its BLK DNM operations. The decision to exit both these businesses resulted from the determination that AHC’s startup brands are not aligned with its current strategic initiatives.
In the fourth quarter of fiscal 2011, AHC discontinued its Adam operations and Koret businesses due to poor operating performance.
The results of operations and restructuring and other charges for the discontinued operations are reported as discontinued operations in AHC’s consolidated financial statements included elsewhere in this prospectus, for all periods presented. Additionally, assets and liabilities of the discontinued operations are segregated in AHC’s consolidated financial statements included elsewhere in this prospectus.
The following table provides summarized operating results for fiscal 2010, fiscal 2011 and fiscal 2012 and the first six months of fiscal 2012 and fiscal 2013 for discontinued operations.

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except effective tax rate)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net sales	  	$	52,454	  	 	$	63,199	  	 	$	47,163	  	 	$	 28,583	  	 	$	  1,097	  	
Cost of products sold	  	 	24,097	  	 	 	45,928	  	 	 	34,014	  	 	 	20,613	  	 	 	1,758	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	28,357	  	 	 	17,271	  	 	 	13,149	  	 	 	7,970	  	 	 	(661	) 	
Selling, general and administrative expenses	  	 	17,238	  	 	 	26,771	  	 	 	20,184	  	 	 	13,381	  	 	 	1,848	  	
Amortization of intangible assets	  	 	83	  	 	 	108	  	 	 	294	  	 	 	261	  	 	 	—	  	
Restructuring and other charges	  	 	3,575	  	 	 	489	  	 	 	409	  	 	 	221	  	 	 	508	  	
Impairment of long-lived assets (excluding goodwill)	  	 	24,129	  	 	 	5,913	  	 	 	4,380	  	 	 	—	  	 	 	434	  	
Impairment of goodwill	  	 	—	  	 	 	225	  	 	 	—	  	 	 	—	  	 	 	—	  	
Interest expense, net	  	 	—	  	 	 	471	  	 	 	1,616	  	 	 	869	  	 	 	—	  	
Other (income) expense, net	  	 	(688	) 	 	 	15	  	 	 	(11,730	) 	 	 	(2,172	) 	 	 	(768	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	  	 	(15,980	) 	 	 	(16,721	) 	 	 	(2,004	) 	 	 	(4,590	) 	 	 	(2,683	) 	
Provision for income taxes	  	 	411	  	 	 	(141	) 	 	 	49	  	 	 	208	  	 	 	(11,913	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income from discontinued operations	  	$	(16,391	) 	 	$	(16,580	) 	 	$	(2,053	) 	 	$	(4,798	) 	 	$	9,230	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	  	 	(2.6	)% 	 	 	0.8	% 	 	 	(2.4	)% 	 	 	(4.5	)% 	 	 	N.M.	  	
Net sales for discontinued operations during the first six months of fiscal 2013 were $1.1 million compared to $28.6 million for the first six months of fiscal 2012, at which time the Zobha, Phat Licensing, Lamb & Flag, BLK DNM, Royal Robbins and Baby Phat Wholesale businesses were all still in operation. The significant decrease of $27.5 million, or 96.2% from the first six months of fiscal 2012 to the first six months of fiscal 2013 is attributable to the fact that Zobha and Phat Licensing were the only aforementioned businesses still in operation during the first six months of fiscal 2013. Net sales for discontinued operations for fiscal 2012 were $47.2 million, compared to $63.2 million in fiscal 2011, decreasing $16.0 million, or 25.4%. $16.0 million of the decrease in net sales is due to the shutdown of the Adam operations and Koret businesses at the end of fiscal 2011. Net sales for fiscal 2011 were $63.2 million, compared to $52.5 million in fiscal 2010, increasing $10.7 million, or 20.5%. The increase is primarily a result of the addition of the Baby Phat wholesale operations in fiscal 2011.
Cost of products sold for discontinued operations during the first six months of fiscal 2013 was 1.8, versus $20.6 million in the first six months of fiscal 2012 due to the fact that the businesses described in the immediately prior paragraph were no longer in operation after the first six months of fiscal 2012. Cost of products sold for discontinued operations for fiscal 2012 was $34.0 million, decreasing $11.9 million, or 25.9%, versus $45.9 million for fiscal 2011. Cost of products sold for
 
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discontinued operations for fiscal 2011 was $45.9 million, increasing $21.8 million, or 90.6%, versus $24.1 million for fiscal 2010.
Gross profit/gross margin for discontinued operations was 27.9% during the first six months of fiscal 2012. During the first six months of fiscal 2013, AHC experienced a negative gross margin of (60.3)% primarily due to the concessions granted to customers of AHC’s Baby Phat licensing business to liquidate the inventory of this discontinued business. Gross profit/gross margin increased 60 basis points to 27.9% in fiscal 2012 from 27.3% in fiscal 2011. Gross profit/gross margin decreased 2,680 basis points to 27.3% in fiscal 2011 from 54.1% in fiscal 2010. The decrease from fiscal 2010 to fiscal 2011 is due to the substantial negative margins realized in 2011 from the Adam operations and Koret operations. While these charges did not recur in fiscal 2012, margin improvement was partially offset by the charges of $2.1 million incurred to liquidate the Lamb & Flag and Baby Phat wholesale inventory in fiscal 2012.
Selling, general and administrative expenses for discontinued operations in the first six months of fiscal 2013 was $1.8 million, representing costs associated with AHC’s Zobha business prior to the divestiture thereof. During the first six months of fiscal 2012, SG&A for discontinued operations was $13.4 million, or 46.8%, of sales for discontinued operations, at which time the Zobha, Phat Licensing, Lamb & Flag, BLK DNM, Royal Robbins and Baby Phat Wholesale businesses were still operating. Selling, general and administrative expenses for discontinued operations in fiscal 2012 were $20.2 million, compared to $26.8 million in fiscal 2011, decreasing $6.6 million, or 24.6%. The decrease is attributable to exiting the Adam operations and Koret businesses in the fourth quarter of fiscal 2011, for which these costs were eliminated. SG&A expenses for fiscal 2011 were $26.8 million, compared to $17.2 million in fiscal 2010, increasing $9.5 million, or 55.3%. The increase resulted from incurring only partial year charges related to the startup of the BLK DNM operations and acquisition of the Adam operations in 2010. AHC also incurred additional expenses related to the addition of the Zobha and Baby Phat wholesale operations in the third quarter of fiscal 2011.
Amortization of intangible assets for discontinued operations is related to the definite-lived assets recognized as a result of acquiring the Royal Robbins and Adam brands. Amortization remained relatively unchanged at $0.1 million in fiscal 2010 and fiscal 2011 and was $0.3 million in fiscal 2012. Amortization was $0 for the first six months of fiscal 2013 and $0.3 million for the first six months of fiscal 2012.
Restructuring and other charges for discontinued operations were $0.5 million during the first six months of fiscal 2013, and $0.2 million during the first six months of fiscal 2012. Charges recognized during the first six months of fiscal 2013 were primarily related to costs to divest AHC’s Zobha business, while the changes recognized during the first six months of fiscal 2012 resulted from the recognition of costs to exit AHC’s Lamb & Flag business, partially offset by adjustments to decrease AHC’s estimated reserves on exited lease spaces and other shutdown costs. Restructuring and other charges for discontinued operations decreased from $0.5 million in fiscal 2011 to $0.4 million in fiscal 2012. Charges recognized in fiscal 2012 primarily relate to costs incurred to exit our Lamb & Flag business, partially offset by reversals of previously accrued make-whole payments related to our terminated Calvin Klein license agreement. Charges recognized in fiscal 2011 primarily relate to costs incurred to exit our Adam business, partially offset by reversals of accrued make-whole payments for our Calvin Klein license agreement. Restructuring and other charges decreased from $3.6 million in fiscal 2010 to $0.5 million during fiscal 2011 as a result of recognizing various costs in fiscal 2010 to reduce overhead and obtain operational efficiencies within our Phat Licensing business.
Impairment of long-lived assets for discontinued operations was $0.4 million for the first six months of fiscal 2013 due to the write-off of obsolete fixed assets related to AHC’s Zobha business. Impairment of long-lived assets was $4.4 million for fiscal 2012, decreasing $1.5 million from
 
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$5.9 million in fiscal 2011. The decrease is primarily due to recognizing impairment losses of $5.2 million on our Phat Licensing and Adam intangible assets in fiscal 2011, partially offset by the write-down of the Lamb & Flag fixed assets of $4.4 million in fiscal 2012. Impairment of long-lived assets decreased from $24.1 million in fiscal 2010 to $5.9 million in fiscal 2011. In fiscal 2010, we recognized an impairment charge of $24.1 million on our Phat Licensing trademarks due to the declining results of our licensees, which was partially offset by the additional impairment charges recognized for our Phat Licensing and Adam intangible assets in fiscal 2011.
Interest expense, net for discontinued operations incurred on the portion of debt required to be repaid upon completing the sale of the Royal Robbins operations in the fourth quarter of fiscal 2012 was retrospectively allocated to discontinued operations in fiscal 2011 and fiscal 2012. Interest expense, net for discontinued operations was $0 in the first six months of fiscal 2013 compared to $0.9 million in the first six months of fiscal 2012. This balance increased to $0.5 million in fiscal 2011 from no interest expense in fiscal 2010 and to $1.6 million in fiscal 2012 as AHC did not obtain financing under the Wells Fargo Facility and the Cerberus Term Loan until the third quarter of fiscal 2011.
Other (income) expense, net from discontinued operations during the first six months of fiscal 2013 was income of $0.8 million, representing the gain on the sale of the Baby Phat trademark. Other (income) expense, net for discontinued operations was income of $2.2 in the first six months of fiscal 2012, which primarily consisted of a $3.7 million gain on the sale of AHC’s Phat Farm trademark, partially offset by a loss recognized on the sale of AHC’s BLK DNM business. Other (income) expenses, net increased from $0 in fiscal 2011 to income of $11.7 million in fiscal 2012. This change resulted from the $9.1 million gain realized on AHC’s sale of the Royal Robbins business and the $3.7 million gain realized on the sale of AHC’s Phat Farm trademark, partially offset by the $1.9 million loss recognized on the sale of the BLK DNM operations in fiscal 2012. No operations were disposed of in fiscal 2011 through sale transactions.
Effective tax rates for discontinued operations for fiscal 2010, fiscal 2011 and fiscal 2012 differs from the U.S. statutory rate of 35% primarily due to a full valuation allowance on current year deferred tax assets offset in part by state taxes. The rate for the first six months of fiscal 2013 differs from the U.S. statutory rate of 35% primarily due to a release of valuation allowance. The release in valuation allowance is primarily due to the allocation of the disallowed tax loss on the sale of the Baby Phat trademark to intangible assets with indefinite lives resulting in fewer deferred tax liabilities that cannot be offset against deferred tax assets for valuation allowance purposes. The effective tax rate for discontinued operations for the first six months of fiscal 2012 differs from the U.S. statutory rate of 35% primarily due to an increase in the valuation allowance offset in part by state taxes and the lower tax rate on foreign earnings.
AHC expects to have future net cash outflows related to its discontinued operations of approximately $1.5 million, which is primarily payable through fiscal 2014.
 
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Quarterly Financial Data
The following table presents AHC’s unaudited consolidated quarterly results of operations for the ten fiscal quarters ended August 3, 2013. This table includes all adjustments, consisting only of normal recurring adjustments that AHC considers necessary for fair presentations of its financial position and operating results for the quarters presented:

 	 	Quarter Ended	 	
 	 	April 30,
2011	 	 	July 30,
2011	 	 	October 29,
2011	 	 	January 28,
2012	 	 	April 28,
2012	 	 	July 28,
2012	 	 	October 27,
2012	 	 	February 2,
2013	 	 	May 4,
2013	 	 	August 3,
2013	 	
(In thousands,
unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Revenues	 	$	146,102	  	 	$	164,010	  	 	$	194,517	  	 	$	158,217	  	 	$	151,664	  	 	$	167,781	  	 	$	203,355	  	 	$	185,195	  	 	$	170,714	  	 	$	193,253	  	
Cost of products sold	 	 	107,460	  	 	 	119,191	  	 	 	143,480	  	 	 	119,979	  	 	 	113,737	  	 	 	121,556	  	 	 	140,440	  	 	 	132,172	  	 	 	124,673	  	 	 	131,358	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Profit	 	 	38,642	  	 	 	44,819	  	 	 	51,037	  	 	 	38,238	  	 	 	37,927	  	 	 	46,225	  	 	 	62,915	  	 	 	53,023	  	 	 	46,041	  	 	 	61,895	  	
Operating expenses:	 				 				 				 				 				 				 				 				 				 				
Selling, general and administrative expenses	 	 	38,641	  	 	 	40,201	  	 	 	37,145	  	 	 	39,233	  	 	 	41,814	  	 	 	41,712	  	 	 	45,786	  	 	 	48,443	  	 	 	45,174	  	 	 	48,329	  	
Amortization of intangible assets	 	 	350	  	 	 	350	  	 	 	766	  	 	 	475	  	 	 	475	  	 	 	475	  	 	 	475	  	 	 	474	  	 	 	475	  	 	 	475	  	
Restructuring, environmental remediation and other charges	 	 	1,367	  	 	 	323	  	 	 	109	  	 	 	852	  	 	 	988	  	 	 	1,276	  	 	 	556	  	 	 	2,271	  	 	 	782	  	 	 	45	  	
Impairment of long-lived assets (excluding goodwill)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	2,504	  	 	 	—	  	 	 	717	  	 	 	9	  	 	 	1,623	  	 	 	—	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	—	  	 	 	—	  	 	 	10,821	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(1,578	) 	 	 	—	  	 	 	(4,507	) 	 	 	—	  	 	 	(2,655	) 	 	 	—	  	 	 	(54	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	40,358	  	 	 	40,874	  	 	 	38,020	  	 	 	52,307	  	 	 	43,277	  	 	 	39,673	  	 	 	46,826	  	 	 	50,156	  	 	 	46,431	  	 	 	48,795	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations	 	 	(1,716	) 	 	 	3,945	  	 	 	13,017	  	 	 	(14,069	) 	 	 	(5,350	) 	 	 	6,552	  	 	 	16,089	  	 	 	2,867	  	 	 	(390	) 	 	 	13,100	  	
Interest expense, net	 	 	28,746	  	 	 	29,917	  	 	 	33,672	  	 	 	34,813	  	 	 	37,291	  	 	 	36,860	  	 	 	23,773	  	 	 	24,459	  	 	 	24,303	  	 	 	19,368	  	
Gain on acquisition, net of tax	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, (income) net	 	 	674	  	 	 	597	  	 	 	(314	) 	 	 	957	  	 	 	667	  	 	 	548	  	 	 	609	  	 	 	899	  	 	 	338	  	 	 	895	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	 	 	(31,136	) 	 	 	(26,569	) 	 	 	(20,341	) 	 	 	(49,839	) 	 	 	(43,308	) 	 	 	(30,856	) 	 	 	(8,293	) 	 	 	(22,491	) 	 	 	(25,031	) 	 	 	(7,163	) 	
Provision for income taxes	 	 	1,296	  	 	 	1,169	  	 	 	556	  	 	 	380	  	 	 	1,238	  	 	 	1,007	  	 	 	(58	) 	 	 	(1,479	) 	 	 	1,354	  	 	 	1,325	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations	 	 	(32,432	) 	 	 	(27,738	) 	 	 	(20,897	) 	 	 	(50,219	) 	 	 	(44,546	) 	 	 	(31,863	) 	 	 	(8,235	) 	 	 	(21,012	) 	 	 	(26,385	) 	 	 	(8,488	) 	
Net income (loss) from discontinued operations, net of income taxes	 	 	1,793	  	 	 	(1,894	) 	 	 	(960	) 	 	 	(15,519	) 	 	 	(2,609	) 	 	 	(2,189	) 	 	 	(6,660	) 	 	 	9,405	  	 	 	11,276	  	 	 	(2,046	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(30,639	) 	 	$	(29,632	) 	 	$	(21,857	) 	 	$	(65,738	) 	 	$	(47,155	) 	 	$	(34,052	) 	 	$	(14,895	) 	 	$	(11,607	) 	 	$	(15,109	) 	 	$	(10,534	) 	

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Liquidity and Capital Resources
AHC has substantial indebtedness as a result of its February 2008 acquisition of Kellwood Company by the Pre-IPO Stockholders. Since its acquisition, AHC has incurred additional debt in order to fund negative cash flows, principally due to significant cash outflows resulting from its numerous restructuring activities, the significant level of interest expense arising from its substantial indebtedness, and significant cash outflows related to payments for acquisitions. The retail and apparel industry and economy as a whole have suffered recessionary conditions, a decline in employment levels and declines in consumer confidence in a number of the years since the acquisition of Kellwood Company by affiliates of Sun Capital, which have negatively impacted operating results. As a result, AHC has been, and continues to be, challenged by its heavily leveraged capital structure, negative cash flows, and significant level of interest expense.
AHC currently funds its cash requirements primarily through cash generated from operations and relies on its revolving credit facility for cash borrowings as needed. At February 2, 2013, its borrowing base provided for a borrowing level of $110.9 million under the Wells Fargo Facility and there were borrowings outstanding and letters of credit outstanding of $79.8 million and $13.3 million, respectively. AHC expects that cash on hand, cash flows from operating activities, and available credit under the Wells Fargo Facility will be adequate to meet its liquidity needs for the next 12 months. As of August 31, 2013, availability under the Wells Fargo Facility was $12.3 million.
AHC will continue to evaluate potential financing transactions, including refinancing certain tranches of its indebtedness, issuing incremental debt, obtaining incremental letter of credit facilities and extending maturities of its existing debt, as well as evaluating other potential transactions which may provide it with additional liquidity. In addition, AHC’s capital and SG&A spending, restructuring plans, and growth initiatives contain discretionary elements. The discretionary elements can be deferred or otherwise eliminated in the near term to provide additional flexibility to manage its liquidity requirements. However, there can be no assurance as to which, if any, of these alternatives AHC may choose, or whether financing or refinancing will be available to it on acceptable terms or at all.
Wells Fargo Facility
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers, (“Borrowers”), entered into a credit agreement with the Wells Fargo Bank, National Association, as agent, and lenders from time to time party thereto, as amended, the Wells Fargo Facility. The Wells Fargo Facility provides the Borrowers with a non-amortizing senior revolving credit facility with aggregate lending commitments of $160.0 million, reduced to $155.0 million by the December 31, 2012 Amendment described below. The Wells Fargo Facility terminates at the earliest to occur of (a) October 19, 2016, (b) 90 days prior to the scheduled December 31, 2014, maturity date of the 12.875% Notes (including any extension effective on or prior to such 90th day prior to such scheduled maturity date) or (c) 90 days prior to the scheduled maturity date of the Cerberus Term Loan (including any extension effective on or prior to such 90th day prior to such scheduled maturity date). The amount which the Borrowers may borrow from time to time under the Wells Fargo Facility is determined on the basis of a borrowing base formula that is a percentage of Kellwood Company’s accounts receivable and inventory that meet eligibility criteria specified in the Wells Fargo Facility, but in no case more than the aggregate lending commitments of the participating lenders. All borrowings under the Wells Fargo Facility bear interest at a rate per annum equal to an applicable margin (ranging from 2.5% to 3.0% per annum for LIBOR Revolver Loans (as defined therein) and 1.25% to 1.75% for Base Rate Loans (as defined therein) based on average availability under the Wells Fargo Facility plus, at the Borrowers’ election, LIBOR or a Base Rate (as defined in the Wells Fargo Facility)). In addition to paying interest, the Borrowers will pay a periodic commitment fee to the lenders under the Wells Fargo Facility based on the amount of unused availability under the borrowing base formula. The Wells Fargo Facility is
 
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secured by a first-priority security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory, and intellectual property. The Wells Fargo Facility contains certain customary representations, warranties, provisions and restrictions. The Wells Fargo Facility requires that the Borrowers maintain a fixed charge coverage ratio of at least 1:1 during any Covenant Testing Period (as defined in therein) which is triggered when excess availability is below 12.5% of the aggregate commitments under the Wells Fargo Facility (the “Covenant Testing Trigger Date”). The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the Wells Fargo Facility) (with certain addbacks as defined in the Wells Fargo Facility for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, management fees, as well as certain other costs and charges) minus certain capital expenditures and certain distributions, redemptions and management fees; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash, excluding earnout payments related to the Vince brand for the 2011 fiscal year, up to a certain amount, calculated over the trailing four fiscal quarters. Upon the occurrence and during the continuance of an event of default or upon the occurrence of a Covenant Testing Trigger Date, a cash dominion period will go into effect whereby the agent has the ability to direct the disposition of the balances in controlled deposit accounts. The cash dominion period will expire when availability is over 12.5% of the aggregate commitments under the Wells Fargo Facility for a period of 90 consecutive days and any other events of default have been waived.
On March 23, 2012, Kellwood Company amended the Wells Fargo Facility to modify the Covenant Testing Period such that it is now triggered when excess availability is below $5.0 million, and triggered the cash dominion period, as defined therein. This amendment was entered into in consideration for a guaranty of payment of Kellwood Company’s obligations under the Wells Fargo Facility and a $20.0 million letter of credit to the benefit of Wells Fargo Bank, National Association, as agent, issued by an affiliate of Sun Capital for repayment under the guaranty should it ever become payable pursuant to its terms.
On April 20, 2012, Kellwood Company amended the Wells Fargo Facility to extend the modification to the Covenant Testing Period to be in effect until March 21, 2014 unless the guaranty described above is no longer in effect or the full face amount of the letter of credit described above is no longer available to be drawn. The guaranty will be released, the letter of credit returned and the trigger for the Covenant Testing Period will return to the pre-amendment level when availability is above $35.0 million for 90 consecutive days and is projected to remain above $25.0 million through the remaining term of the Wells Fargo Facility. This amendment also provided for the consent of the Wells Fargo Facility lenders to the additional loans under the Sun Loan Agreements.
On December 31, 2012, Kellwood Company amended the Wells Fargo Facility to obtain consent to the sale of the Royal Robbins business, to release Royal Robbins, LLC as a Borrower and/or Obligor under the Wells Fargo Facility, and to release the agent’s lien on the assets of the Royal Robbins business. Additionally, the first $10 million of the net cash proceeds arising from the cash purchase price paid at closing (excluding any escrow amount) were to be applied to the Cerberus Term Loan and the remaining portion to be remitted to the Wells Fargo Facility. This amendment also resulted in a permanent reduction to availability of $5.0 million.
On June 28, 2013, Kellwood Company and the lenders under the Wells Fargo Facility entered into a consent pursuant with respect to Kellwood Company’s incurrence of Term Loan G under the Sun Term Loan B/C/D/E/F/G Agreement.
In connection with consummation of this offering, Kellwood Company, LLC will refinance the Wells Fargo Facility. See “Use of Proceeds” and “Restructuring Transactions.”
 
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Sun Promissory Notes
On May 2, 2008, AHC issued the Sun Promissory Notes in amounts totaling $300.0 million. The unpaid principal balance of the note accrues interest at 15% per annum until the maturity date of October 15, 2011, at which point any unpaid principal balance of the note shall accrue interest at a rate of 17% per annum until the note is paid in full. All interest which is not paid in cash on or before an interest payment date shall be deemed paid in kind and added to the principal balance of the note. All interest accrued shall be deemed interest paid in kind unless an election is made otherwise. No interest has been paid on the Sun Promissory Notes.
On July 19, 2012, AHC amended the Sun Promissory Notes to extend the maturity date to October 15, 2016 and reduce the interest rate to 12% per annum until maturity, at which point any unpaid principal balance of the notes shall accrue interest at a rate of 14% per annum until the notes are paid in full.
On December 28, 2012, all interest accrued under the note prior to July 19, 2012 was waived. This resulted in an increase to additional paid-in-capital in the amount of $270.8 million as both parties were under the common control of affiliates of Sun Capital.
Effective June 18, 2013, an affiliate of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes as a capital contribution to AHC in the Sun Capital Contribution.
Sun Capital Loan Agreement
AHC is party to the Sun Capital Loan Agreement with SCSF Kellwood Finance, LLC (“SCSF Finance”) and Sun Kellwood Finance (as successors to Bank of Montreal) for a $72.0 million line of credit. Under the terms of this agreement, as amended from time to time, interest accrues at the greater of prime plus 2% per annum or LIBOR plus 4.75% per annum and is due by the last day of each fiscal quarter. The principal balance of the loan which remains unpaid after demand for repayment or during the existence of any other Event of Default, as defined in the credit agreement, bears interest until paid in full at a post-maturity rate of 2% per annum above the rate otherwise applicable. Interest on the loan is payable either in immediately available funds on each interest payment date or by adding such interest to the unpaid principal balance of the loan on each interest payment date. No interest has been paid on the Sun Capital Loan Agreement. The original maturity date of the loan was August 6, 2009. On July 19, 2012, the maturity date of the loan was extended to August 6, 2014.
On December 28, 2012, Sun Kellwood Finance and SCSF Finance waived all interest capitalized and accrued under the loan authorization agreement prior to July 19, 2012. As all parties are under the common control of affiliates of Sun Capital, this transaction resulted in a capital contribution of $18.2 million, which was recorded as an adjustment to additional paid-in-capital as of February 2, 2013.
Effective June 18, 2013, an affiliate of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes as a capital contribution to AHC in the Sun Capital Contribution.
Cerberus Term Loan
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers, entered into the Cerberus Term Loan with Cerberus Business Finance, LLC (the “Agent”) as collateral agent, and the lenders from time to time party thereto. The Cerberus Term Loan provides the
 
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Borrowers with a non-amortizing secured Cerberus Term Loan in an aggregate amount of $55.0 million. The Cerberus Term Loan terminates at the earliest to occur of (a) October 19, 2015, (b) the date on which the Wells Fargo Facility has been paid in full and all commitments thereunder have been terminated, (c) 60 days prior to the scheduled December 31, 2014 maturity date of the 12.875% Notes (including any extensions thereof agreed to after October 19, 2011) or (d) the date on which the term loans under the Sun Term Loan Agreements are accelerated. All borrowings under the Cerberus Term Loan bear interest, from the date of the agreement until the effective date of the amendment described below at a rate per annum equal to an applicable margin (10.25% per annum for LIBOR Rate Loans (as defined therein) and 7.75% for Reference Rate Loans (as defined therein)) plus, at the Borrowers’ election, LIBOR or a Reference Rate as defined in the Cerberus Term Loan. The Cerberus Term Loan is secured by a security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory and intellectual property, which security interest is contractually subordinated to security interests of the lenders under the Wells Fargo Facility. The Cerberus Term Loan contains certain customary representations, warranties, provisions and restrictions. The Cerberus Term Loan required that the Borrowers maintain a fixed charge coverage ratio as of each fiscal quarter end prior to the effective date of the amendment described below of at least 1:1. The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the December 31 amendment to the Cerberus Term Loan as described below ) (with certain addbacks as defined in the amended Cerberus Term Loan for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, as well as certain other costs and charges) minus certain capital expenditures and certain distributions, redemptions and management fees; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash, excluding earnout payments related to the Vince brand for the 2011 fiscal year, up to a certain amount, calculated over the trailing four fiscal quarters. The Cerberus Term Loan also required that the Borrowers maintain a leverage ratio as defined in the Cerberus Term Loan and ranging from 2.85:1 to 4.25:1 during the life of the Cerberus Term Loan prior to the effective date of the amendment described below. The leverage ratio is defined as the ratio of indebtedness secured by a lien on any collateral (including the debt under the Wells Fargo Facility and Cerberus Term Loan and capitalized leases, but excluding the debt under the Sun Loan Agreements (as defined below) and the 12.875% Notes), divided by Consolidated EBITDA (as defined in the December 31 amendment to the Cerberus Term Loan described below) for the trailing four fiscal quarters.
On January 26, 2012, Kellwood Company obtained a waiver to the Cerberus Term Loan until the end of the first quarter of fiscal 2012 (the “Waiver Period”) as AHC anticipated not being in compliance with the fixed charge coverage ratio and the leverage ratio covenants as of January 28, 2012. In conjunction with this waiver, Kellwood Company paid the Agent a $75,000 waiver fee and an affiliate of Sun Capital provided the Agent with a $10.0 million letter of credit. The waiver required the parties to the Cerberus Term Loan to work in good faith during the Waiver Period to amend the financial covenants set forth in the Cerberus Term Loan at levels mutually acceptable to all parties.
On March 23, 2012, Kellwood Company entered into a waiver consenting to the March 23, 2012 amendment entered into with respect to the Wells Fargo Facility referred to above.
On April 20, 2012, Kellwood Company entered into Consent and Amendment No. 1 to Cerberus Term Loan. This amendment provided for the consent of the Cerberus Term Loan lenders to the additional term loans under the Sun Loan Agreement (as defined below), the release of the $10.0 million letter of credit noted above and the delivery of Kellwood Company’s audited fiscal 2011 financial statements within 97 days of the fiscal year-end. This amendment increased the applicable margins for borrowings under the Cerberus Term Loan which bore interest from and after the effective date of the amendment at a rate per annum equal to an applicable margin (ranging from 10.75% to 11.25% per annum for LIBOR Rate Loans (as defined in the Cerberus Term Loan) and 8.25% to
 
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8.75% for Reference Rate Loans (as defined in the Cerberus Term Loan) based on leverage and income tests under the Cerberus Term Loan) plus, at the Borrowers’ election, LIBOR or a Reference Rate as defined in the Cerberus Term Loan. The amendment also provided for a portion of such interest equal to 1% per annum to be paid-in-kind and added to the principal amount of such term loans at Kellwood Company’s option so long as no event of default exists. The amendment also modified the financial covenant levels required to be maintained by the Borrowers beginning with the second quarter of fiscal 2012 for each financial covenant. The Cerberus Term Loan, as amended, requires that the Borrowers maintain a fixed charge coverage ratio as of each fiscal quarter end (beginning with the second quarter of fiscal 2012) ranging from 0.14:1 to 1.28:1 during the life of the Cerberus Term Loan. The Cerberus Term Loan, as amended, also required that the Borrowers maintain a leverage ratio as defined in the Cerberus Term Loan and ranging from 2.44:1 to 7.77:1 during the life of the Cerberus Term Loan (beginning with the second quarter of fiscal 2012). The minimum fixed charge coverage ratios for the second, third and fourth quarters of fiscal 2012 were 0.14:1, 0.41:1 and 0.67:1, respectively. The minimum fixed charge coverage ratios for 2013 were 0.89:1, 1.24:1, 1.28:1, and 1.22:1 for the first through fourth quarters, respectively. Subsequent to 2013, the quarterly minimum fixed charge coverage ratio remained at 1.22:1. The maximum leverage ratios for the second, third and fourth quarters of fiscal 2012 were 7.77:1, 5.71:1 and 3.51:1, respectively. The maximum leverage ratios for 2013 were 3.47:1, 358:1, 3.08:1, and 2.44:1 for the first through fourth quarters, respectively. Subsequent to 2013, the maximum quarterly leverage ratio remains at 2.44:1.
On December 31, 2012, Kellwood Company amended the Cerberus Term Loan to obtain consent to the sale of the Royal Robbins business, to release Royal Robbins, LLC as a Borrower and/or Obligor under the Cerberus Term Loan, and to release the agent’s lien on the assets of Royal Robbins. This amendment required the prepayment of the obligations under the Cerberus Term Loan in an amount not less than $10.0 million from a portion of the proceeds from the sale of Royal Robbins, with the remaining funds to be remitted to the Wells Fargo Facility. This amendment also redefined the definition Consolidated EBITDA to allow for certain additional addbacks.
On May 3, 2013, Kellwood Company amended the Cerberus Term Loan in anticipation of not being in compliance with the fixed charge coverage ratio covenant during fiscal 2013. This amendment modified the definition of the fixed charge coverage ratio to allow Kellwood Company to exclude certain types of capital expenditures in the calculation of the minimum fixed charge coverage ratio for the second, third, and fourth quarters of fiscal 2013, not to exceed $7.5 million in total. Additionally, this amendment modified the minimum fixed charge coverage ratios for the second, third, and fourth quarters of fiscal 2013 to be 1.10:1, 1.175:1, and 1.25:1, respectively. The minimum fixed charge coverage ratio for all fiscal quarters subsequent to fiscal 2013 was modified to be 1.25:1. Kellwood Company anticipates that it will be in compliance with all provisions of the amended Cerberus Term Loan during fiscal 2013, until consummation of this offering, at which time Kellwood Company, LLC will use a portion of the net proceeds from this offering to repay all amounts outstanding under the Cerberus Term Loan (and accrued and unpaid interest thereon). At February 2, 2013, Kellwood Company was in compliance with all provisions of the amended Cerberus Term Loan. On June 28, 2013, Cerberus and Kellwood Company entered into a consent to the Cerberus Term Loan with respect to AHC’s incurrence of the Term G Loan under the Sun Term Loan B/C/D/E/F/G Agreement.
In connection with consummation of this offering, Kellwood Company, LLC will use a portion of the net proceeds from the Kellwood Note Receivable to repay all amounts outstanding under the Cerberus Term Loan (and accrued and unpaid interest thereon) in full .
Sun Term Loan A/B/C/D/E/F/G Obligations
On July 23, 2009, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), affiliates of Sun Capital, as lenders, and Sun Kellwood Finance, LLC, as collateral agent, entered into the Sun Term Loan A Loan Agreement pursuant to which the Sun Capital affiliated lenders made certain Term A loans with an original principal amount of $12.2 million, the proceeds of which were used by the Borrowers to fund payment of the principal amounts outstanding, plus accrued and
 
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unpaid interest on Kellwood Company’s 7.875% 1999 Debentures due July 15, 2009 that were not tendered as part of the exchange offer for the 12.875% Notes.
On October 19, 2011, the Sun Term Loan A Loan Agreement was amended and restated in order to conform to representations, warranties and covenants to that of the Wells Fargo Facility and the Cerberus Facility which were entered into on that date. The Sun Term Loan Agreements were also amended to provide a termination date of the earlier of (i) January 19, 2017 or (ii) the date on which the Cerberus Term Loan has been terminated; provided that, if the Cerberus Term Loan is extended, the stated maturity date set forth in (i) above shall be extended by a period of the same duration. The interest terms of the Sun Term Loan Agreements were amended such that the Sun Term Loan Agreements bear interest at 10% per annum (or 12% per annum in the case of the Term E Loans, Term F Loans and the Term G Loans described below) that will be added to the principal amounts of the term loans thereunder. If the availability under the Wells Fargo Facility is not less than $45.0 million, Kellwood Company may pay interest at a rate of 5% per annum in cash with respect to the Term A, B, C and D Loans and at a rate of 6% per annum in cash with respect to the Term E, F and G Loans. The Sun Term Loan Agreements are secured by a security interest in substantially all of the assets of the Borrowers, which security interest is contractually subordinated to the security interests of the lenders under the Wells Fargo Facility and the Cerberus Term Loan. The Sun Term Loan Agreements contain customary representations, warranties, provisions and restrictions substantially similar to Wells Fargo Facility and the Cerberus Term Loan.
The Sun Term Loan B/C/D Agreement, dated as of July 23, 2009 pursuant to which the lenders made certain (i) Term B Loans with an original principal amount of $22.4 million issued on January 4, 2011, the proceeds of which were used by the Borrowers solely to finance the acquisition of Rebecca Taylor, (ii) Term C Loans with an original principal amount of $14.9 million issued on March 18, 2011, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers and (iii) Term D Loans with an original principal amount of $10.0 million issued on August 5, 2011, the proceeds of which were used to fund all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of such assets or the acquisition of capital stock of any person owning such assets) used in the business of the Borrowers.
On October 19, 2011, the Sun Term Loan B/C/D Agreement and the Sun Term Loan A Agreement each were amended and restated in order to confirm the related representations, warranties and covenants to those of the Wells Fargo Term Facility and the Cerberus Term Loan entered into on that date. The Sun Term Loan Agreements were also amended to provide a termination date of the earlier of (i) January 19, 2017 or (ii) the date on which the Cerberus Term Loan has been terminated; provided that, if the Cerberus Term Loan is extended, the stated maturity date set forth in (i) above shall be extended by a period of the same duration. The interest terms of the Sun Term Loan Agreements were amended such that the Sun Term Loan Agreements bear interest at 10% per annum (or 12% per annum in the case of the Term E Loans, Term F Loans and the Term G Loans described below) that will be added to the principal amounts of such term loans. If the availability under the Wells Fargo Facility is not less than $45.0 million, AHC may pay interest at a rate of 5% per annum in cash with respect to the Term A Loan, Term B Loan, Term C Loan and Term D Loans and at a rate of 6% per annum in cash with respect to the Term E Loan, Term F Loan and Term G Loan. The Sun Term Loan Agreements are secured by a security interest in substantially all of the assets of the Borrowers, which security interest is contractually subordinated to the security interests of the lenders under the Wells Fargo Facility and the Cerberus Term Loan. The Sun Term Loan Agreements contain customary representations, warranties, provisions and restrictions substantially similar to Wells Fargo Facility and the Cerberus Term Loan.
 
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On April 20, 2012, Kellwood Company entered into an amendment and restatement of each of the Sun Term Loan Agreements. The Sun Term Loan B/C/D Agreement was amended and restated and became the Sun Term Loan B/C/D/E/F Agreement in order to (i) provide for new Term E Loans with an original principal amount of $5.1 million, the proceeds of which were used to finance costs and expenses and earnout payments in respect of certain acquisitions consummated by the Borrowers prior to the date of the Term E Loans, (ii) provide for new Term F Loans with an original principal amount of $24.9 million, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers, and (iii) conform certain covenant and definitional changes made to the Wells Fargo Facility and the Cerberus Term Loan. The primary reason for entering into the amendment and restatement of the Sun Term A Loan Agreement was to conform to the aforementioned changes made to the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan B/C/D Agreement. The Term E Loans and the Term F Loans bear interest at a rate of 12% per annum and such interest will be added to the principal amounts of such loans at the end of each fiscal quarter. If the availability under the Wells Fargo Facility is not less than $45.0 million, Kellwood Company may pay interest at a rate of 6% per annum in cash. No cash interest has been paid on the Sun Term Loan Agreements.
On June 28, 2013, Kellwood Company entered into an amendment and restatement of the Sun Term Loan B/C/D/E/F Agreement in order to (i) provide for new Term G Loans with an original principal amount of $5.0 million, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers and (ii) to conform to the changes made to the Wells Fargo Facility and the Cerberus Term Loan. On June 28, 2013 Kellwood Company also entered into an amendment to the Sun Term Loan A Agreement to allow for the addition of the Term G Loans and to conform to the changes made to the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan B/C/D/E/F Agreement.
In connection with consummation of this offering, Kellwood Company, LLC will use a portion of the net proceeds from the Kellwood Note Receivable to repay all amounts outstanding under the Sun Term Loan Agreements (and accrued and unpaid interest thereon) in full (after giving effect to indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates).
12.875% Notes
Interest on the 12.875% Notes is paid (a) in cash at a rate of 7.875% per annum payable in January and July; and (b) in the form of PIK interest at a rate of 5% per annum (“PIK Interest”) payable either by increasing the principal amount of the outstanding 12.875% Notes, or by issuing additional 12.875% Notes with a principal amount equal to the PIK Interest accrued for the interest period. The 12.875% Notes are guaranteed by various of Kellwood Company’s subsidiaries on a secured basis, which security interest is contractually subordinated to security interests of lenders under the Wells Fargo Facility, the Cerberus Term Loan and the Sun Loan Agreements. The 12.875% Notes contain certain customary provisions that, among other things, limit Kellwood Company’s ability to incur additional indebtedness, make certain restricted payments, dispose of assets or redeem or repurchase capital stock or prepay subordinated indebtedness.
In connection with consummation of this offering, Kellwood Company, LLC will use a portion of net proceeds from the Kellwood Note Receivable to discharge or repurchase all amounts outstanding under the 12.875% Notes (and accrued and unpaid interest thereon) in full.
7.625% Notes
On April 15, 2010, Kellwood Company repurchased $29.7 million in aggregate principal amount of the 7.625% Notes from an affiliate of Sun Capital for $9.1 million in cash. The repurchased 7.625% Notes were then retired. Approximately $87.0 million in aggregate principal amount of 7.625% Notes
 
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remain outstanding following the repurchase. Interest is payable in April and October. The extinguishment resulted in a gain of $15.9 million during 2010.
In connection with consummation of this offering, Kellwood Company, LLC will use a portion of net proceeds from the Kellwood Note Receivable offering to discharge or repurchase all amounts outstanding under the 7.625% Notes (and accrued and unpaid interest thereon) in full (after giving effect to indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates).
Cash (used in)/provided by operating activities.     Cash provided by operating activities primarily consists of net loss, adjusted for certain non-cash items including depreciation and amortization, share-based compensation, capitalized PIK interest expense, deferred income taxes, amortization of bond discounts and debt issuance costs, impairment, restructuring, environmental remediation and other charges, gains and losses on dispositions of various assets and businesses, and the effect of changes in working capital and other activities.
In the first six months of fiscal 2013, net cash used in operating activities was $41.0 million and consisted of a net loss of $25.6 million plus non-cash items of $21.5 million less changes in working capital and other activities of $36.9 million. Non-cash items consisted primarily of capitalized PIK interest expense of $23.3 million, deferred income tax benefit of $9.7 million, depreciation and amortization of $3.7 million, and amortization of bond discounts and debt issue costs of $3.5 million. Cash used in working capital and other activities consisted of an increase in receivables, net of $4.2 million, an increase in inventories, net of $18.8 million, an increase in prepaid and other current assets of $7.3 million and a decrease in accounts payable and other accrued expenses of $4.2 million as a result of timing of payments to vendors.
In the first six months of fiscal 2012, net cash used in operating activities was $41.0 million and consisted of a net loss of $81.2 million plus non-cash items of $61.5 million less changes in working capital and other activities of $21.4 million. Non-cash items consisted primarily of capitalized PIK interest expense of $55.2 million, depreciation and amortization of $4.6 million, amortization of bond discounts and debt issuance costs of $3.6 million, net gains of $2.4 million on the disposition of trademarks and businesses, and a net gain of $4.5 million on fair value of contingent consideration. Cash used in working capital and other activities consisted primarily of an increase in inventories, net of $8.3 million, an increase in receivables, net of $7.5 million as a result of timing of customer payments, an increase in prepaid expenses and other current assets of $2.3 million, and payments of liabilities associated with restructuring and environmental remediation activities of $7.4 million.
In fiscal 2012, net cash used in operating activities was $26.0 million and consisted of a net loss of $107.7 million plus non-cash items of $98.3 million less changes in working capital and other activities of $16.6 million. Non-cash items consisted primarily of capitalized PIK interest expense of $86.5 million, depreciation and amortization of $8.4 million, amortization of bond discounts and debt issuance costs of $7.2 million, impairment charges of $6.7 million, restructuring, environmental remediation and other charges of $5.5 million, gains on disposition of trademarks of $4.2 million, gains on disposition of businesses of $7.3 million and a net gain on fair value of contingent consideration of $7.2 million. Cash used for working capital and other activities consisted primarily of payments of liabilities associated with restructuring and environmental remediation activities of $16.1 million, a decrease in accounts payable and accrued expenses of $7.8 million due to timing of vendor payments and payroll, partially offset by an increase in other assets and liabilities of $5.7 million.
In fiscal 2011, net cash used in operating activities was $38.3 million and consisted of a net loss of $147.9 million plus $135.6 million of non-cash items less $26.0 million for changes in working capital and other activities. Non-cash items consisted primarily of capitalized PIK interest expense of
 
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$92.1 million, depreciation and amortization of $11.1 million, amortization of bond discounts and debt issuance costs of $6.4 million, impairment charges of $19.5 million and restructuring, environmental remediation and other charges of $3.1 million. Cash used for working capital and other activities consisted primarily of an increase in receivables, net of $20.9 million due to increased net sales, an increase in inventories, net of $5.9 million due to a forecasted increase in net sales, payments of liabilities associated with restructuring and environmental remediation activities of $12.9 million, partially offset by an increase in accounts payable and accrued expense of $12.6 million due to timing of vendor payments and payroll.
In fiscal 2010, net cash used in operating activities was $44.7 million and consisted of a net loss of $104.5 million plus $118.2 million of non-cash items less $58.5 million for changes in working capital and other activities. Non-cash items consisted primarily of capitalized PIK interest expense of $75.1 million, depreciation and amortization of $10.3 million, amortization of bond discounts and debt issuance costs of $6.8 million, impairment charges of $24.6 million and restructuring, environmental remediation and other charges of $13.3 million, and a gain on debt extinguishment of $15.9 million. Cash used for working capital and other activities consisted primarily of an increase in inventories, net of $28.5 million due to timing of inventory purchases, payments of liabilities associated with restructuring and environmental remediation activities of $18.6 million, an increase in receivables, net of $5.8 million due to the timing of customer payments, and an increase in accounts payable and accrued expenses of $6.0 million due to timing of vendor payments and payroll.
Net cash (used in)/provided by investing activities.     Net cash from investing activities primarily relates to capital expenditures and payments for acquisitions and proceeds from dispositions. Net cash provided by investing activities was $0.5 million in the first six months of fiscal 2013 due primarily to proceeds received from the disposition of a trademark and other assets, partially offset by capital expenditures of $5.5 million. Net cash used in the first six months of fiscal 2012 was $2.5 million due to deposits to restricted accounts and capital expenditures, partially offset by proceeds from dispositions of trademarks and businesses. Net cash from investing activities increased $87.0 million from $69.6 million used in investing activities in fiscal 2011 to $17.5 million provided by investing activities in fiscal 2012. The increase is primarily attributable to significantly higher amounts of cash used in fiscal 2011 for cash purchase consideration related to the Vince acquisition, as well as proceeds received from the disposition of various trademarks, the disposition of two closed distribution center facilities, and the sale of the BLK DNM and Royal Robbins business during fiscal 2012. Net cash from investing activities decreased $35.5 million from $34.0 million used in investing activities in fiscal 2010 to $69.6 million used in investing activities in fiscal 2011. The change is due to significant cash purchase consideration paid during fiscal 2011 related to the Vince acquisition as well as additional capital expenditures for new retail store development.
Net cash (used in)/provided by financing activities.     Net cash from financing activities primarily relates to borrowings and repayments of short-term debt obligations, long-term debt obligations, revolving credit facilities and debt issuance costs related thereto. Net cash provided by financing activities was $40.8 million in the first six months of fiscal 2013 due to additional net borrowings of $35.8 million on the Wells Fargo Facility and additional borrowings of $5.0 million under the Sun Term Loan Agreements. Net cash provided by financing activities was $43.6 million in the first six months of fiscal 2012 due to additional borrowings of $30.0 million under the Sun Term Loan Agreements and net borrowings of $16.5 million on the Wells Fargo Facility. Net cash from financing activities decreased $95.8 million from $104.5 million provided by financing activities in fiscal 2011 to $8.6 million provided by financing activities in fiscal 2012. The decrease is primarily due to a fiscal 2012 repayment on a long-term loan obligation incurred in the prior year, as well as fewer net borrowings of long-term loan obligations and revolving credit facilities during fiscal 2012, net of fees paid for amendments. Net cash from financing activities increased $37.1 million from $67.3 million provided by financing activities in fiscal 2010 to $104.5 million provided by financing activities in fiscal 2011. This increase is due to
 
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additional debt obligations incurred during fiscal 2011 partially offset by lower net borrowings from revolving credit facilities and fees paid for debt issuance.
Cash from discontinued operations.     All cash flows from discontinued operations are combined with cash flows from continuing operations within our discussions of net cash from operating activities, investing activities, and financing activities above.
Net cash used in operating activities of AHC included a $14.8 million increase, $13.3 million increase, and $11.2 million increase in working capital of discontinued operations for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. Net cash used in operating activities of AHC included a $0.5 million increase and $1.9 million decrease in working capital requirements of discontinued operations for the first six months of fiscal 2012 and fiscal 2013, respectively.
Noteworthy investing activities of discontinued operations consist of proceeds received from the dispositions of various businesses and trademarks. In fiscal 2012, AHC received a combined amount of $28.3 million net of selling costs for the sale of its Phat Farm trademark, BLK DNM business, and Royal Robbins business. During the first six months of fiscal 2013, AHC sold the Baby Phat trademark and received $4.8 million in sale proceeds, net of related selling costs. During the first six months of fiscal 2012, AHC received $4.6 million net of selling costs to sell various trademarks related to discontinued operations, including its Phat Farm trademark. There were no investing activities related to discontinued operations that generated material cash flows in fiscal 2010 or fiscal 2011.
Net cash from financing activities was not materially impacted by discontinued operations for all periods presented.
Cash and cash equivalents.     Cash and cash equivalents increased $0.1 million from $1.8 million at January 28, 2012 to $1.9 million at February 2, 2013. The increase is due to cash provided by investing activities, specifically the disposition of businesses and trademarks, as well as net borrowings on AHC’s long-term loan obligations, offset by cash used to finance operating activities.
Contractual Obligations and Commitments
A summary of AHC’s contractual obligations and commitments at February 2, 2013 is as follows:

 	  	Future payments due by period(1)	 	
 	  	Less than
1 Year	 	  	1-3
Years	 	  	3-5
Years	 	  	After
5
Years	 	  	Total	 	
(In thousands)	  	 	 	
Wells Fargo Facility(2)(3)	  	$	—	  	  	$	79,783	  	  	$	—	  	  	$	—	  	  	$	79,783	  	
Sun Promissory Notes—principal and PIK interest(4)	  	 	—	  	  	 	—	  	  	 	497,894	  	  	 	—	  	  	 	497,894	  	
Sun Capital Loan Agreement—principal and PIK interest(4)	  	 	—	  	  	 	77,450	  	  	 	—	  	  	 	—	  	  	 	77,450	  	
Other long-term debt—principal and PIK interest(3)	  	 	—	  	  	 	331,685	  	  	 	86,953	  	  	 	200	  	  	 	418,838	  	
Long-term debt—cash interest(2)(3)	  	 	18,047	  	  	 	24,750	  	  	 	13,260	  	  	 	244	  	  	 	56,301	  	
Operating lease obligations	  	 	16,367	  	  	 	28,016	  	  	 	19,822	  	  	 	30,081	  	  	 	94,286	  	
Minimum royalty/advertising obligations	  	 	574	  	  	 	508	  	  	 	—	  	  	 	—	  	  	 	1,082	  	
Purchase orders/commitments	  	 	103	  	  	 	—	  	  	 	—	  	  	 	—	  	  	 	103	  	
Contingent purchase price(5)	  	 	—	  	  	 	3,663	  	  	 	3,454	  	  	 	—	  	  	 	7,117	  	
Uncertain tax positions(6)	  	 	2,357	  	  	 	4,138	  	  	 	690	  	  	 	—	  	  	 	7,185	  	
Environmental remediation(7)	  	 	656	  	  	 	2,115	  	  	 	1,611	  	  	 	8,499	  	  	 	12,881	  	
State income tax settlement(8)	  	 	2,042	  	  	 	3,067	  	  	 	—	  	  	 	—	  	  	 	5,109	  	
Employment contracts(9)	  	 	132	  	  	 	332	  	  	 	—	  	  	 	—	  	  	 	464	  	
Obligation from exit activities	  	 	3,356	  	  	 	1,594	  	  	 	—	  	  	 	—	  	  	 	4,950	  	
Other contractual commitments(10)	  	 	1,334	  	  	 	624	  	  	 	—	  	  	 	—	  	  	 	1,958	  	
Tax Receivable Agreement(11)	  	 	—	  	  	 	—	  	  	 	—	  	  	 	—	  	  	 	172,087	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	44,968	  	  	$	557,725	  	  	$	623,684	  	  	$	39,024	  	  	$	1,437,488	  	

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(1)	In connection with consummation of this offering, Vince, LLC will enter into the Shared Services Agreement with Kellwood Company, LLC pursuant to which Kellwood will provide support services in various operational areas including, among other things, distribution, information technology and back office support (as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement”). We have excluded the amounts due under such agreement from the table herein as we cannot precisely estimate the future payments to be made thereunder and timing thereof. However, we currently expect to pay between $8.0 million to $10.0 million on an annualized basis in the near to intermediate term after consummation of this offering for services to be provided by Kellwood under the Shared Services Agreement.	
(2)	The cash interest commitment excludes cash interest on the Wells Fargo Facility as the agreement contains variable interest provisions for which no reliable estimate of future payment amounts can be made. These long-term debt obligations will be repaid, refinanced or discharged in connection with the consummation of this offering.	
(3)	Payments under these instruments will not be required in any period after consummation of this offering, as most of the proceeds from this offering, along with the borrowings under our new term loan facility, will be used to repay the Kellwood Note Receivable. In turn, Kellwood Company, LLC will use the proceeds from such repayment to repay, refinance or discharge this indebtedness (after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates).	
(4)	On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in both the Sun Promissory Notes and note under the Sun Capital Loan Agreement to Sun Cardinal. Immediately following the assignment of these notes, Sun Cardinal contributed all outstanding principal and interest due as of June 18, 2013 to the capital of AHC. These transactions were recorded in the second quarter of fiscal 2013 as increases to AHC’s additional paid in capital in the amounts of $334.6 million and $72.9 million for the Sun Promissory Notes and Sun Capital Loan Agreement, respectively, in connection with the Sun Capital Contribution.	
(5)	Represents the amount of potential additional cash purchase consideration related to the Rebecca Taylor acquisition. The obligor under such agreements and contracts is Kellwood Company and such obligations will remain with Kellwood Company after the consummation of this offering. These commitments and obligations are not currently, and will not become, the obligations of Vince, LLC or the Vince business subsequent to the IPO Restructuring Transactions and the consummation of this offering.	
(6)	These amounts are inclusive of estimated interest currently due, as well as an estimate of future interest that will be payable. AHC has excluded $2.7 million from the table that it believes is not reasonably possible to predict when it may be paid.	
(7)	Kellwood Company has posted a letter of credit in the amount of $5.9 million as a performance guarantee related to environmental remediation work. AHC currently estimates undiscounted cash flows of $12.9 million related to this remediation work. The obligor under such agreements and contracts is Kellwood Company and such obligations will remain with Kellwood Company after the consummation of this offering. These commitments and obligations are not currently, and will not become, the obligations of Vince, LLC or the Vince business subsequent to the IPO Restructuring Transactions and the consummation of this offering.	
(8)	Kellwood Company settled an ongoing income tax case with a state jurisdiction during fiscal 2012 payable over a three year period. The amounts within the table include estimated interest payments at a rate of 7.5%. The obligor under such agreements and contracts is Kellwood Company and such obligations will remain with Kellwood Company after the consummation of this offering. These commitments and obligations are not currently, and will not become, the obligations of Vince, LLC or the Vince business subsequent to the IPO Restructuring Transactions and the consummation of this offering.	
(9)	Kellwood Company has entered into agreements with certain employees to provide for relocation benefits.	
(10)	Other contractual commitments include payments under significant non-cancellable consulting and software contracts. The obligor under such agreements and contracts is Kellwood Company and such obligations will remain with Kellwood Company after the consummation of this offering. These	
 
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 	commitments and obligations are not currently, and will not become, the obligations of Vince, LLC or the Vince business subsequent to the IPO Restructuring Transactions and the consummation of this offering.	
(11)	In connection with the consummation of this offering, Vince Holding Corp. will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders (as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement”). While we have included the total amount estimated to be due under such agreement, we cannot reliably estimate in which future periods these amounts would become due.	
Inflation
While inflation may impact AHC’s sales and cost of goods sold, AHC believes the effects of inflation on its results of operations and financial condition are not significant. While the offering involves only an investment in the Vince business, AHC cannot provide any assurances that its results of operations and financial condition will not be materially impacted by inflation in the future.
Quantitative and Qualitative Disclosures About Market Risk
AHC is exposed to interest rate risk resulting from fluctuations in interest expense of variable-rate debt, as well as fluctuations in the fair value of its fixed-rate debt instruments. These obligations were contributed to the capital of AHC in the Sun Capital Contribution or will be repaid, refinanced, repurchased or discharged in connection with this offering.
As of February 2, 2013, 23.4% of AHC’s total debt outstanding related to variable-rate debt instruments, including the Wells Fargo Facility, Cerberus Term Loan, and the Sun Capital Loan Agreement and the Sun Promissory Notes. Affiliates of Sun Capital contributed $407.5 million of indebtedness, including under the Sun Capital Loan Agreement, in the Sun Capital Contribution. Any increase in interest rates of these financial instruments could have an adverse impact on the results of AHC’s operations, as management does not currently hedge against interest rate fluctuations and does not intend to engage in such hedging activity in the foreseeable future. A 100 basis point increase to the market rates utilized within each of the variable-rate debt instruments would have resulted in a $1.8 million increase to AHC’s interest expense for fiscal 2012. AHC’s strategy regarding management of its exposure to interest rate fluctuations did not change significantly during the year. Management does not expect any significant changes in AHC’s exposure to interest rate fluctuations or in how such exposure is managed during the remainder of fiscal 2013.
Based on quoted market prices obtained through independent pricing sources for the same or similar types of borrowing arrangements, AHC’s fixed-rate debt had a fair value of approximately $620.4 million as of February 2, 2013, which compares to the book value of $644.8 million. Market interest rate changes result in increases or decreases in the fair value of AHC’s fixed-rate debt. Notwithstanding that all of AHC’s fixed-rate debt will be repaid, refinanced, repurchased or discharged in connection with this offering (after giving effect to the Sun Capital Contribution), at February 2, 2013 a 100 basis point increase in interest rates would have resulted in approximately a $4.4 million decrease in the fair value of its fixed-rate debt; a 100 basis point decrease in interest rates would have resulted in approximately a $4.5 million increase in the fair value of its fixed-rate debt.
In addition, AHC does not believe that foreign currency risk, commodity price or inflation risks are expected to be material to its business or its consolidated financial position, results of operations or cash flows after giving effect to the Sun Capital Contribution and the IPO Restructuring Transactions.
 
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Off-Balance Sheet Arrangements
During fiscal 2010, fiscal 2011 and fiscal 2012, AHC did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Estimates
The preparation of the consolidated financial statements included elsewhere in this prospectus in conformity with generally accepted accounting principles requires that management make certain estimates and assumptions that affect amounts reported in AHC’s consolidated financial statements and accompanying notes. Actual results will differ from those estimates and assumptions and the differences may be material. Significant accounting policies, estimates and judgments which management believes are the most critical to aid in fully understanding and evaluating the reported financial results are discussed below.
Revenue Recognition
Sales are recognized when goods are shipped in accordance with customer orders for AHC’s wholesale and e-commerce businesses, and at the time of sale to consumer for AHC’s retail business. The Vince segment and the Rebecca Taylor operations are the only parts of AHC’s business with retail store operations. The estimated amounts of sales discounts, returns and allowances are accounted for as reductions of sales when the associated sale occurs. These estimated amounts are adjusted periodically based on changes in facts and circumstances when the changes become known to AHC. Accrued discounts, returns and allowances are included as an offset to accounts receivable in the balance sheets for AHC’s wholesale business.
Accounts Receivable—Reserves for Allowances
Accounts receivable are recorded net of allowances for returns and existing and expected future chargebacks from customers. It is the nature of the apparel and recreational products industry that suppliers like AHC face significant pressure from customers in the retail industry to provide allowances to compensate for customer margin shortfalls. This pressure often takes the form of customers requiring AHC to provide price adjustments on prior shipments as a prerequisite for obtaining future orders. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of AHC’s products at retail. To the extent AHC’s customers have more of its goods on hand at the end of the season, there will be greater pressure for AHC to grant markdown allowances on prior shipments. AHC’s accounts receivable balances are reported net of expected allowances for these matters based on the historical level of concessions required and its estimates of the level of markdowns and allowances that will be required in the coming season in order to collect the receivables. AHC evaluates the allowance balances on a continuing basis and adjust them as necessary to reflect changes in anticipated allowance activity. AHC also provides an allowance for sales returns based on historical return rates.
Accounts Receivable—Allowance for Doubtful Accounts
AHC maintains an allowance for doubtful accounts receivable for estimated losses resulting from customers that are unable to meet their financial obligations. AHC’s estimation of the allowance for doubtful accounts involves consideration of the financial condition of specific customers as well as general estimates of future collectability based on historical experience and expected future trends.
 
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The estimation of these factors involves significant judgment. In addition, actual collection experience, and thus bad debt expense, can be significantly impacted by the financial difficulties of as few as one customer.
Inventory Valuation
Inventories are stated at lower of cost or market. Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost. AHC’s products can be classified into two types: replenishment and non- replenishment. Replenishment items are those basics that are not highly seasonal or dependent on fashion trends. The same products are sold by retailers 12 months a year and styles evolve slowly. Retailers generally replenish their stocks of these items as they are sold. Only a relatively small portion of AHC’s business involves replenishment items.
The majority of AHC’s products consist of items that are non-replenishment as a result of being highly tied to a season or fashion look. These products are economically “perishable”. The value of this seasonal merchandise might be sufficient for AHC to generate a profit over its cost at the beginning of its season, but by the end of its season a few months later the same inventory might be salable only at less than cost. For these products, the selling season generally ranges from three to six months. The value may rise again the following year when the season in which the goods sell approaches—or it may not, depending on the level of prior year merchandise on the market and on year-to-year fashion changes.
The majority of out-of-season inventories must be sold to off-price retailers and other customers who serve a customer base that will purchase prior year fashions. The amount, if any, that these customers will pay for prior year fashions is determined by the desirability of the inventory itself as well as the general level of prior year goods available to these customers. The assessment of inventory value, as a result, is highly subjective and requires an assessment of the seasonality of the inventory, its future desirability, and future price levels in the off-price sector.
Many of AHC’s products are purchased for and sold to specific customers’ orders. Others are purchased in anticipation of selling them to a specific customer. The loss of a major customer, whether due to the customer’s financial difficulty or other reasons, could have a significant negative impact on the value of the inventory expected to be sold to that customer. This negative impact can also extend to purchase obligations for goods that have not yet been received. These obligations involve product to be received into inventory over the next one to six months.
Fair Value Assessments of Goodwill and Intangible Assets
Goodwill and other indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if a triggering event occurs. AHC completed its most recent annual impairment testing on goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2012.
Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. As the acquisition by Kellwood Company of the net assets of Vince occurred prior to the current requirements of ASC Topic 805: Business Combinations , the additional purchase consideration paid to the former owners of Vince subsequent to the acquisition date was recorded as an addition to the purchase price, and therefore goodwill, once determined. In September 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to the Intangibles—Goodwill and Other Topic of Accounting Standards Codification (“ASC”). The goodwill impairment qualitative assessment requires an assessment of the reporting unit to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If adverse qualitative trends are identified that could negatively impact the fair value of the reporting unit, a “step one” goodwill
 
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impairment test is performed. The “step one” goodwill impairment test requires an estimate of the fair value of the reporting unit and certain assets and liabilities. If the fair value of a reporting unit exceeds its book value, goodwill of the reporting unit is not considered impaired and “step two” of the impairment test is not required. If the book value of a reporting unit exceeds its fair value, “step two” of the impairment test is performed to measure the amount of impairment loss, if any. The implied fair value of the reporting unit’s goodwill is compared to the book value of that goodwill. If the book value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. These amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. AHC early adopted these amendments during fiscal year 2011 and performed a qualitative assessment of impairment in fiscal 2011 for goodwill related to its reporting units, with the exception of Vince, as there was significant related purchase consideration capitalized in fiscal 2011.
In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite Lived Assets for Impairment . Under this amendment, an entity may elect to perform a qualitative impairment assessment for indefinite-lived intangible assets similar to the goodwill impairment testing guidance discussed above.
This amendment is effective for annual and interim impairment tests for indefinite-lived intangible assets performed for fiscal years beginning after September 15, 2012. AHC early adopted this amendment during fiscal 2012 and performed a quantitative assessment of impairment in fiscal 2012 for trademarks associated with certain brands.
For trademarks that AHC directly proceeded to “step one” during fiscal 2012, and for impairment tests performed in prior years, AHC primarily uses the relief from royalty method to calculate the fair value of the intangible assets, which uses revenue projections, royalty rates and discount rates in the calculation.
Determining the fair value of goodwill and other intangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. It is possible that estimates of future operating results (which will need to give effect to give effect to the IPO Restructuring Transactions and the discontinuance of the Kellwood operations) could change adversely and impact the evaluation of the recoverability of the carrying value of goodwill and intangible assets and that the effect of such changes could be material.
Definite-lived intangible assets are primarily compromised of customer relationships and are being amortized on a straight-line basis over their useful lives of 10 to 20 years.
Income Taxes
AHC is subject to taxation in many jurisdictions, and the calculation of its tax liabilities involves dealing with inherent uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. AHC assesses the income tax positions and record tax liabilities for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. AHC accounts for income taxes using the asset and liability method. Under this
 
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method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities at enacted rates. AHC bases its estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes. AHC records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized.
AHC’s accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates. Changes in existing tax laws, regulations, rates and future operating results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time.
The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are also subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Although AHC believes the measurement of liabilities for uncertain tax positions is reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. If AHC ultimately determines that the payment of these liabilities will be unnecessary, the liability will be reversed and a tax benefit will be recognized during the period in which it is determined the liability no longer applies. Conversely, additional tax charges are recorded in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be. If additional taxes are assessed as a result of an audit or litigation, it could have a material effect on AHC’s income tax provision and net income in the period or periods for which that determination is made.
Recent Accounting Pronouncements
In June 2011, the FASB issued an accounting standards update regarding the presentation of comprehensive income in financial statements. The provisions of this standard provide an option to present the components of net income and other comprehensive income either as one continuous statement of comprehensive income or as two separate but consecutive statements. This standard was amended December 2011 as it relates to the presentation of comprehensive income. This amendment defers the requirement to present the effects of reclassifications out of accumulated other comprehensive income on AHC’s consolidated statements of income, which was required in the Comprehensive Income amendment made in June 2011. The provisions of this new disclosure standard were effective January 1, 2012. AHC has provided a separate Statement of Other Comprehensive Income during the current year. The requirement to present the effects of reclassifications out of accumulated other comprehensive income will impact only the presentation of the financial statements to the extent AHC has instances of these transactions in the future.
In September 2011 and July 2012, the FASB issued amendments to the Intangibles—Goodwill and Other topic of ASC. Under these amendments, an entity may elect to perform a qualitative impairment assessment for goodwill and indefinite-lived intangible assets. We have adopted these amendments, as discussed above.
In May 2011, the FASB issued ASU 2011-04. The new guidance resulted in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP. The new guidance did not extend the use of fair value accounting, but provided guidance on how it should be applied where its use is already required or permitted by other standards within GAAP. This update was effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance in fiscal 2011 did not have a material impact on AHC’s consolidated financial position, results of operations, or cash flows.
 
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 AHC BUSINESS
Overview
AHC is a holding company, controlled by the affiliates of Sun Capital. Kellwood Company was founded in 1961 as the successor by merger of fifteen independent suppliers to Sears, Roebuck & Co. (“Sears”). Beginning in 1985, Kellwood implemented a strategy to expand its branded business, broaden its customer base, diversify its distribution channels and further develop its global product sourcing capability. As a result of this strategy, AHC has redirected its focus from the manufacturing of private label apparel and home fashions for Sears to the development of branded fashion apparel and recreational products. As part of this strategy, AHC also acquired various apparel companies or businesses and has divested numerous others. AHC now has a diversified brand portfolio that serves a broad range of customer segments across multiple wholesale partners and through its own retail stores and websites.
AHC did not have any customers that accounted for more than 10% of consolidated net sales from continuing operations during fiscal 2012. In fiscal 2011, sales to Kohl’s accounted for more than 10% of the consolidated net sales of continuing operations. These sales represented 14% of fiscal 2011 net sales. In fiscal 2010, sales to Kohl’s and Macy’s accounted for more than 10% of the consolidated net sales from continuing operations. These sales represented 15% and 12% of fiscal 2010 net sales, respectively.
AHC manufactures, distributes and markets products under many brands, some of which it owns, and others that are under licensing agreements. In addition, prior to the IPO Restructing Transactions, AHC had four reportable segments, as set forth below. Each segment is responsible for its own design, merchandising and sourcing activities:
 
 	Ÿ 	 	Vince : Contemporary fashion apparel and accessories sold under the Vince ® brand name through wholesale distribution to premier department stores and specialty stores as well as direct-to-consumer through our retail stores and the www.vince.com website;	
 
 	Ÿ 	 	American Recreational Products (“ARP”) : Recreational apparel and products sold under Kelty, Sierra Designs, Ultimate Direction, Slumberjack, Wenzel and Isis brand names through wholesale distribution to retailers as well as through websites;	
 
 	Ÿ 	 	Juniors : A collection of denim, dresses and sportswear labels that appeal to girls and young women sold under the Rewind, My Michelle and Jolt brand name as well as private label to wholesale partners. Additionally, AHC licenses the XOXO brand name and produces apparel under that name for wholesale partners within this segment; and	
 
 	Ÿ 	 	Moderate : Moderately priced related separates and pants covering career and casual lifestyle sold through wholesale distribution and produced under private labels as well as under the Sag Harbor and Briggs New York brands.	
Performance results of AHC’s remaining operating segments, primarily apparel sold under the Rebecca Taylor, Democracy, Jax and Sangria brands as well as under the licensed David Meister brand, have been combined in Other, as none of these brands individually meets the quantitative thresholds for disclosures as a reportable segment. Other operations accounted for less than 25% of AHC’s revenues in each of fiscal 2010, fiscal 2011 and fiscal 2012 and the first six months of fiscal 2013.
In connection with this offering, all AHC segments other than the Vince segment will be separated from AHC in the IPO Restructuring Transactions, as defined elsewhere in this prospectus, by Apparel Holding Corp., the entity offering stock in this offering. Apparel Holding Corp. will report operations from all segments other than the Vince segment as discontinued operations in future reporting periods after the consummation of this offering.
 
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Company History
Affiliates of Sun Capital acquired Kellwood Company and formed AHC in connection with the February 2008 acquisition of Kellwood Company by affiliates of Sun Capital. As discussed in “Additional Information Related to Vince—Vince Business” elsewhere in this prospectus, Kellwood Company acquired the Vince business in September 2006. Gerber Childrenswear LLC and Hanna Andersson LLC were sold during the fourth quarter of fiscal 2008 to affiliates of Sun Capital. In January 2010, AHC acquired certain net assets from Juno Rising, Inc. AHC subsequently acquired the Adam operations in August 2010. Thereafter, AHC acquired Rebecca Taylor and Zobha in July 2011. Additionally, during 2011, AHC discontinued its Adam operations and Koret wholesale business. During 2012, AHC decided to exit its Baby Phat wholesale and Lamb & Flag businesses. Additionally, BLK DNM and Royal Robbins, LLC businesses (and certain related Canadian assets and liabilities), were sold during 2012. AHC divested the Zobha operations during the second quarter of fiscal 2013.
Properties; Distribution and Production
At August 31, 2013, AHC operated two distribution or production facilities and utilized six third-party distribution centers. AHC’s operating facilities are leased under operating leases that generally contain renewal options. AHC also operated 34 retail stores at August 31, 2013. AHC’s retail spaces are leased under operating leases. AHC leases its corporate office spaces in St. Louis County, Missouri and New York City, as well as showrooms and divisional office spaces in City of Industry, Los Angeles, California, New York City, Boulder, Colorado, and Mississauga, Ontario.
The fashion apparel divisions currently operate one warehousing and distribution center totaling approximately 471,000 square feet in City of Industry, California. All of AHC’s warehousing and distribution occurs at its distribution facility in City of Industry, California or third party distribution centers. These facilities serve multiple divisions, thereby generating economies of scale in warehousing and distribution activities.
The recreational apparel and products division operates one warehousing and distribution center totaling approximately 177,000 square feet in St. George, Utah, and also uses third-party distribution facilities.
Information Systems
AHC is responsible for and maintains the following information technology systems and services across all of its segments (except as described in the following paragraph): information technology and planning and administration; desktop support and help desk; its ERP system; financial applications, warehouse systems, reporting and analysis applications; and its retail and e-commerce interfaces. Kellwood will continue to provide such services to Vince after consummation of the IPO Restructuring Transactions and this offering, until such time as Vince elects to terminate provision of such services in accordance with the terms of the Shared Services Agreement.
AHC’s ERP system was developed from a core system that is widely used in the apparel and fashion industry, which AHC has customized to suit its inventory management and order processing requirements. AHC has integrated Oracle Financials with its ERP system to meet its financial reporting and accounting requirements. Additionally, AHC uses a suite of third-party hosted retail applications integrated with its ERP system that provide it with merchandising , retail inventory management, point-of-sale systems, customer relationship management and retail accounting. Its retail applications are supported through a “Software as Service” model, which allows for new implementations to occur quickly. AHC’s ERP and warehouse systems are also integrated with a hosted, third-party e-commerce platform.
 
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Competition
AHC faces strong competition in each of its segments and markets where it competes on the basis of price, quality, style and brand recognition and is facing increased competition from private label brands. Some of AHC’s competitors have achieved significant recognition for their brand names or have substantially greater financial, marketing, distribution and other resources than AHC. AHC’s competitors vary across segment but include other fashion label platforms, including the Jones Group, Fifth and Pacific, PVH Corp., VF Corporation, G-III Apparel Group, Ltd. and Perry Ellis.
In management’s opinion, AHC’s current facilities are generally well maintained and provide adequate capacity for future operations. However, management continues to evaluate the need to reposition its portfolio of businesses and facilities to meet the needs of the changing markets we serve and to reflect the international business environment.
Employees
As of August 31, 2013, AHC had approximately 1,493 employees. None of our employees are currently covered by a collective bargaining agreement, and we believe our employee relations are good.
Intellectual Property
AHC owns or has rights to trademarks or tradenames that it uses for the production, marketing and distribution of its products in the U.S. and internationally. These trademarks and tradenames include the following: Vince ® , Rebecca Taylor ® , David Meister ® , My Michelle ® , XOXO ® , Jolt ® , Rewind ® , Democracy ™ , Sag Harbor ® , Briggs New York ® , Jax ® , Sangria ™ , Kelty ® , Sierra Designs ® , Ultimate Direction ® , Slumberjack ® , Wenzel ® and Isis ® . After giving effect to the IPO Restructuring Transactions and the consummation of this offering, Vince, LLC will have the sole right to use the Vince ® trademark, under which Vince will operate the Vince business and Kellwood will continue to own the trademarks and tradenames necessary to operate the non-Vince businesses.
Legal Proceedings
During the second quarter of fiscal 2012, Kellwood Company entered into a Consent Decree with the EPA and MDNR to conduct cleanup initiatives for the decontamination of soil and groundwater located near a former metal fabrication plant in New Haven, Missouri. The agreement became effective August 24, 2012, and was entered into as settlement of a lawsuit filed against Kellwood Company by the EPA and MDNR. Effective October 15, 2012, in accordance with the terms of the agreement, Kellwood Company posted a letter of credit payable to the EPA in the amount of $5.9 million as a performance guarantee for the estimated cost of remediation work. As of February 2, 2013, AHC recorded $9.6 million for estimated capital costs and ongoing remedial activities at the New Haven site. AHC’s recorded liability differs from the performance guarantee required by the EPA primarily due to management’s use of a lower discount rate, as well as assumption of additional costs not reflected in the EPA’s estimate of remediation work. These additional costs include voluntary corrective actions implemented by AHC, as well as EPA oversight fees.
AHC is currently party to various legal proceedings. While management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse impact on AHC’s financial position, cash flows or results of operations, litigation is subject to inherent uncertainties.
 
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 AHC MANAGEMENT
Below is a list of names, ages and a brief overview of the business experience of AHC’s executive officers and directors:

Name	  	Age	 	Position/Title	
Christopher T. Metz	  	48	 	Director and Chairman	
Mark E. Brody	  	51	 	Director	
Jason H. Neimark	  	42	 	Director	
Jerome Griffith	  	55	 	Director Nominee	
Jill Granoff	  	51	 	Director and Chief Executive Officer of Apparel Holding Corp.	
Lynn Shanahan	  	52	 	Chief Executive Officer, Kellwood Brands	
Arthur Gordon	  	72	 	Chief Executive Officer, Kellwood Western Region	
Karin Gregersen	  	43	 	President, Vince	
Lisa Klinger	  	46	 	Chief Financial Officer and Treasurer	
Keith Grypp	  	49	 	Senior Vice President, General Counsel and Secretary	
Deena Gianoncelli	  	39	 	Senior Vice President, Human Resources	
Directors and Executive Officers
AHC believes that Apparel Holding Corp.’s board of directors should be composed of individuals with knowledge and experience in many substantive areas that impact our business. The following areas are the most important to AHC: fashion and consumer goods; retail and wholesale; marketing and merchandising; sales and distribution; international business development; strategic planning and leadership of complex organizations; accounting, finance, and capital structure; legal/regulatory and government affairs; talent management; and board practices of other major corporations. AHC believes that all of Apparel Holding Corp.’s current board members possess the professional and personal qualifications necessary for board service, and have highlighted in the individual biographies below the specific experience, attributes, and skills that led to the conclusion that each board member should serve as a director.
Christopher T. Metz.     Mr. Metz has served as a director since 2008 and will be appointed to serve as the Chairman of Apparel Holding Corp.’s board of directors prior to the consummation of this offering. Mr. Metz has served as Managing Director of Sun Capital since 2005 and has extensive global operating and leadership experience in the consumer and durable goods industries. Prior to joining Sun Capital, Mr. Metz was President at Black & Decker, leading its Hardware and Home Improvement Group from 1999 to 2005. During his 13 years at Black & Decker, Mr. Metz held various other senior leadership positions, including President of Kwikset Corporation, President of Price Pfister faucets, President of Baldwin Hardware, and General Manager of European Professional Power Tools and Accessories, based in Frankfurt, Germany. Mr. Metz also serves on several boards of Sun Capital portfolio companies, including Avion Services Group Holding Corp., Captain D’s Holding Corp., Friendly’s Ice Cream LLC, Grandy’s Holding Corp., Lexington Furniture Industries, Inc., Pemco World Air Services, Inc., Rowe Fine Furniture, Inc., and SK Financial Services Corp. Mr. Metz also served on the board of Amicus Wind Down Corporation, a public company, from 2010 to 2012. Mr. Metz brings to Apparel Holding Corp.’s board extensive public and international leadership experience.
Mark E. Brody.     Mr. Brody has served as a director since 2008. Mr. Brody has served as a Managing Director and Group Chief Financial Officer of Sun Capital since 2006. Prior to joining Sun Capital, Mr. Brody served from 2001 to 2006 as Chief Financial Officer for Flight Options, a leading provider of fractional jet services. Prior to Flight Options, he served as Chief Financial Officer or Vice President, Finance for manufacturing-related public companies, including Sudbury, Inc., Essef Corporation, Anthony & Sylvan Pools, and Waterlink, Inc. Mr. Brody also serves on several boards of Sun Capital portfolio companies, including Limited Stores Company, LLC, Cello-Foil Products, Inc., Emerald Performance Materials LLC, Exopack Holding Corp., Garden Fresh Restaurant Corp., and
 
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TPG Enterprises, Inc. Mr. Brody started his career as an auditor with Ernst & Young. Mr. Brody brings to the board significant experience in finance, accounting and corporate strategy development.
Jason H. Neimark.     Mr. Neimark has served as a director since May 2013. Mr. Neimark has served as a Managing Director of Sun Capital since 2001. Mr. Neimark has led more than 65 buyout and capital markets transactions in a broad range of industries on behalf of affiliates of Sun Capital in the U.S. and Europe. From 2000 to 2001, Mr. Neimark was a Principal and President of K&D Distributors, a national direct marketer and specialty distributor of optical products where he led a financial and operational turnaround which concluded in a successful sale. From 1995 to 2000, Mr. Neimark served as a principal of Midwest Mezzanine Funds, a provider of junior capital to middle market businesses. After receiving his CPA designation in 1992, Mr. Neimark worked as a tax consultant and auditor for KPMG Peat Marwick. Mr. Neimark also serves on several boards of Sun Capital portfolio companies, including Gordmans Stores Inc. Mr. Neimark was a director of Accuride Corporation, a public company, from February 2009 to October 2009 and was a director of Loud Technologies, a private company, from May 2005 to July 2008. Mr. Neimark provides strong finance skills to Apparel Holding Corp.’s board of directors and valuable experience gained from previous board service.
Jerome Griffith.     Mr. Griffith will be appointed to our board of directors in connection with the consummation of this offering. Mr. Griffith has served as the Chief Executive Officer, President and a member of the board of directors of Tumi Holding, Inc. since April 2009. From 2002 to February 2009, Mr. Griffith was employed at Esprit Holdings Limited, a global fashion brand, where he was promoted to Chief Operating Officer and appointed to the board of directors in 2004, then promoted to President of Esprit North and South America in 2006. From 1999 to 2002, Mr. Griffith worked as an Executive Vice President at Tommy Hilfiger. From 1998 to 1999, Mr. Griffith worked as the President of Retail at the J. Peterman Company, a catalog-based apparel and retail company. From 1989 through 1998, Mr. Griffith worked in various positions at Gap, Inc. Mr. Griffith brings to our board experience as a public company director, experience as a senior executive of a major global consumer products company and a proven track record of innovation and driving international growth and expansion.
Jill Granoff.     Ms. Granoff has served as AHC’s Chief Executive Officer and a director since May 2012. Ms. Granoff has also served as Vince’s Chief Executive Officer since August 2012. Previously, Ms. Granoff served as Chief Executive Officer of Kenneth Cole Productions, Inc., a designer and marketer of women’s and men’s apparel, footwear and accessories, from 2008 until 2011. Prior to that, Ms. Granoff served as Executive Vice President of Liz Claiborne Inc. where she had global responsibility for Juicy Couture, Lucky Brand Jeans, Kate Spade and the company’s e-commerce and outlet businesses. Prior to joining Liz Claiborne, Ms. Granoff was President and Chief Operating Officer of Victoria Secret Beauty, a division of Limited Brands, where she worked from 1999 to 2006. From 1990 to 1999, Ms. Granoff held various executive positions at The Estée Lauder Companies. Ms. Granoff is a member of the board of directors of Demandware and the Fashion Institute of Technology Foundation. Ms. Granoff brings significant senior leadership, operating and industry experience to Apparel Holding Corp.’s board of directors. Ms. Granoff’s position as AHC’s Chief Executive Officer also allows her to advise the board of directors on management’s perspective over a full range of issues affecting AHC.
Lynn Shanahan .      Ms. Shanahan has served as the Chief Executive Officer of Kellwood Brands, since July 2013. Previously, Ms. Shanahan was founder of C2 Group, LLC (“C2 Group”) a company that partners with leading fashion and lifestyle companies to provide operating management, brand development and overall growth strategies. Most recently, through C2 Group, Ms. Shanahan was President of Marimekko NA from 2011 to 2013. Prior to that, Ms. Shanahan worked at Tommy Hilfiger for 15 years where she last served as Group President, with responsibility for U.S. Wholesale, E-commerce, Licensing and Marketing.
 
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Arthur Gordon .      Mr. Gordon has served as the Chief Executive Officer of Kellwood Western Region since August 2009. Previously, Mr. Gordon served as Chief Executive Officer of Kellwood ENC (previously En Chant’e Inc.) and My Michelle from 1998 to 2009. Prior to that, Mr. Gordon served as President of ENC from 1987 to 1997.
Karin Gregersen .      Ms. Gregersen has served as Vince’s President since May 2013. Previously, Ms. Gregersen worked at Chloé/Richemont for 13 years, where she last served as the Executive Vice President and Managing Director of Chloé/Richemont Americas from 2007 to 2013. Prior to this role, she served as the Sales and Marketing Director for Chloé/Richemont Europe/Middle East from 1999 to 2007. Ms. Gregersen previously served as the Europe Sales Manager for Givenchy from 1997 to 1999.
Lisa Klinger.     Ms. Klinger has served as AHC’s Chief Financial Officer and Treasurer since December 2012. Ms. Klinger has also served as Vince’s Chief Financial Officer since December 2012. Previously, Ms. Klinger served as Executive Vice President and Chief Financial Officer of The Fresh Market, Inc., a specialty retailer, from 2009 until 2012. Prior to that, Ms. Klinger served as interim Chief Financial Officer of Michael’s Stores during 2008 and Senior Vice President of Finance and Treasurer from 2005 to 2009. Ms. Klinger previously served as Assistant Treasurer at Limited Brands from 2000 to 2005.
Keith Grypp.     Mr. Grypp has worked at AHC for over 20 years and has served as AHC’s Senior Vice President, Secretary and General Counsel since 2009. Mr. Grypp served as Vice President, Secretary and General Counsel from 2008 to 2009. Prior to that, Mr. Grypp served as Assistant General Counsel and Assistant Secretary from 2007 to 2008 and Attorney and Assistant Secretary from 2002 to 2007. Prior to that, Mr. Grypp held various management positions in the audit and information technology department from 1989 to 2002. Mr. Grypp is also a licensed CPA and was employed as an auditor with PricewaterhouseCoopers LLP from 1986 to 1989 and as an attorney with a law firm in St. Louis from 1995 to 1997.
Deena Gianoncelli.     Ms. Gianoncelli began serving as our Senior Vice President, Human Resources in September 2013. Previously, Ms. Gianoncelli served as the Director of Human Resources for Amazon.com from 2012 to 2013. Prior to that, Ms. Gianoncelli served as the Vice President of Human Resources for Hugo Boss Americas from 2010 to 2012. In addition, Ms. Gianoncelli served as the Senior Director of Human Resources for Medco Health Solutions from 2005 to 2010.
Family Relationships
There are no family relationships between any of AHC’s executive officers or directors.
Corporate Governance
See “Additional Information Related to Vince—Vince Management—Corporate Governance” for a description of the corporate governance provisions and practices to be adopted by the AHC board of directors and stockholders in connection with the consummation of this offering.
Compensation Committee Interlocks and Insider Participation
In fiscal year 2012, AHC did not have a Compensation Committee. All compensation decisions were made by the board of directors of AHC, which held deliberations during fiscal year 2012 concerning executive officer compensation. As a member of the board of directors of AHC, Ms. Granoff participated in deliberations concerning compensation of executive officers. See “Additional Information Related to AHC—AHC Executive Compensation—Employment Agreements” for a description of the employment agreements of our executive officers.
None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors.
 
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 AHC EXECUTIVE COMPENSATION
The following executive compensation section contains information related to the historical Named Executive Officers of AHC. In connection with this offering, all AHC segments other than the Vince segment will be separated from AHC in the IPO Restructuring Transactions as defined elsewhere in this prospectus. Some of the current AHC officers will remain with the Kellwood business and thus will not be officers of Vince, LLC or Apparel Holding Corp. (to be renamed Vince Holding Corp.), the entity offering stock in this offering, after consummation of this offering.
The following section provides compensation information pursuant to the scaled disclosure rules applicable to “emerging growth companies” under the rules of the SEC and may contain statements regarding future individual and company performance targets and goals. These targets and goals are disclosed in the limited context of the company’s executive compensation program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. AHC specifically cautions investors not to apply these statements to other contexts. AHC’s Named Executive Officers for fiscal 2012 and the positions they held with AHC during fiscal 2012 are set forth below:
Jill Granoff, Chief Executive Officer, Kellwood and Vince
Arthur Gordon, Chief Executive Officer, Kellwood Western Region
Michael Saunders, Senior Vice President and Chief Operating Officer, Kellwood
This executive compensation section contains certain forward-looking statements that are based on our current plans and expectations regarding future compensation plans and arrangements. The actual compensation plans and expectations that we adopt may differ materially from the currently anticipated plans and arrangements as summarized in this discussion.
Overview
AHC is a privately-held company solely owned by the Pre-IPO Stockholders. As a result, AHC was not subject to any stock exchange listing or SEC rules requiring a majority of its board of directors to be independent or relating to the formation and functioning of board committees, including audit, compensation and nominating committees. As such, all compensation decisions have historically been made by the board of directors of Kellwood Company, a wholly-owned subsidiary of AHC. Furthermore, AHC’s executive officers are currently compensated by Kellwood Company for performing services on its behalf. To date, the compensation of the executive officers identified in the “Summary Compensation Table” in this prospectus, who are referred to as AHC’s Named Executive Officers, has consisted of a combination of base salary, bonuses (sign-on, performance based and guaranteed) and long-term incentive compensation in the form of Kellwood Company stock options issued under the 2010 Option Plan). Executive officers and all salaried employees are also eligible to receive health and welfare benefits. Pursuant to employment agreements or an offer letter, the Named Executive Officers were also eligible to receive certain payments and benefits upon termination of employment under certain circumstances, as well as acceleration of vesting of certain outstanding equity awards in connection with a change in control. See “—Employment Agreements” for additional information.
In connection with the consummation of the IPO Restructuring Transactions and this offering, Kellwood Company will assign to Vince Holding Corp. or one of its subsidiaries (after giving effect to the IPO Restructuring Transactions) Kellwood Company’s obligations under those executive employment agreements pursuant to which the related executive officers will be providing services to Vince after consummation of this offering. Employment Agreements for the non-Vince officers will remain with Kellwood Company. See “—Employment Agreements” for additional information.
 
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The compensation paid to AHC’s Named Executive Officers for fiscal 2012 may not necessarily be indicative of how Vince Holding Corp. or Kellwood Company, LLC, a wholly-owned subsidiary to be separated from Apparel Holding Corp. in the IPO Restructuring Transactions, may compensate its Named Executive Officers following the consummation of this offering. See “Additional Information Related to Vince—Vince Executive Compensation” for a description of executive compensation paid to Vince’s named executive officers.
Executive Compensation Design Overview
AHC’s executive compensation programs have historically been designed to provide competitive total compensation opportunities. They were designed to align pay with achievement of Kellwood’s annual and long-term financial and operational goals and recognize individual achievement. In setting pay levels, AHC reviewed published survey information and other available compensation data that was specific to companies of similar size and positioning in our industry. As currently structured, AHC’s executive compensation program is designed to:
 
 	Ÿ 	 	provide aggregate compensation that reflects the market compensation for executives with similar responsibilities in similar companies with appropriate adjustments to reflect the experience, performance and other distinguishing characteristics of specific individuals;	
 
 	Ÿ 	 	be commensurate with our short-term and long-term financial performance;	
 
 	Ÿ 	 	be aligned with the value for stakeholders; and	
 
 	Ÿ 	 	provide a competitive compensation opportunity to allow us to attract and retain key executive talent.	
AHC believes that an important criterion for the determination of the aggregate value of its compensation program and the allocation of such value among the various elements of its compensation plans is market data on the amounts, allocations and structures utilized by similarly situated companies for positions of comparable responsibility. As discussed in “Additional Information Related to Vince—Executive Compensation—Executive Compensation Design Overview,” Apparel Holding Corp. intends to work with Aon to determine the elements of its go-forward public company compensation program, for Vince officers and directors. Affiliates of Sun Capital and AHC management are continuing to evaluate the elements of the compensation package for Kellwood officers that will remain employed by Kellwood Company, LLC after the consummation of this offering.
Risk Assessment and Compensation Practices
AHC’s management assesses and discusses with the board of directors its compensation policies and practices for its employees as they relate to AHC’s overall risk management, and based upon this assessment, AHC believes that any risks arising from such policies and practices are not reasonably likely to have a material adverse effect on us.
Compensation of Named Executive Officers
Base Salaries .     In fiscal 2012, the board of directors of Kellwood Company, a wholly-owned subsidiary of AHC, reviewed and held deliberations concerning the compensation of its executive officers, including AHC’s Named Executive Officers. Going forward, Vince’s compensation committee will review the base salaries of Vince’s executive officers, including Ms. Granoff, at least annually and make adjustments as it determines to be reasonable and necessary. AHC anticipates that Kellwood Company, LLC’s board of managers (after giving effect to the IPO Restructuring Transactions and
 
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Kellwood Company’s conversion) will continue to make compensation decisions for its managers and the non-Vince officers. The current base salaries of the Named Executive Officers are as follows:

Named Executive Officer	  	Base Salary	 	
Jill Granoff, Chief Executive Officer, Kellwood and Vince(1)	  	$	1,000,000	  	
Arthur Gordon, Chief Executive Officer, Kellwood Western Region	  	$	800,000	  	
Michael Saunders, Senior Vice President and Chief Operating Officer, Kellwood(2)	  	$	540,000	  	

(1)	Ms. Granoff joined AHC as Chief Executive Officer in May 2012 and subsequently became the Chief Executive Officer of the Vince business in August 2012. The board of directors approved a base salary increase for Ms. Granoff from $900,000 to $1,000,000 effective as of February 1, 2013.	
(2)	Mr. Saunders resigned his position as Senior Vice President and Chief Operating Officer of Kellwood effective June 30, 2013. He will not be an AHC Named Executive Officer for fiscal 2013 or any subsequent period.	
Sign-On Bonuses .     Certain executives received a one-time sign-on bonus when they joined AHC. For fiscal 2012, no Named Executive Officers received any sign-on bonus.
Guaranteed Bonus .     Certain executives were eligible to receive a guaranteed minimum bonus based on their annual salary and their targeted bonus opportunity. If an executive’s award in fiscal 2012 under the AHC 2012 Bonus Plan was lower than their guaranteed minimum bonus as set forth in their employment agreement or offer letter, they received a cash bonus for such year in amount equal to the difference, so that their total cash bonus award for fiscal 2012 was equal to their guaranteed minimum bonus. For fiscal 2012, Ms. Granoff, Mr. Gordon and Mr. Saunders had guaranteed bonuses of $500,000, $250,000 and $100,000, respectively. See “Summary Compensation Table” and “—Cash Bonus Plan” for additional information.
Cash Bonus Plan .     The AHC 2012 Bonus Plan was designed to encourage a high level of performance in each year so that the achievement of targeted performance levels is rewarded with a target incentive payout, and performance above such levels is rewarded with higher-level payouts. Each executive officer is assigned a target annual award opportunity based on the achievement of EBITDA performance that is expressed as a percentage of such executive’s base salary. Kellwood Company’s board of directors has historically approved these targeted award opportunities for each executive officer. Ms. Granoff received additional cash bonus payments for fiscal 2012, as the amount of her guaranteed bonus exceeded the amount she received based on the EBITDA targets under the AHC 2012 Bonus Plan. For fiscal 2012, the threshold, target and maximum EBITDA targets for AHC were $42.4 million, $47.4 million and $57.4 million, respectively. Actual EBITDA for AHC for fiscal 2012 was $46.9 million. Neither Mr. Saunders nor Mr. Gordon received any additional cash bonus payment for fiscal 2012 as the amount they received under the AHC 2012 Bonus Plan exceeded their guaranteed bonuses for fiscal 2012.
Kellwood Company’s board of directors established EBITDA targets for fiscal 2013 for AHC’s Named Executive Officers under the AHC 2013 Bonus Plan. For fiscal 2013, Ms. Granoff’s targeted incentive payout under the ACH 2013 Bonus Plan is based on the following allocations:
 
 	Ÿ 	 	From February 2, 2013 to July 31, 2013, 50% of her targeted incentive payout under the AHC 2013 Bonus Plan is based on the achievement of EBITDA targets for AHC’s non-Vince businesses and 50% of such payment is based on the achievement of Vince EBITDA targets;	
 
 	Ÿ 	 	From August 1, 2013 until the date of consummation of this offering, 25% of her targeted incentive payout under the AHC 2013 Bonus Plan is based on the achievement of EBITDA targets for AHC’s non-Vince businesses and 75% of such payment is based on the achievement of Vince EBITDA targets; and	
 
 	Ÿ 	 	After the date of consummation of this offering, 100% of such payout will be based on the achievement of Vince EBITDA targets.	
 
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AHC believes it is currently on track to achieve the targeted AHC non-Vince and Vince EBITDA performance levels under the AHC 2013 Bonus Plan. The EBITDA targets under the AHC 2013 Incentive Plan for Mr. Saunders are based on the achievement of targeted AHC Non-Vince EBITDA levels. For Mr. Gordon, the EBITDA targets under the AHC 2013 Bonus Plan are based on the achievement of targeted AHC Non-Vince and AHC regional EBITDA levels.
Although AHC is using EBITDA performance as a financial measure for fiscal 2013 and have done so historically, it may use other objective financial performance indicators for the cash bonus plan in the future, including but not limited to the price of our common stock, stockholder return, return on equity, return on investment, return on capital, sales productivity, same-store sales growth, economic value added, gross margin, cash flow, earnings per share or market share.
Kellwood Equity Incentives.     On June 30, 2010, the board of directors of Kellwood Company, a wholly-owned subsidiary of AHC, approved the 2010 Option Plan. The 2010 Option Plan provides for the grant of options to acquire up to 100,000 shares of non-voting common stock of Kellwood Company. Options granted under the 2010 Option Plan (i) have an exercise price based on the fair market value; (ii) vest over a five year period at a rate of 20% per year, (iii) expire on the earlier of the tenth anniversary of the grant date or upon termination of employment for cause and (iv) become exercisable upon termination or a liquidity event, as defined by the 2010 Option Plan. The fair value of the stock options is determined at the grant date using a probability-weighted expected return method model, which requires us to make several significant assumptions including long-term EBITDA growth rates, future enterprise value, discount rates, and timing and probability of a future liquidity event. This methodology was selected based on the current capital structure and forecasted operational performance.
In determining the number of shares underlying each option grant, the Kellwood Company board of directors took into account each executive officer’s existing unvested equity grants and made awards that they determined would be sufficient to motivate and retain each executive officer past the expected date of this offering. The stock option grants made to AHC’s Named Executive Officers in fiscal 2012 were as follows:

Named Executive Officer	  	Date of Grant	  	Number of Shares	 	  	Exercise Price(1)	 	
Jill Granoff	  	May 4, 2012	  	 	44,000	  	  	$	150.78	  	
Arthur Gordon(2)	  	N/A	  				  				
Michael Saunders	  	N/A	  				  				

(1)	The grant date fair value of these option grants is reflected in the “Summary Compensation Table” under the “Option Awards” column.	
(2)	As described below in “—Employment Agreements,” Mr. Gordon agreed to cancel his outstanding Kellwood Company stock options in exchange for payments under his retirement agreement. Such options were effectively surrendered and cancelled on October 4, 2012 in accordance with the terms of the related option cancellation agreement.	
 
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Summary Compensation Table
The following table provides information regarding the total compensation for services rendered in all capacities that was earned by each individual who served as a principal executive officer of AHC at any time during fiscal 2012 and the two other most highly compensated executive officers who were serving as executive officers during the fiscal year ended February 2, 2013.

Name and Principal Position	 	Year	 	 	Salary ($)	 	 	Bonus ($)	 	 	Option
Awards
($)(1)	 	 	Non-Equity
Incentive
Plan
Compen-
sation
($)(2)	 	 	All Other
Compen-
sation
($)	 	 	Total ($)	 	
Jill Granoff	 				 				 				 				 				 				 				
Chief Executive Officer (3)	 	 	2012	  	 	$	661,154	(4) 	 	$	27,363	(5) 	 	$	2,128,920	  	 	$	472,637	  	 	$	11,245	(6) 	 	$	3,301,319	  	
								
Arthur Gordon	 				 				 				 				 				 				 				
Chief Executive Officer, Kellwood Western Region	 	 	2012	  	 	$	800,000	  	 	 	—	  	 	 	—	  	 	$	308,766	  	 	$	21,074	(6) 	 	$	1,129,840	  	
	 	 	2011	  	 	$	800,000	  	 	 	—	  	 	 	—	  	 	$	190,109	  	 	$	21,645	(6) 	 	$	1,011,754	  	
								
Michael Saunders	 				 				 				 				 				 				 				
Senior Vice President and Chief Operating Officer	 	 	2012	  	 	$	540,000	  	 	 	—	  	 	 	—	  	 	$	189,055	  	 	$	14,988	(6) 	 	$	744,043	  	
	 	 	2011	  	 	$	539,846	  	 	 	—	  	 	 	—	  	 	$	0	  	 	$	14,932	(6) 	 	$	554,778	  	

(1)	The fair value of stock options granted in fiscal 2012 was determined at the grant date using a Black-Scholes model, which requires us to make several significant assumptions including risk-free interest rate, volatility, expected term, and discount factors for stockholders in a privately-held company. At the grant date, the options granted in fiscal year 2012 had a weighted average fair value of $43.01 per share. As discussed above in “—Compensation of Named Executive Officers—Kellwood Equity Incentives,” the options previously issued to Ms. Granoff will be exchanged for                  options to acquire Apparel Holding Corp. common stock, with an exercise price equal to $                .	
(2)	Amounts reflect the annual incentive cash bonus earned in the fiscal year shown but paid in the following fiscal year.	
(3)	Ms. Granoff was not employed by the company in fiscal 2011.	
(4)	Salary reflects base compensation from hire date of May 4, 2012 through February 2, 2013.	
(5)	Amount reflects cash bonus payment after giving effect to the $472,637 which was paid upon the achievement of targeted objectives under the AHC 2012 Bonus. The aggregate of such amounts (or $500,000) represents the amount of Ms. Granoff’s guaranteed bonus under the terms of her employment agreement.	
(6)	Amounts reflect the value of their clothing allowance, car allowance and excess life insurance.	
Employment Agreements
Jill Granoff, Chief Executive Office r .     Kellwood Company entered into an employment agreement with Ms. Granoff on May 4, 2012. Pursuant to the terms of the employment agreement, Ms. Granoff received an annual base salary of $900,000 in fiscal 2012. In addition to base salary, Ms. Granoff was eligible to participate in the AHC 2012 Bonus Plan which provided her with the opportunity to earn a bonus targeted at 75% of her base salary in fiscal 2012. Under her employment agreement, Ms. Granoff was guaranteed an annual cash bonus of $500,000 for fiscal 2012. Effective February 1, 2013, Ms. Granoff received a base salary increase to $1,000,000 and her targeted bonus opportunity increased to 100% of her base salary. Ms. Granoff has no guaranteed bonus for fiscal 2013.
In connection with the consummation of this offering and the repayment of certain Kellwood Company indebtedness, Ms. Granoff will earn a debt recovery bonus under the terms of her employment agreement (as amended by her debt recovery side letter, dated as of June 11, 2013). The amount of the bonus is equal to 4.4% of the related debt recovery, subject to the aggregate maximum bonus cap of $6.0 million; provided, that she remain continuously employed with AHC through the related payment date. As set forth therein, she is eligible to receive a debt recovery bonus upon any reduction in the debt outstanding under the Cerberus Term Loan, the Public Bonds and the Sun Term Loan Agreements. In connection with Kellwood Company’s sale of Royal Robbins in December 2012, Kellwood Company repaid
 
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$10.0 million of indebtedness under the Cerberus Term Loan. This repayment triggered a $440,000 debt recovery bonus for Ms. Granoff. Ms. Granoff has agreed to delay the payment of such bonus until the earlier of (i) December 31, 2013, (ii) the consummation of this offering, (iii) the consummation of a sale of all or substantially all of the Vince business to a third-party not affiliated with Kellwood Company or (iv) the termination of Ms. Granoff’s employment for any reason, pursuant to the terms of a related letter agreement. This payment reduces the amount of debt recovery bonus to which she would otherwise be entitled to receive upon the repayment of the Cerberus Term Loan, the Public Bonds and the Sun Term Loan Agreements in connection with the consummation of this offering on a dollar for dollar basis.
On September 24, 2013, Ms. Granoff and Kellwood Company entered into an amendment to her employment agreement. Pursuant to the terms of the amendment, Kellwood Company has agreed to pay the debt recovery bonus to Ms. Granoff upon the closing of this offering prior to paying the 1% restructuring fee to Sun Capital Management or repaying, refinancing or repurchasing the 7.625% Notes, each as described in “Use of Proceeds” and “Restructuring Transactions.” Vince, LLC is not a guarantor or obligor of the 7.625% Notes.
In the event Ms. Granoff’s employment is terminated without cause or Ms. Granoff terminates her employment for good reason, she would be eligible to receive (i) any unpaid base salary through her termination date, together with a pro-rated portion of the annual bonus for the year in which her termination occurs, (ii) reimbursement for any unreimbursed business expenses incurred through her termination date, (iii) any accrued and unused vacation time, (iv) all other payments, benefits or fringe benefits to which she is entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant, (v) her base salary during a period ending on the 18th month anniversary of her termination date, less any salary she receives from other full-time employment after the 12-month anniversary of her termination, (vi) continued participation in our group health plan for 18 months or until she obtains other employment following the first anniversary of her termination and such employment offers comparable group health benefits for which she is eligible, (vii) the pro rata portion of shares subject to Ms. Granoff’s option grants which would have otherwise vested on the next scheduled vesting date had her employment continued until such time and (viii) any prior period bonus earned and not yet paid.
Kellwood Company’s obligations under Ms. Granoff’s employment agreement will be assigned to Vince Holding Corp. or one of its subsidiaries in connection with this offering.
Arthur Gordon, Chief Executive Officer , Kellwood Western Region .     Beginning fiscal 2009, Mr. Gordon received an annual base salary of $800,000. In addition to base salary, Mr. Gordon was eligible to participate in the AHC 2012 Bonus Plan that provided him with the opportunity to earn a bonus targeted at 70% of his base salary. Effective May 1, 2013, Mr. Gordon entered into an amended and restated retirement agreement and related option cancellation agreement with Kellwood Company, a wholly-owned subsidiary of AHC. Pursuant to the terms of his retirement agreement, Kellwood Company agreed to make the following payments to Mr. Gordon in the event he is terminated without cause or voluntarily resigns or retires after February 1, 2014: (i) any unpaid and earned cash incentive bonus for the prior year; (ii) a lump sum equal to 18 months of his base salary, plus a lump sum equal to the average of his three prior year cash incentive bonuses, each subject to Mr. Gordon’s execution of a satisfactory release; and (iii) provided that Mr. Gordon is paying the employee portion of his COBRA premium, the amount in excess of the COBRA premium for a period of 18 months or until he secures other employment. In such event, Kellwood Company may retain his exclusive consulting services, upon the mutual agreement of the parties, for a period beginning on his termination date and ending on the earlier of: (A) the 12-month anniversary of his termination date; (B) his death or disability; and (C) his termination as a consultant for cause. Mr. Gordon will earn a bonus of $130,563 upon the consummation of this offering, which constitutes a “Sale” under the terms of his retirement
 
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agreement. Such amount shall be paid upon the earlier of (1) 30 days following the consummation of this offering; (2) the payment of severance amounts to him; and (3) February 1, 2014. Notwithstanding the foregoing, he shall not be entitled to any payments under his retirement agreement if he voluntarily resigns or retires before February 2, 2014, upon his death or disability or if he is terminated for cause. Mr. Gordon agreed to cancel his outstanding Kellwood Company stock options in connection with his entry into this amended and restated retirement agreement.
It is currently anticipated that Mr. Gordon’s sole operational responsibilities will relate to AHC’s non-Vince businesses after consummation of this offering, and that he will remain an employee of Kellwood Company, LLC. As such, he will not be one of Vince Holding Corp.’s Named Executive Officers for fiscal 2013 or beyond.
Outstanding Equity Awards at Fiscal 2012 Year-End
The following table sets forth information regarding outstanding equity awards of Kellwood Company held by our Named Executive Officers at the end of fiscal 2012:

 	 	Options Awards(1)	 	
Name	 	Vesting
Commencement Date	 	 	Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable	 	 	Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable	 	 	Option Exercise
Price ($)	 	 	Option Expiration
Date	 	
Jill Granoff	 	 	May 4, 2012	(2) 	 	 	—	  	 	 	44,000	  	 	$	150.78	  	 	 	May 4, 2022	  	
Arthur Gordon(3)	 	 	N/A	  	 				 				 				 				
Michael Saunders	 	 	February 20, 2008	  	 	 	8,000	  	 	 	2,000	  	 	$	1.00	  	 	 	August 15, 2013	(4) 	

(1)	Each stock option was granted pursuant to the 2010 Option Plan. Pursuant to the terms of his extension agreement (as described below in Note 4), the options previously issued to Mr. Saunders will be exercisable into shares of Apparel Holding Corp. common stock upon the consummation of this offering.	
(2)	Ms. Granoff’s options will vest 20% each year on the anniversary of the grant date beginning on the first anniversary of the grant date so long as she remains continuously employed with Kellwood Company. Notwithstanding the foregoing, unvested options will automatically vest upon the consummation of certain sale and change of control transactions involving Kellwood Company.	
(3)	As described below in “—Employment Agreements,” Mr. Gordon agreed to cancel his outstanding Kellwood Company stock options in exchange for payments under his retirement agreement. Such options were effectively surrendered and cancelled on October 4, 2012 in accordance with the terms of the related option cancellation agreement.	
(4)	Mr. Saunders entered into an Extension Agreement with Kellwood Company on August 5, 2013, pursuant to which the expiration date of his previously granted Kellwood Company options was extended from the date which was ten days after the date upon which his employment with Kellwood Company was terminated, or July 8, 2013, to the earliest of (a) the date which is 10 days after the consummation of this offering, (b) the date of the consummation of a Sale (as such term is defined in Saunders’ original Grant Agreement) and (c) on June 30, 2020 (such earliest of (a), (b) or (c) referred to herein as, the “Expiration Time”). The Company shall provide Saunders with at least 10 days’ notice of the Expiration Time. Saunders agreed that Saunders shall not, and has no right to, exercise any of the Options until the date that is 10 days prior to the Expiration Time. Within the 30 day period prior to the Expiration Time, affiliates of Sun Capital shall have the right to purchase all or any of Mr. Saunders’ options at the lower of (i) $120.78 per option (as such price may be adjusted in accordance with the Extension Agreement) and (ii) the fair market value of the underlying share, minus $1.00 per option. The purchase price may be paid, in the sole discretion of the Sun Capital affiliates, solely in cash, in a combination of cash and non-voting common stock of Apparel Holding Corp. or entirely in non-voting common stock of Apparel Holding Corp.; provided, that in the event the Sun Capital affiliates purchase all or some of Mr. Saunders’ options by paying the purchase price with non-voting common stock of Apparel Holding Corp., they shall have the right, for seven months after the date of such purchase, to buy back all or some of such shares of non-voting common stock for fair market value at the time of repurchase. In the event Mr. Saunders exercises his options prior to the Expiration Time, affiliates of Sun Capital shall have the right, within seven months of the related exercise date, to purchase any or all of the shares acquired upon such exercise at the lower of (i) $121.78 per share (as may be adjusted in accordance with the Extension Agreement) and (ii) the fair market value of such share at the time of repurchase.	
 
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Director Compensation
During fiscal 2012, AHC did not make any compensation payments (including any equity grants) to its directors, for service as directors, as all of its directors were employees of AHC or affiliates of Sun Capital, which will continue to be AHC’s controlling stockholder after consummation of this offering. Sun Cardinal, an affiliate of Sun Capital, will also have the authority to designate a majority of AHC’s directors after consummation of this offering. AHC did reimburse directors for out-of-pocket expenses they incurred in connection with their service as directors, including those incurred in connection with attending all board and committee meetings. See “Additional Information Related to Vince—Vince Executive Compensation—Director Compensation” for a description of Vince Holding Corp.’s director compensation arrangements after consummation of this offering.
Director and Officer Indemnification and Limitation of Liability
There is no pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.
Employee Stock Plans
2010 Option Plan
The 2010 Option Plan was adopted by the board of directors of Kellwood Company, a wholly-owned subsidiary of Apparel Holding Corp., on June 30, 2010. As of February 2, 2013, Kellwood Company had reserved 100,000 shares of its common stock for issuance under the 2010 Option Plan. The Kellwood Company board of directors will not grant any further awards under the 2010 Option Plan to any of AHC’s officers or directors after the consummation of this offering. Future awards to executive officers that will provide services to Vince after consummation of this offering and AHC’s directors shall be granted by AHC’s board of directors or compensation committee under the Vince 2013 Incentive Plan, as described in “Additional Information Related to Vince—Vince Executive Compensation.”
Section 401(k) Plan
AHC provides the defined contribution Kellwood Retirement Savings Plan, a 401(k) Plan, as well as various group health and welfare programs that are generally available to all Kellwood employees, including AHC’s Named Executive Officers.
Under the plan, eligible employees electing to participate may contribute up to 100% of their pretax income, subject to IRS rules limiting an individual’s total contributions and the application of IRS tests designed to ensure that the plan does not discriminate in favor of highly compensated employees.
Effective February 1, 2013, AHC reinstated the 401(k) for all employees. AHC will match 50% up to the first 3% of the employee’s deferral. AHC did not make any contributions to any AHC Named Executive Officer’s 401(k) account in fiscal 2012.
 
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 DESCRIPTION OF CERTAIN INDEBTEDNESS OF AHC
The following description of certain indebtedness of AHC sets forth the debt of historical AHC and its consolidated subsidiaries. In connection with this offering, all AHC segments other than the Vince segment (or the non-Vince businesses) will be separated from AHC in the IPO Restructuring Transactions. In connection with these transactions, the Pre-IPO Stockholders will continue to own the non-Vince businesses through their ownership of Kellwood Holding, LLC. Kellwood Company, LLC will become a subsidiary of Kellwood Holding, LLC and will remain liable for its obligations under the debt described in this section. Additionally, Vince, LLC’s obligations under the Wells Fargo Facility, the Cerberus Term Loan, the Sun Term Loan Agreements and the 12.875% Notes will be terminated or released in connection with the consummation of this offering and Vince, LLC will not guarantee or become a party to Kellwood’s new revolving credit facility. As a result, the debt of Kellwood after giving effect to the IPO Restructuring Transactions will not be the debt of Apparel Holding Corp, the entity offering stock in this offering.
In connection with this offering, Kellwood Company, LLC will use the proceeds from the repayment of the Kellwood Note Receivable to, after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates, (i) repay, at closing, all indebtedness outstanding under (A) the $45 million Cerberus Term Loan and (B) the Sun Term Loan Agreements, which collectively totaled $118.0 million in the aggregate as of August 3, 2013, (ii) discharge, or repurchase at par all of the outstanding 12.875% Notes, which totaled $146.8 million as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon, (iii) pay a restructuring fee equal to 1% of the aggregate of the offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement and (iv) pay a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements.” It is currently estimated that the restructuring fee described in clause (iii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.
In addition, Kellwood Company, LLC may, at or after closing, use proceeds remaining from the repayment of the Kellwood Note Receivable to discharge, refinance or repurchase at par the following indebtedness, for which Vince, LLC is neither a guarantor nor an obligor: (A) all of the outstanding 7.625% Notes, which totaled $87.0 million in aggregate principal amount as of August 3, 2013; and (B) all of the outstanding 3.5% Convertible Notes, which totaled $0.2 million in aggregate principal amount as of August 3, 2013, plus, with respect to clauses (i) and (ii), fees, expenses and accrued and unpaid interest thereon.
Kellwood Company, LLC shall enter into an escrow agreement with Vince Intermediate Holding, LLC and the Escrow Agent, pursuant to which Vince Intermediate Holding, LLC will, on behalf of Kellwood Company, LLC, escrow an amount with the Escrow Agent equal to the face amount of all the indebtedness described in the prior paragraph (with the proceeds from the repayment of the Kellwood Note Receivable and after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates) which is not repaid, repurchased or discharged at closing until such time as it is discharged, refinanced or repaid in full. No interest will accrue on the funds placed into escrow with the Escrow Agent and both Vince Intermediate Holding, LLC and Kellwood Company, LLC must consent to any distributions from the escrow account in accordance with the terms of the Transfer Agreement. The escrow agreement will automatically terminate upon the release of all funds escrow account, in accordance with the terms thereof.
In addition, Kellwood Company, LLC will, in connection with this offering, refinance the Wells Fargo Facility, to among other things, remove Vince, LLC as an obligor thereunder. See “Use of
 
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Proceeds” and “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC” for additional information and “Additional Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC—Liquidity and Capital Resources” for a description of such indebtedness.
In connection with the refinancing of the Wells Fargo Facility, Kellwood Company, LLC anticipates entering into a $         million revolving facility. Kellwood is still in preliminary discussions with Wells Fargo with respect to the terms any such new revolving credit facility. In general, we expect that such facility will contain representations and warranties, financial and restrictive covenants, events of default and collateral arrangements that are customary for this type of financing. We anticipate that indebtedness under such facility will be the only outstanding long-term debt of Kellwood after consummation of this offering. Vince, LLC will not guarantee or be a borrower party or guarantor to any such new revolving credit facility.
 
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 ADDITIONAL INFORMATION RELATED TO VINCE
The information appearing in this section relates to the Vince business and Apparel Holding Corp., the entity offering shares of common stock in this offering after giving effect to the IPO Restructuring Transactions, and to the operations of Vince, LLC and the Vince business on a historical basis, as the context requires.
Please note the following:
 
 	Ÿ 	 	Apparel Holding Corp. (to be renamed Vince Holding Corp. prior to the consummation of this offering) is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC;	
 
 	Ÿ 	 	The information set forth below is provided as supplemental information and should not be considered in lieu of the information pertaining to Apparel Holding Corp; and	
 
 	Ÿ 	 	The financial information included in this discussion and in Vince, LLC’s historical financial statements may not be indicative of Apparel Holding Corp.’s financial position, operating results and changes in equity after the completion of the IPO Restructuring Transactions, or what they would have been had the Vince business operated separately from the non-Vince businesses during the periods presented.	
As used in this “Additional Information Related to Vince” section, unless the context otherwise requires:
 
 	Ÿ 	 	“our,” “us,” “we” and “Vince Holding Corp.” refers to Vince Holding Corp. (currently known as Apparel Holding Corp.) and its consolidated subsidiaries (including Vince, LLC) after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince” refers to the Vince business after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince, LLC” refers to the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering and the application of proceeds of this offering as discussed herein. Apparel Holding Corp. is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC.;	
 
 	Ÿ 	 	“AHC” refers to Apparel Holding Corp. and its consolidated subsidiaries (including Kellwood Company) prior to the completion of the IPO Restructuring Transactions. Apparel Holding Corp. is the historical owner and operator of the Vince and non-Vince businesses; and	
 
 	Ÿ 	 	“Kellwood” refers to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions, as the future owner and operator of the non-Vince businesses, or to the non-Vince businesses of AHC prior to the completion of the IPO Restructuring Transactions, as the context requires.	
 
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 SUPPLEMENTAL SELECTED HISTORICAL FINANCIAL DATA OF VINCE, LLC
The following tables set forth the supplemental selected historical financial data of Vince, LLC, the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering.
You should read the information set forth below in conjunction with “Use of Proceeds,” “Capitalization of AHC,” “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” and Vince, LLC’s audited financial statements and notes thereto included elsewhere in this prospectus. The statement of operations data for each of fiscal 2010, fiscal 2011 and fiscal 2012 and the balance sheet data as of January 28, 2012 and February 2, 2013 set forth below are derived from Vince, LLC’s audited financial statements included elsewhere in this prospectus.
The statement of operations data for the six month periods ended July 28, 2012 and August 3, 2013 and the balance sheet data as of August 3, 2013 set forth below are derived from Vince, LLC’s unaudited quarterly financial statements and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented.
Operating results for the six month periods are not necessarily indicative of results for a full financial year, or any other periods. Vince, LLC’s summary historical financial data include charges from Kellwood Company for certain expenses, including centralized legal, tax, treasury, information technology, employee benefits and other centralized services and infrastructure costs. The charges have been determined on bases that we considered to be reasonable reflections of the utilization of services provided or the benefit received by Vince, LLC.

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands, except for percentages and store counts)	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statement of Operations Data:	  				 				 				 				 				
Net sales	  	$	111,492	  	 	$	175,255	  	 	$	240,352	  	 	$	90,531	  	 	$	114,657	  	
Cost of products sold	  	 	55,695	  	 	 	89,545	  	 	 	132,156	  	 	 	50,119	  	 	 	63,506	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	55,797	  	 	 	85,710	  	 	 	108,196	  	 	 	40,412	  	 	 	51,151	  	
Operating expenses:	  				 				 				 				 				
Selling, general and administrative expenses(1)(2)	  	 	32,704	  	 	 	42,148	  	 	 	66,639	  	 	 	27,057	  	 	 	33,954	  	
Amortization of intangible assets	  	 	598	  	 	 	599	  	 	 	598	  	 	 	299	  	 	 	300	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	33,302	  	 	 	42,747	  	 	 	67,237	  	 	 	27,356	  	 	 	34,254	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	22,495	  	 	 	42,963	  	 	 	40,959	  	 	 	13,056	  	 	 	16,897	  	
Interest expense(3)	  	 	7,172	  	 	 	15,004	  	 	 	22,903	  	 	 	10,690	  	 	 	12,429	  	
Other expense, net	  	 	350	  	 	 	478	  	 	 	779	  	 	 	396	  	 	 	512	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	  	 	14,973	  	 	 	27,481	  	 	 	17,277	  	 	 	1,970	  	 	 	3,956	  	
Provision for Income taxes	  	 	5,923	  	 	 	10,812	  	 	 	6,964	  	 	 	789	  	 	 	1,556	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	$	1,181	  	 	$	2,400	  	

Other Operating and Financial Data:	  				 				 				 				 				
Total stores at end of period	  	 	16	  	 	 	19	  	 	 	22	  	 	 	19	  	 	 	24	  	
Comparable store sales growth	  	 	9.3	% 	 	 	7.6	% 	 	 	23.1	% 	 	 	13.9	% 	 	 	31.7	% 	
Capital expenditures	  	$	1,602	  	 	$	1,450	  	 	$	1,821	  	 	$	457	  	 	$	3,406	  	

(1)	Includes the impact of our public company transition costs and certain one-time costs of $9.3 million for fiscal 2012 and $4.0 million for the first six months of 2013. These costs include transition payments to our founders, charges that are directly attributable to offering, incremental costs for external legal counsel and consulting fees incurred to effect the Restructuring Transactions and other one-time charges. We expect additional transaction costs (excluding underwriting discounts and commissions) of approximately $2.9 million for the remainder of fiscal 2013 will be charged to SG&A.	
 
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(2)	Vince, LLC is charged for the use of services provided by Kellwood Company departments and shared facilities. These charges are based upon the actual cost incurred, without markup. These functions and facilities will remain with Kellwood upon separation in the IPO Restructuring Transactions and will continue to be an integral part of the non-Vince businesses going forward. Vince, LLC will continue to use certain of these services for a period of time through the shared services agreement described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement” and will be charged accordingly. The charges to Vince, LLC may not be representative of what the costs would have been had Vince, LLC been a separate, stand-alone entity during the periods presented.	
(3)	Interest expense for fiscal 2010, fiscal 2011 and fiscal 2012 and the six month periods ended July 28, 2012 and August 3, 2013 represents interest costs and amortization of debt issuance costs on certain Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. The Kellwood Note Receivable will include accrued and unpaid interest on such indebtedness (and on the Public Bonds and the 3.5% Convertible Notes), through the closing date of this offering. All such debt instruments are to be repaid, refinanced or discharged in connection with the consummation of this offering. We intend to enter into a new revolving credit facility and a new term loan facility with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We also intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
The balance sheet data of Vince, LLC is presented on an actual basis as of January 28, 2012, February 2, 2013 and August 3, 2013.

 	  	As of January 28,
2012	 	 	As of February 2,
2013	 	 	As of
August 3,
2013	 	
(In thousands)	  	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	(unaudited)	 	
Balance Sheet Data:	  				 				 				
Cash and cash equivalents	  	$	34	  	 	$	35	  	 	$	106	  	
Total current assets	  	 	40,861	  	 	 	60,854	  	 	 	82,603	  	
Total current liabilities(1)	  	 	102,470	  	 	 	110,466	  	 	 	148,005	  	
Long-term debt(1)	  	 	122,207	  	 	 	152,675	  	 	 	163,675	  	
Total invested equity	  	 	(1,524	) 	 	 	(22,017	) 	 	 	(26,159	) 	
Total liabilities and invested equity	  	 	228,942	  	 	 	247,211	  	 	 	290,562	  	

(1)	Included within current liabilities are short-term borrowings under the Wells Fargo Facility of $88.2 million, $79.8 million and $115.6 million as of January 28, 2012, February 2, 2013 and August 3, 2013, respectively. Long-term debt includes the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and the related capitalized deferred issuance costs are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. This debt was incurred to fund the operation and growth of the Vince and non-Vince businesses, including to finance certain acquisitions made by Kellwood Company since 2008. As discussed above, we intend to enter into a new revolving credit facility and a new term loan facility with the consummation of this offering. We also intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013 would have been $         million or $         million, respectively.	
 
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 SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VINCE, LLC
You should read the following discussion together with “Additional Information Related to Vince—Supplemental Selected Historical Financial Data of Vince, LLC,” “Additional Information Related to AHC—Description of Certain Indebtedness of AHC” and Vince, LLC’s audited financial statements and related notes thereto included elsewhere in this prospectus. You should also read this discussion in connection with “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC” for a detailed discussion of the effects of the IPO Restructuring Transactions on our financial condition and results of operations. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors—Risks Related to Vince,” “Risk Factors—Risks Related to the Restructuring Transactions,” “Risk Factors— Risks Related to this Offering and Our Common Stock” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.
As used in this section, unless the context requires otherwise:
 
 	Ÿ 	 	“our,” “us,” “we” and “Vince Holding Corp.” refer to Vince Holding Corp. (currently known as Apparel Holding Corp.) and its consolidated subsidiaries (including Vince, LLC) after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince” refers to the Vince business after giving effect to the IPO Restructuring Transactions;	
 
 	Ÿ 	 	“Vince, LLC” refers to the entity that has historically held the Vince assets and liabilities and will continue to do so after completion of the IPO Restructuring Transactions and the consummation of this offering. Apparel Holding Corp. is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC;	
 
 	Ÿ 	 	“AHC” refers to Apparel Holding Corp. and its consolidated subsidiaries (including Kellwood Company) prior to consummation of the IPO Restructuring Transactions. AHC is the historical owner and operator of the Vince and non-Vince businesses; and	
 
 	Ÿ 	 	“Kellwood” refers to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) after giving effect to the IPO Restructuring Transactions, as the future owner and operator of the non-Vince businesses, or to the non-Vince businesses of AHC prior to the consummation of the IPO Restructuring Transactions, as the context requires.	
As described elsewhere in this prospectus AHC will use a series of transactions to separate the non-Vince businesses from the Vince business in the IPO Restructuring Transactions. In connection with Vince Intermediate Holding, LLC’s acquisition of Vince, LLC, Vince Intermediate Holding, LLC will issue the Kellwood Note Receivable to Kellwood Company, LLC. The principal amount of the Kellwood Note Receivable represents (i) the face value of the indebtedness (including accrued and unpaid interest and any related fees and expenses) to be repaid, discharged or repurchased by Kellwood Company, LLC in connection with the consummation of this offering, (ii) a restructuring fee equal to 1% of the aggregate of this offering and certain related debt repayment and the amount of the new Vince and Kellwood credit facilities to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (iii) a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional Information Related to Vince—Vince
 
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Executive Compensation—Employment Agreements,” all partially offset by (iv) indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates. It is currently estimated that the restructuring fee described in clause (ii) above and payable to Sun Capital Management in connection with this offering will total $3.5 million. Most of the proceeds from this offering will be used to repay the Kellwood Note Receivable. As further described within “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC,” the estimated pro forma amount due under the Kellwood Note Receivable as of August 3, 2013 is $385.0 million. The Kellwood Note Receivable will be repaid with most of the net proceeds from this offering, along with the borrowings under our new term loan facility. Once the IPO Restructuring Transactions have occurred, the non-Vince businesses will operate separately from the Vince business. After consummation of this offering, the Vince business will be our only operations going forward. An investment in Vince Holding Corp. is an investment in the Vince business. Vince, LLC’s assets and liabilities consist solely of the Vince business.
AHC has maintained distinct financial records of its Vince and non-Vince businesses. Revenues and expenses identified as directly pertaining to the Vince or non-Vince businesses have been credited or charged directly to the Vince or non-Vince businesses, as applicable. Additionally, we will continue to be charged for the use of services provided by centralized Kellwood departments and shared facilities, such as distribution, information technology and back office support, after the consummation of this offering. However, the financial information included herein may not necessarily reflect the financial position, results of operations and cash flows of the Vince business in the future or what they would have been had we been operated separately from the non-Vince businesses during the periods presented.
AHC has significant indebtedness. Vince, LLC is a borrower party or guarantor to a significant amount of this debt. Kellwood Company, LLC will use proceeds from the Kellwood Note Receivable together with new financing arrangements to repay, refinance or discharge, much of this debt. Because Vince, LLC is a borrower party to the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements, all such debt and related balances are included on the Vince, LLC balance sheet, and the corresponding interest expense is included in our statements of operations. Vince, LLC will have no obligations under such debt (or under the 12.875% Notes, the 7.625% Notes or the 3.5% Convertible Notes that are also to be repaid, refinanced or discharged by Kellwood Company, LLC with proceeds from the repayment of the Kellwood Note Receivable) after giving effect to the consummation of this offering and the application of the related proceeds. We intend to enter into a new revolving credit facility and new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We also intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.
Our future results of operations after giving effect to the IPO Restructuring Transactions and the consummation of this offering will include costs and expenses for us to operate as a stand-alone company, and, consequently, these costs and expenses may be materially different than our historical results of operations. We expect that we will incur significantly higher expenses such as audit fees, professional fees, and costs to maintain our corporate functions, such as board of director fees and expenses, SEC reporting costs and costs to comply with Sarbanes-Oxley Act and other internal control requirements. Also, as a stand-alone company, we may not be able to negotiate as favorable terms in contracts, such as those for materials, services and intellectual property, as those negotiated in the past by AHC. Accordingly, the Vince, LLC financial information for these periods may not be indicative of our future results of operations, financial position and cash flows.
 
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Business Summary
Vince is a prominent, high-growth contemporary apparel brand known for modern, effortless style and everyday luxury essentials. Founded in 2002, Vince has generated strong sales momentum over the last decade. We believe that we will achieve continued success by expanding our product assortment distributed through premier wholesale partners in the U.S. and select international markets, as well as in our own branded retail locations and on our e-commerce platform. We have a small number of wholesale partners who account for a significant portion of our net sales. Net sales to the full-price, off-price and e-commerce operations of our four largest wholesale partners were 59% of our total revenue for fiscal 2011, 61% of our total revenue for fiscal 2012 and 63% of our total revenue for the first six months of 2013. These partners, each of which accounted for more than 10% of our total revenue for fiscal 2011 and fiscal 2012, include Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdales. Nordstrom, Saks Fifth Avenue and Neiman Marcus each accounted for more than 10% of our total revenue for the first six months of fiscal 2013 and collectively represented 55.7% of our total revenue in such period. We design our products in the U.S. and source the vast majority of our products from contract manufacturers outside the U.S., primarily in Asia and South America.
We serve our customers through a variety of channels that reinforce the Vince brand image. Our diversified channel strategy allows us to introduce our products to customers through multiple distribution points that are reported in two segments: wholesale and direct-to-consumer. Our wholesale segment is comprised of sales to premier department stores and specialty stores in the U.S. and in select international markets, with U.S. wholesale representing 76% of our fiscal 2012 sales and 70.4% of our sales in the first six months of fiscal 2013. We believe that our success in the U.S. wholesale channel and our strong relationships with premier wholesale partners provide opportunities for continued growth. These growth initiatives include creating enhanced product assortments and brand extensions through both in-house development activities and licensing arrangements, as well as continuing the build-out of branded shop-in-shops in select wholesale partner locations. We also believe international wholesale, which represented 8% of net sales for fiscal 2012 and 10.3% of net sales for the first six months of fiscal 2013, presents a significant growth opportunity as we strengthen our presence in existing geographies and introduce Vince in new markets globally.
In 2008, we initiated a direct-to-consumer strategy with the opening of our first retail store. As of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Based on a combination of third-party analyses and internal projections, we believe that the U.S. market can currently support at least 100 free-standing Vince store locations. Comparable store sales reflect net revenue at retail stores that have been open for at least 12 months. Net revenue from a store is included in comparable store sales in the 13 th month following its opening. Non-comparable store sales include sales from new stores that have not been open for at least 12 months. In the event that we relocate, or change square footage of an existing store, we would treat that store as a non-comparable store until the 13th month following the relocation or square footage adjustment. For 53-week fiscal years, we do not adjust comparable store sales to exclude the additional week. Fiscal 2012 was a 53-week year while fiscal 2011 reflects a 52-week year. Our comparable store sales grew by 23.1% in fiscal 2012 and by 31.7% in the first six months of fiscal 2013 primarily as a result of a 24.4% increase in average dollar sale and a 7.3% increase in transaction volume. We plan to continue to drive our comparable store sales growth through a balanced combination of increased traffic, conversion and average dollar sale.
The direct-to-consumer segment also includes our website, www.vince.com , which was also launched in 2008. The direct-to-consumer segment accounted for 16% of fiscal 2012 net sales and 19.3% of net sales in the first six months of fiscal 2013, and we expect sales from this channel to grow as we drive productivity in existing stores, open new stores and upgrade and re-launch our website in 2014.
 
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Despite recent global economic trends which led to a decline in discretionary consumer spending, we believe, based on industry experience, that our performance remained strong due primarily to a strong design aesthetic and superior quality. Our net sales are derived exclusively from the sale of Vince branded apparel and accessories and have grown from $175.3 million in 2011 to $240.4 million in 2012, representing a 37.1% increase. Total net sales were $90.5 million and $114.7 million in the first six months of fiscal 2012 and fiscal 2013, respectively, representing growth of 26.7%. Since the start of fiscal 2011, we have experienced significant sales growth within both the wholesale and direct-to-consumer segments. Wholesale segment sales growth since 2011 through the first six months of fiscal 2013 was driven primarily by the addition of over 600 wholesale doors, bringing total wholesale door count to 2,145 as of August 3, 2013 compared to 1,527 as of January 29, 2011, as well as increased penetration in our existing wholesale doors, primarily due to the continued expansion of our product offerings. Wholesale door count represents the number of third party wholesalers, such as department stores, who currently stock our products. Some of these wholesalers sell our products mixed in with their other apparel and accessories, while others carve out a dedicated area for Vince products. Each such store, regardless of whether it utilizes a dedicated area for Vince products and whether it offers men’s and women’s Vince product in different locations within the same store, counts as a single location for purposes of calculating our wholesale door count. Direct-to-consumer segment sales growth during these periods was driven by an increase in comparable store sales, the opening of eight additional retail stores in addition to the 16 stores opened as of January 29, 2011, and strong e-commerce sales growth. Our comparable store sales growth was 7.6%, 23.1% and 31.7% in fiscal 2011, fiscal 2012 and the first six months of fiscal 2013, respectively.
Opportunities, Challenges and Risks
We intend to focus on generating sales by increasing our wholesale productivity and by expanding our direct-to-consumer segment. In our wholesale business, we will work with our existing wholesale partners to increase our wholesale penetration by capitalizing on new and existing product categories (whether developed in-house or through licensing arrangements), improving our visual presentation, space layout and fixtures and opening branded shop-in-shops. We anticipate that an increasing percentage of our new sales will come from our direct-to-consumer segment and our international operations as we grow and expand our business. The growth in our direct-to-consumer business will be primarily driven by the opening of new retail stores, improving the productivity of our existing stores (by enhancing store-level merchandising, launching new product categories and improving our inventory management) and leveraging our recently enhanced e-commerce strategy.
Over the last decade, Vince has generated strong sales momentum and has successfully grown to include a men’s collection in 2007, expanded denim, leather and outerwear lines in 2010, and women’s footwear, which was launched through a licensing partnership in 2012. We intend to continue building existing product categories by elevating our men’s collection, expanding our denim and outwear businesses, increasing the assortment of women’s bottoms and dresses and implementing a replenishment program for core items. Additionally, we have identified new product categories, including handbags and leather accessories as well as more tailored collections for women and men, which we believe will allow us to capture incremental share from existing customers and attract new customers in our wholesale and direct-to-consumer businesses.
We have a small number of wholesale partners who account for a significant portion of our net sales. Net sales to the full-price, off-price and e-commerce operations of our four largest wholesale partners represented 63.0% of our total revenue in the first six months of fiscal year 2013, 61% of our total revenue for fiscal 2012 and 59% of our total revenue for fiscal 2011. We do not have written agreements with any of these wholesale partners, which include Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s. As such, purchases from our wholesale partners generally occur
 
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on an order-by-order basis. A decision by any of our major wholesale partners to significantly decrease the amount of merchandise purchased from us or our licensing partners could substantially reduce our revenue and have a material adverse effect on our profitability.
As of August 31, 2013, we had seven shop-in-shops with our U.S. wholesale partners and seven shop-in-shops with our international wholesale partners. Working with our wholesale partners, we are planning to open 15 to 20 new branded shop-in-shops in fiscal 2013 and believe there is an attractive opportunity to open additional shop-in-shops in 2014 and beyond. While expanding the number of shop-in-shops is part of our growth strategy, there can be no assurances we will be able to align our wholesale partners with this strategy and continue to receive floor space from our wholesale partners to open or expand shop-in-shops.
In fiscal 2012, approximately 16% of our net sales were generated from our direct-to-consumer segment, which consists of our retail stores and our e-commerce platform. In the first six months of fiscal 2013 approximately 19.3% of our net sales were generated from our direct-to-consumer segment. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 free-standing Vince store locations. We plan to double our store base over the next three to five years, including opening net six new stores in fiscal 2013. As we expand our store base, we may not be able to maintain or grow the levels of comparable store sales that we have experienced historically.
Vince products are currently sold in 43 countries, either directly to premier department and specialty stores, or through distribution relationships with highly-regarded international partners with exclusive rights to certain territories. Approximately 8% of our net sales for fiscal 2012 and 10.3% of our net sales for the first six months of fiscal 2013 resulted from our international wholesale operations. We intend to continue to increase our presence in international markets, including Canada, select European countries, Asia and the Middle East, by supplementing existing distribution partnerships, increasing wholesale partner penetration and productivity and selectively adding stand-alone retail locations with current and prospective partners. Locating and managing these international partnerships may be challenging and we may incur additional costs in doing so.
We entered into a licensing agreement when we launched women’s footwear in 2012 and signed a licensing agreement in 2013 for the launch of children’s apparel in 2014. We will continue to explore additional licensing opportunities for select categories requiring specialized expertise, such as intimates/loungewear, men’s footwear and fashion accessories. While these licensing arrangements present an attractive way to grow our business, identifying, implementing and maintaining licensing arrangements requires additional expenditures of management time and oversight to ensure brand consistency and brand integrity.
We have expanded our operations since our inception in 2002 and have limited operating experience at our current size. Our business has more than doubled over the past two years, as we have grown our total net sales from $111.5 million in fiscal 2010 to $240.4 million in fiscal 2012 and from $90.5 million in the first six months of fiscal 2012 to $114.7 million in the first six months of fiscal 2013. Although we have made and are continuing to make investments to support our near and longer-term growth, we will continue to have an ongoing relationship with Kellwood which will provide services, including distribution, information technology and back office support, under the Shared Services Agreement. Our continued expansion may exceed the capacity that Kellwood is able to provide under the terms of such agreement. In addition, Kellwood has experienced financial difficulties in the past. If Kellwood encounters any such issues during the term of the Shared Services Agreement or is unable to satisfy its obligations thereunder on a timely basis, we may be unable to provide these services internally or implement acceptable, substitute arrangements with third-party providers.
 
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After the IPO Restructuring Transactions, we must obtain goods, technology and services we will not obtain from Kellwood on our own. We may be unable, as an entity separate from and smaller than Kellwood, to obtain such goods, technology and services at prices and terms as favorable as those available to us prior to the separation. As a result, our costs may increase and our profitability may decrease.
Our CEO, Jill Granoff, and CFO, Lisa Klinger, joined the company in 2012. Many of the other members of our senior management team, including our President, Karin Gregersen, and our Creative Director, Doo-Ri Chung, have been with us less than one year. As a result, our senior management team has limited experience working together as a group. The lack of shared experience could negatively impact our senior management’s ability to quickly and efficiently respond to problems and effectively manage our business.
Basis of Presentation
We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year.
 
 	Ÿ 	 	References to “fiscal year 2012” or “fiscal 2012” refer to the fiscal year ended February 2, 2013;	
 
 	Ÿ 	 	References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012; and	
 
 	Ÿ 	 	References to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011.	
 
 	Ÿ 	 	References to “first six months of fiscal 2013” refer to the six months ended August 3, 2013; and	
 
 	Ÿ 	 	References to “first six months of fiscal 2012” refer to the six months ended July 28, 2012.	
Fiscal year 2012 consists of a 53-week period and each of fiscal 2011 and fiscal 2010 consisted of a 52-week period. The first six months of fiscal 2013 and the first six months of fiscal 2012 each consisted of 26 weeks.
Net sales.     Our net sales consist of revenues from the sale of products, less returns, discounts and allowances and other offsets to net sales as well as shipping and handling fees and licensing fees and royalties. In our wholesale segment, revenue is recognized when goods are shipped in accordance with customer orders, at which point title passes. Provisions for discounts, returns and other allowances are recorded as a reduction of net sales in the same period as the related sales. Historically, increases in revenues have been driven primarily by the addition of new wholesale doors, increased penetration in our existing wholesale doors and by incorporating higher priced items into our product assortment. Going forward, we anticipate that the wholesale and direct-to-consumer segments will contribute almost equivalent amounts to future sales growth, with the direct-to-consumer channel becoming a higher percentage of the business than it is today (but not higher than wholesale overall). In our direct-to-consumer segment, revenue is recognized at the time of customer purchase in our retail stores, and at the time of shipment for customer e-commerce orders. Comparable store sales are calculated based on our own branded retail locations that have been open for at least 13 months and do not include any sales from our e-commerce business. There may be variations in the way other companies and retailers calculate comparable store or “same store” sales. As a result, data in this prospectus regarding our comparable store sales may not be comparable with similar data made available by other companies. Additionally, comparable store sales for companies like our own that are in the midst of opening additional retail locations may be of limited utility.
Cost of products sold .    Our cost of products sold includes:
 
 	Ÿ 	 	the cost of purchased merchandise, including raw materials;	
 
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 	Ÿ 	 	the cost of inbound transportation, including freight;	
 
 	Ÿ 	 	the cost of our production, sourcing and technical design departments;	
 
 	Ÿ 	 	other processing costs associated with acquiring and preparing the inventory for sale as charged by Kellwood as part of the Shared Services Agreement; and	
 
 	Ÿ 	 	shrink and valuation reserves.	
Gross profit/Gross margin .    Gross profit is defined as net sales less the cost of products sold. Gross margin is gross profit expressed as a percentage of net sales. As we have continued to use more expensive but lower margin raw materials such as leather and fur-trimmed items and as our men’s business has become a larger portion of our sales, we have seen a reduction in our gross margin rate; however our gross profit dollars have continued to increase. Our gross margins have also been adversely impacted in the past by margin assistance to our wholesale customers. Such margin arrangements are customary in the industry and will continue to impact future margins in relation to the overall performance of the Vince product with our retail partners. Going forward, we expect our margin rate to improve as a result of increasing the percentage of our net sales derived from our direct-to-consumer segment, which tends to generate higher margins than our wholesale business, optimizing our pricing strategy and by leveraging economies of scale as we evolve into a larger organization.
There may be variations in the costs that other companies use to calculate gross profit. As a result, data in this prospectus regarding our gross profit dollars and gross margin may not be comparable with similar data made available by other companies.
Selling, general and administrative expenses .    Our selling, general and administrative expenses (“SG&A expenses”) consist of all other operating expenses, excluding amortization of intangible assets, which are not included in cost of products sold. These expenses include marketing, advertising, design, occupancy, certain distribution costs, salaries and benefits and other corporate overhead. Additionally, our historical financials include charges for the use of services provided by centralized Kellwood departments and shared facilities. These costs were charged upon the actual cost incurred, without mark-up. The charges to Vince, LLC may not be representative of what the costs would have been had we been operated separately from the non-Vince businesses during the periods presented, however, we believe the amounts charged are representative of incremental cost to Kellwood to provide these services to us. In future periods we will continue to use certain of these services, such as distribution, information technology and back office support, from Kellwood as part of the Shared Services Agreement. SG&A expenses have increased over the past 18 months as we have added resources and capabilities to operate as a stand-alone company. We expect our SG&A expenses as a percentage of sales to slightly increase over the near-term as we incur additional costs associated with our retail operations as sales from our direct-to-consumer segment becomes a larger percentage of our business and as we incur costs associated with the consummation of this offering (including stock based compensation charges). Additionally, in an effort to build our brand awareness, we intend to increase our marketing investment across a range of strategic initiatives, including cooperative advertising with wholesale partners, print media, digital media, editorial coverage, direct mail, search engine optimization, social media initiatives, targeted product placement, celebrity outreach and in-store events. In the long-term, we expect our SG&A expenses, as a percentage of sales, to increase slightly from recent levels as we grow our direct-to-consumer business and invest in expanded marketing efforts, as well as from ongoing public company costs.
Amortization of intangible assets .    Our amortization of intangible assets consists of straight-line amortization expense on our definite-lived intangible assets over a 20 year life. These assets are comprised of Vince customer relationships and were valued at the time of the acquisition of Kellwood Company by affiliates of Sun Capital in 2008. We test definite-lived intangible assets if a triggering
 
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event occurs. There have been no triggering events or impairments recorded on the Vince customer relationships. Under the provisions of ASC Topic 350, we do not amortize indefinite-lived tangible assets (our Vince trademark). In accordance with ASC Topic 350, indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if a triggering event occurs. The fair value of the trademark is estimated and compared to its carrying value. We estimate the fair value of these assets primarily based on a royalty savings model, which uses discounted cash flow assumptions. We completed our most recent annual impairment testing on our indefinite-lived intangible assets during the fourth quarter of fiscal 2012 and no impairments were identified.
Interest expense .    Our interest expense has historically included interest and related costs on the Wells Fargo Facility, Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and the related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party under such instruments. Vince, LLC will have no obligations under such debt (or under the 12.875% Notes, the 7.625% Notes or the 3.5% Convertible Notes that are also to be repaid, refinanced or discharged by Kellwood Company, LLC with proceeds from the repayment of the Kellwood Note Receivable) after giving effect to the consummation of this offering and the application of the related proceeds. As this expense is expected to be significantly less than our historical interest expense under the Wells Fargo, Cerberus and Sun Term Loans, we believe that our interest expense will decrease in both absolute terms and as a percentage of revenue in both the near and intermediate term.
We intend to enter into a new revolving credit facility and new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.
Other expense, net .    Our other expense, net primarily consists of miscellaneous income and expenses and management fees incurred by Kellwood Company which were charged to Vince in the amounts of $0.4 million, $0.5 million, $0.8 million and $0.2 million for fiscal 2010, fiscal 2011, fiscal 2012 and the first six months of fiscal 2013, respectively. Upon consummation of this offering, Vince will no longer incur management fees payable to Sun Capital Management as the obligations under the Management Services Agreement will be terminated or remain with Kellwood. As a result, we do not expect to report other expense, net, after consummation of this offering. We will enter into a services agreement with Sun Capital Management, pursuant to which we will agree to reimburse Sun Capital Management for out-of-pocket expenses incurred in connection with providing consulting services to us. We intend to report any expense associated with this new services agreement as SG&A expense in future reporting periods.
Provision for income taxes .    We are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with inherent uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. Historically, we have been primarily subject to taxation in the U.S. because we have sold the majority of our products to customer in the U.S. We anticipate that in the future as we expand our sale of products to customers outside the U.S., we could become subject to taxation based on the foreign statutory rates in the countries where these sales occurred and our effective tax rate would fluctuate accordingly. We are subject to examination of our income tax returns by the IRS and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our income tax reserve and expense. Should actual events differ from our current expectations, we could experience a material impact to our financial position, results of operations and cash flows.
 
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Our operating results have historically been included in the U.S. federal and state income tax returns for AHC. Provision for income taxes in the Vince, LLC financial statements have been determined on a stand-alone basis (i.e., on a “separate return” basis). As such, we are required to assess the realization of our net deferred tax assets, the need for a valuation allowance and judgments on the recognition of tax benefits based on our own facts and circumstances and exclude from that assessment any impact of the overall results of AHC. We believe the assumptions underlying the allocation of income taxes are reasonable; however, the amounts allocated for income taxes in the Vince, LLC financial statements are not necessarily indicative of the income taxes that would have been recorded had Vince, LLC been a separate, stand-alone entity during the periods presented.
We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria.
AHC has generated certain tax benefits (including NOLs) and tax credits which it has been unable to utilize, and will generate certain section 197 intangible deductions. Absent the IPO Restructuring Transactions, based on available information, it is more likely than not that AHC’s net deferred tax assets will not be realized, and accordingly there is currently a full valuation allowance against all of the U.S. net deferred tax assets.
As a result of the IPO Restructuring Transactions, we expect that these net deferred tax assets will be available to offset future taxable income. As of August 3, 2013 AHC has deferred tax assets of $77.6 million related to U.S. NOL carry-forwards, which has a full valuation allowance recorded against them. Approximately $205.0 million in federal NOL carry-forwards would become available to offset future taxable income as of August 3, 2013. In connection with the consummation of this offering, we will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders. As a result of the Tax Receivable Agreement, 85% of any benefits we receive from utilization of NOLs and other tax attributes will be paid to the Pre-IPO Stockholders. As further described within “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC,” the pro forma amount due under the Tax Receivable Agreement as of August 3, 2013 is $172.1 million. We anticipated funding amounts due under the Tax Receivable Agreement with internally generated cash flow from operations and availability under our new revolving credit facility. We estimate the net benefits from the NOL carry-forwards and other tax attributes covered by the Tax Receivable Agreement will be utilized within ten years. We do not anticipate that the existence of the Tax Receivable Agreement, or payments to be made thereunder, will impact our effective tax rate which is estimated to be approximately 38% to 42% both during and after the period we will be subject to the Tax Receivable Agreement. The expansion of our international operations may cause our effective tax rate to fluctuate and be different than expected.
Furthermore, federal and state laws impose substantial restrictions on the utilization of NOL carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Code. Under the rules, such an ownership change is generally any change in ownership of more than 50 percent of a company’s stock within a rolling three-year period, as calculated in accordance with the rules. The rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning directly or indirectly 5% or more of the stock of the company and any change in ownership arising from new issuances of stock by the company.
At this time, we have not performed a detailed analysis under Section 382 of the Code to determine if the IPO Restructuring Transactions would constitute an ownership change. However, with this offering and other transactions that have occurred over the past three years, we may trigger or have already triggered an “ownership change” limitation. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable
 
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income, our ability to use our pre-change NOL carry-forwards (after giving effect to payments to be made to the Pre-IPO Stockholders under the Tax Receivable Agreement) to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. Notwithstanding the foregoing, our preliminary analysis under Section 382 of the Code indicates that the IPO Restructuring Transactions would not trigger an “ownership change” limitation.
Vince, LLC Results of Operations

 	 	Fiscal Year	 	 	Percentage of Net Sales	 	
 	 	2010	 	 	2011	 	 	2012	 	 	    2010    	 	 	    2011    	 	 	    2012    	 	
(In thousands, except store counts,
percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Statements of Operations:	 				 				 				 				 				 				
Net sales	 	$	111,492	  	 	$	175,255	  	 	$	240,352	  	 	 	100.0	% 	 	 	100.0	% 	 	 	100.0	% 	
Cost of products sold	 	 	55,695	  	 	 	89,545	  	 	 	132,156	  	 	 	50.0	% 	 	 	51.1	% 	 	 	55.0	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	55,797	  	 	 	85,710	  	 	 	108,196	  	 	 	50.0	% 	 	 	48.9	% 	 	 	45.0	% 	
Operating expenses:	 				 				 				 				 				 				
Selling, general and administrative expenses	 	 	32,704	  	 	 	42,148	  	 	 	66,639	  	 	 	29.3	% 	 	 	24.1	% 	 	 	27.7	% 	
Amortization of intangible assets	 	 	598	  	 	 	599	  	 	 	598	  	 	 	0.5	% 	 	 	0.3	% 	 	 	0.3	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	33,302	  	 	 	42,747	  	 	 	67,237	  	 	 	29.8	% 	 	 	24.4	% 	 	 	28.0	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	22,495	  	 	 	42,963	  	 	 	40,959	  	 	 	20.2	% 	 	 	24.5	% 	 	 	17.0	% 	
Interest expense	 	 	7,172	  	 	 	15,004	  	 	 	22,903	  	 	 	6.5	% 	 	 	8.5	% 	 	 	9.5	% 	
Other expense, net	 	 	350	  	 	 	478	  	 	 	779	  	 	 	0.3	% 	 	 	0.3	% 	 	 	0.3	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	 	 	14,973	  	 	 	27,481	  	 	 	17,277	  	 	 	13.4	% 	 	 	15.7	% 	 	 	7.2	% 	
Provision for income taxes	 	 	5,923	  	 	 	10,812	  	 	 	6,964	  	 	 	5.3	% 	 	 	6.2	% 	 	 	2.9	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	 	8.1	% 	 	 	9.5	% 	 	 	4.3	% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Operating and Financial Data:	 				 				 				 				 				 				
Total stores at end of period	 	 	16	  	 	 	19	  	 	 	22	  	 				 				 				
Comparable store sales growth	 	 	9.3	% 	 	 	7.6	% 	 	 	23.1	% 	 				 				 				
Capital expenditures	 	$	1,602	  	 	$	1,450	  	 	$	1,821	  	 				 				 				

 	  	Six Months Ended	 	 	Percentage of Net Sales	 	
 	  	July 28, 2012	 	 	August 3, 2013	 	 	July 28, 2012	 	  	August 3, 2013	 	
(In thousands, except store counts,
percentages)	  	 	 	 	 	 	 	 	 	  	 	 	
 	  	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	  	(unaudited)	 	
Statements of Operations:	  				 				 				  				
Net sales	  	$	90,531	  	 	$	114,657	  	 	 	100.0%	  	  	 	100.0%	  	
Cost of products sold	  	 	50,119	  	 	 	63,506	  	 	 	55.4	  	  	 	55.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Gross profit	  	 	40,412	  	 	 	51,151	  	 	 	44.6	  	  	 	44.6	  	
Operating expenses:	  				 				 				  				
Selling, general and administrative expenses	  	 	27,057	  	 	 	33,954	  	 	 	29.9	  	  	 	29.6	  	
Amortization of intangible assets	  	 	299	  	 	 	300	  	 	 	0.3	  	  	 	0.3	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Total operating expenses	  	 	27,356	  	 	 	34,254	  	 	 	30.2	  	  	 	29.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Income from operations	  	 	13,056	  	 	 	16,897	  	 	 	14.4	  	  	 	14.7	  	
Interest expense	  	 	10,690	  	 	 	12,429	  	 	 	11.8	  	  	 	10.8	  	
Other expense, net	  	 	396	  	 	 	512	  	 	 	0.4	  	  	 	0.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Income before provision for income taxes	  	 	1,970	  	 	 	3,956	  	 	 	2.2	  	  	 	3.5	  	
Provision for income taxes	  	 	789	  	 	 	1,556	  	 	 	0.9	  	  	 	1.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net income	  	$	1,181	  	 	$	2,400	  	 	 	1.3%	  	  	 	2.1%	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Other Operating and Financial Data:	  				 				 				  				
Total stores at end of period	  	 	19	  	 	 	24	  	 				  				
Comparable store sales growth	  	 	13.9	% 	 	 	31.7	% 	 				  				
Capital expenditures	  	$	457	  	 	$	3,406	  	 				  				
 
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Non-GAAP Financial Measure
To provide investors with additional information about our financial results, we disclose within this prospectus Adjusted EBITDA, a non-GAAP financial measure. We have provided below a reconciliation between Adjusted EBITDA and net income. Net income is the most directly comparable GAAP financial measure.
We have included Adjusted EBITDA in this prospectus because we believe it enhances investors’ understanding of our operating results. Adjusted EBITDA is provided because management believes it is an important measure of financial performance commonly used to determine the value of companies, to define standards for borrowing from institutional lenders and because it is the primary measure used by management to evaluate our performance.
Some limitations of Adjusted EBITDA are:
 
 	Ÿ 	 	Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;	
 
 	Ÿ 	 	Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us;	
 
 	Ÿ 	 	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future; and	
 
 	Ÿ 	 	other companies may calculate Adjusted EBITDA differently or not at all, which reduces its usefulness as a comparative measure.	
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and Vince, LLC’s audited historical financial results presented elsewhere in this prospectus in accordance with GAAP.
The following table presents a reconciliation of Adjusted EBITDA to net income based on our combined statements of operations for each of the periods indicated:

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	 	 	 	 	 	 	 	 	 	July 28,	 	 	August 3,	 	
 	  	2010	 	 	2011	 	 	2012	 	 	2012	 	 	2013	 	
(in thousands)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA:	  				 				 				 				 				
Wholesale	  	$	39,353	  	 	$	63,171	  	 	$	73,515	  	 	$	27,932	  	 	$	32,072	  	
Direct-to-consumer	  	 	1,045	  	 	 	1,713	  	 	 	5,865	  	 	 	(698	) 	 	 	3,002	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment Adjusted EBITDA	  	 	40,398	  	 	 	64,884	  	 	 	79,380	  	 	 	27,234	  	 	 	35,074	  	
Unallocated Corporate Adjusted EBITDA	  	 	(16,761	) 	 	 	(20,698	) 	 	 	(27,860	) 	 	 	(11,974	) 	 	 	(13,572	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Adjusted EBITDA	  	 	23,637	  	 	 	44,186	  	 	 	51,520	  	 	 	15,260	  	 	 	21,502	  	
Interest expense (a)	  	 	(7,172	) 	 	 	(15,004	) 	 	 	(22,903	) 	 	 	(10,690	) 	 	 	(12,429	) 	
Provision for income taxes	  	 	(5,923	) 	 	 	(10,812	) 	 	 	(6,964	) 	 	 	(789	) 	 	 	(1,556	) 	
Depreciation and amortization expense	  	 	(1,492	) 	 	 	(1,701	) 	 	 	(2,009	) 	 	 	(921	) 	 	 	(1,106	) 	
Public company transition costs (b)	  	 	—  	  	 	 	—  	  	 	 	(9,331	) 	 	 	(1,679	) 	 	 	(4,011	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	$	1,181	  	 	$	2,400	  	

(a)	Interest expense for fiscal 2010, fiscal 2011 and fiscal 2012 and the six month periods ended July 28, 2012 and August 3, 2013 represents interest costs and amortization of debt issuance	
 
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 	costs on certain Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. We intend to enter into a new revolving credit facility and new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.	
(b)	Adjusted EBITDA does not include the impact of our public company transition costs and certain one-time costs of $9.3 million for fiscal 2012 and $4.0 million for the first six months of fiscal 2013. These costs include transition payments to our founders, charges that are directly attributable to this offering, incremental costs for external legal counsel and consulting fees incurred to effect the Restructuring Transactions and other one-time costs. These charges are excluded due to their non-recurring nature and ability to impact comparability to other periods.	
First Six Months of Fiscal 2013 Compared to First Six Months of Fiscal 2012
Net Sales for the first six months of fiscal 2013 were $114.7 million, increasing $24.2 million, or 26.6%, versus $90.5 million for the first six months of fiscal 2012. The increase in sales compared to the prior year is due to an increase in volume across both of our business segments.
Segment Results of Operations

 	  	Net Sales by Segment	 	  	Segment Adjusted EBITDA	 	
 	  	Six Months Ended	 	  	Six Months Ended	 	
 	  	July 28,
2012	 	  	August 3,
2013	 	  	July 28,
2012	 	 	August 3,
2013	 	
(in thousands)	  				  				  				 				
 	  	(unaudited)	 	  	(unaudited)	 	  	(unaudited)	 	 	(unaudited)	 	
Wholesale	  	$	78,064	  	  	$	92,551	  	  	$	27,932	  	 	$	32,072	  	
Direct-to-consumer	  	 	12,467	  	  	 	22,106	  	  	 	(698	) 	 	 	3,002	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  	$	90,531	  	  	$	114,657	  	  	$	27,234	  	 	$	35,074	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Net sales from our wholesale segment increased $14.5 million, or 18.6%, to $92.6 million in the first six months of fiscal 2013 from $78.1 million in the first six months of fiscal 2012. We increased volume with many of our premier wholesale partners through increased sales productivity in existing doors, including our first women’s shop-in-shop at Saks Fifth Avenue, opened in September 2012, and the opening of 13 new shop-in-shops with our domestic and international partners.
Segment Adjusted EBITDA from our wholesale segment increased $4.2 million, or 14.8%, to $32.1 million in the first six months of fiscal 2013 from $27.9 million in the first six months of fiscal 2012. This increase was driven primarily from a sales volume increase of $14.5 million and a decrease in operating expenses as a percentage of wholesale sales, partially offset by a reduction in the gross margin rate primarily due to one-time charges associated with the recording of inventory reserves. The decrease in operating expenses as a percentage of net wholesale sales resulted as our net wholesale sales grew at a rate greater than our expenses during fiscal 2013.
Net sales from our direct-to-consumer segment increased $9.6 million, or 77.3%, to $22.1 million in the first six months of fiscal 2013 from $12.5 million in the first six months of fiscal 2012. This sales growth was due to (i) comparable retail store sales growth of 31.7% contributing $3.1 million, or 32.0%, driven by a 24.4% increase in average dollar sale and a 7.3% increase in transactions, (ii) opening five
 
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stores (bringing our total retail store count to 24 as of August 3, 2013, compared to 19 as of July 28, 2012) contributing $4.7 million, or 48.9%, and (iii) e-commerce sales growth of 68.9% contributing $1.8 million, or 19.1%.
Segment Adjusted EBITDA from our direct-to-consumer segment was $3.0 million in the first six months of fiscal 2013 compared to $(0.7) million in the first six months of fiscal 2012. The $3.7 million increase resulted primarily from a sales volume increase of $9.6 million which more than offset the additional operating expenses incurred during the period to support the sales growth.
Cost of products sold for first six months of fiscal 2013 was $63.5 million, increasing $13.4 million, or 26.7%, versus $50.1 million for the first six months of fiscal 2012. The increase in costs of products sold is due to (i) additional volume contributing $11.9 million, or 88.9% and (ii) one-time charges to record inventory reserves for excess goods and raw materials purchased using prior inventory control management systems and processes contributing $1.5 million, or 11.1%.
Gross Profit/Gross Margin was 44.6% for the first six months of fiscal 2012 and the first six months of fiscal 2013. While the margin rate remained constant year over year, it was unfavorably impacted in fiscal 2013 by one-time inventory reserves for excess merchandise, which accounted for 130 basis points of decline, and increased margin assistance provided to our wholesale partners, which accounted for 54 basis points of decline. Favorable margin upside of 146 basis points was driven by a higher percentage of our sales coming from the direct-to-consumer segment, in which we generally recognize higher margins, and an increased percentage of full-price to off-price sales, which accounted for 38 basis points of upside.
Selling, general and administrative expenses for the first six months of fiscal 2013 were $34.0 million, increasing $6.9 million, or 25.5%, versus $27.1 million for the first six months of fiscal 2012. The increase in SG&A expenses compared to the prior year is primarily due to:
 
 	Ÿ 	 	Increased compensation expense of $1.1 million related to hiring and retaining certain key employees;	
 
 	Ÿ 	 	Increased occupancy and depreciation expense of $1.4 million due primarily to new retail store openings;	
 
 	Ÿ 	 	Increased design, development and marketing expenses of $2.4 million to support our brand awareness growth efforts and the opening of new retail stores; and	
 
 	Ÿ 	 	Increased corporate costs such as legal and audit fees of $2.0 million associated with preparing to become a public company.	
Amortization of intangible assets for the first six months of fiscal 2013 and fiscal 2012 were unchanged at $0.3 million.
Interest expense for the first six months of 2013 was $12.4 million, increasing $1.7 million, or 16.3%, versus $10.7 million for the first six months of 2012. Interest expense increased as we had higher average debt balances period over period. The increase in overall debt balances was primarily due to additional borrowings under the Sun Term Loan Agreements during the first six months of fiscal 2013 to fund capital spending and corporate costs associated with preparation for this offering, combined with the payment-in-kind feature of the interest recognized on these instruments.
Other expense, net for the first six months of fiscal 2013 and fiscal 2012 was largely unchanged at $0.5 million and $0.4 million, respectively.
Provision for income taxes for the first six months of fiscal 2013 was $1.6 million, increasing $0.8 million, or 97.2%, versus $0.8 million for the first six months of fiscal 2012. Our effective tax rate
 
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on pretax income for the first six months of fiscal 2013 and fiscal 2012 was 39.3% and 40.1%, respectively. The rates for the first six months of fiscal 2013 and the first six months of fiscal 2012 differed from the U.S. statutory rate of 34.0% primarily due to state taxes for the periods presented.
Fiscal Year 2012 Compared to Fiscal Year 2011
Net sales for fiscal 2012 were $240.4 million, increasing $65.1 million, or 37.1%, versus $175.3 million for fiscal 2011. The increase in sales compared to the prior year was due to volume increases across both of our business segments. Net sales for the fifty-third week of fiscal 2012 were approximately $0.6 million for the direct-to-consumer and $17.6 million for the wholesale segment, which represents approximately 7.5% of Vince, LLC’s net sales for fiscal 2012.
Segment Results of Operations

 	  	Net Sales by Segment	 	  	Segment Adjusted EBITDA	 	
 	  	Fiscal Year	 	  	Fiscal Year	 	
 	  	2011	 	  	2012	 	  	        2011        	 	  	        2012        	 	
(in thousands)	  				  				  				  				
Wholesale	  	$	151,921	  	  	$	203,107	  	  	$	63,171	  	  	$	73,515	  	
Direct-to-consumer	  	 	23,334	  	  	 	37,245	  	  	 	1,713	  	  	 	5,865	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	175,255	  	  	$	240,352	  	  	$	64,884	  	  	$	79,380	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales from our wholesale segment increased $51.2 million, or 33.7%, to $203.1 million in fiscal 2012 from $151.9 million in fiscal 2011, partially attributable to the expansion of the number of our wholesale doors by nearly 400 doors, or over 20% of our door base. This increase was also a result of increased sales volume with our four largest wholesale partners, which contributed $43.4 million, or 85%.
Segment Adjusted EBITDA from our wholesale segment increased $10.3 million, or 16.4%, to $73.5 million in fiscal 2012 from $63.2 million in fiscal 2011. This increase was driven primarily by a sales volume increase of $51.2 million in fiscal 2012, partially offset by a decrease in the gross margin rate as a result of higher cost of goods and increased margin assistance to our wholesale partners and higher operating expenses as a percentage of wholesale sales driven by increased compensation costs.
Net sales from our direct-to-consumer segment increased $13.9 million, or 59.6%, to $37.2 million in fiscal 2012 from $23.3 million in fiscal 2011. This sales growth was due to (i) comparable retail store sales growth of 23.1% contributing $4.4 million, or 31.4%, driven by a 16.0% increase in transactions and 7.1% increase in average dollar sale, (ii) opening three stores (bringing our total retail store count to 22 as of February 2, 2013, compared to 19 as of January 28, 2012) contributing $5.2 million, or 37.1%, and (iii) e-commerce sales growth of 103.4% contributing $4.4 million, or 31.6%.
Segment Adjusted EBITDA from our direct-to-consumer segment increased $4.2 million, or 242.4%, to $5.9 million in fiscal 2012 from $1.7 million in fiscal 2011. The increase was driven primarily by a sales volume increase of $13.9 million in fiscal 2012, which more than offset the additional expenses incurred during the period to support the sales growth.
Cost of products sold for fiscal 2012 was $132.2 million, increasing $42.6 million, or 47.6%, versus $89.5 million for fiscal 2011. The increase in costs of products sold is due to (i) additional volume contributing $21.9 million, or 51.4%, and (ii) increased material costs and a product assortment shift to more expensive but lower margin products contributing $20.7 million, or 48.6%.
 
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Gross Profit/Gross Margin decreased 389 basis points to 45.0% in fiscal 2012 from 48.9% in fiscal 2011. The decrease in gross margin was due primarily to additional margin assistance provided to our wholesale partners, which accounted for 169 basis points of decline but which we believe was a major contributor to volume growth. The margin rate was further impacted by shifts in our product mix and the use of more expensive but lower margin raw materials such as leather and furs, which accounted for 106 basis points of the decline. The balance of our margin decline, or 114 basis points, was attributable to the increased penetration of off-price sales to full-price sales.
Selling, general and administrative expenses for fiscal 2012 were $66.6 million, increasing $24.5 million, or 58.1%, versus $42.1 million for 2011. The increase in SG&A expenses compared to the prior year is primarily due to:
 
 	Ÿ 	 	Increased compensation expense of $15.1 million related to hiring and retention of certain key employees (including one-time transition payments of $6.4 million in the aggregate to our founders), and increased charges from expanded and dedicated resources in retail operations that were previously centralized at the Kellwood level;	
 
 	Ÿ 	 	Increased occupancy expense of $1.9 million due primarily to new retail store openings;	
 
 	Ÿ 	 	Increased design, development and marketing expenses of $1.9 million to support our brand awareness growth efforts and the opening of new retail stores; and	
 
 	Ÿ 	 	Increased corporate costs, such as legal and audit fees, of $2.7 million associated with preparing to become a public company.	
Amortization of intangible assets for fiscal 2011 and fiscal 2012 was unchanged at $0.6 million in each period.
Interest expense for fiscal 2012 was $22.9 million, increasing $7.9 million, or 52.6%, versus $15.0 million for fiscal 2011. The increase was primarily due to higher average outstanding debt balances in fiscal 2012. Interest expense increased as we had higher average debt balances period over period, partially offset by a one-time charge of $1.7 million to write off debt issuance costs during the third quarter of fiscal 2011. The increase in overall debt balances was primarily due to (i) additional borrowings on the Sun Term Loan Agreements during fiscal 2012 to fund capital spending and corporate costs associated with preparations of this offering, combined with the payment-in-kind feature of the interest recognized on these instruments, and (ii) the full year impact of entering into the Cerberus Term Loan during the third quarter of fiscal 2011 to fund the fiscal 2011 cash purchase consideration payment of $58.5 million to CRL Group, LLC (“CRL Group”).
Other expense, net for fiscal 2012 and fiscal 2011 was $0.8 million and $0.5 million, respectively. The increase is primarily due to higher management fees payable to Sun Capital Management under the Management Services Agreement due to our increased revenue year over year.
Provision for income taxes for fiscal years 2012 and 2011 was an expense of $7.0 million and $10.8 million, respectively. Our effective tax rate on pretax income for fiscal 2012 and fiscal 2011 was 40.3% and 39.3%, respectively. The rates for the fiscal year 2012 and fiscal 2011 differed from the U.S. statutory rate of 34.0% primarily due to state taxes for the periods presented.
 
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Fiscal Year 2011 Compared to Fiscal Year 2010
Net sales for fiscal 2011 were $175.3 million, an increase of $63.8 million, or 57.2%, versus $111.5 million for fiscal 2010. The increase in sales compared to the prior year is due to an increase in volume across both of our business segments.
Segment Results of Operations

 	  	Net Sales by Segment	 	  	Segment Adjusted EBITDA	 	
 	  	Fiscal Year	 	  	Fiscal Year	 	
 	  	2010	 	  	2011	 	  	2010	 	  	2011	 	
(in thousands)	  				  				  				  				
Wholesale	  	$	95,798	  	  	$	151,921	  	  	$	39,353	  	  	$	63,171	  	
Direct-to-consumer	  	 	15,694	  	  	 	23,334	  	  	 	1,045	  	  	 	1,713	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	111,492	  	  	$	175,255	  	  	$	40,398	  	  	$	64,884	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales from the wholesale segment increased $56.1 million, or 58.6%, to $151.9 million in fiscal 2011 from $95.8 million in fiscal 2010, due largely to increased sales volume with our four largest wholesale partners, which contributed $42.8 million, or 76%. This increase was also partially attributable to the expansion of the number of our wholesale doors by over 200 doors, or 15% of our door base.
Segment Adjusted EBITDA from the wholesale segment increased $23.8 million, or 60.5%, to $63.2 million in fiscal 2011 from $39.4 million in fiscal 2010. This increase was driven primarily by a sales volume increase of $56.1 million and a decrease in operating expenses as a percentage of wholesale sales, partially offset by a gross margin rate reduction due to higher cost of goods and an increase in our off-price sales penetration. The decrease in operating expenses as a percentage of net wholesale sales resulted from our net wholesale sales growing at a greater rate than our expenses during fiscal 2011.
Net sales from our direct-to-consumer segment increased $7.6 million, or 48.7%, to $23.3 million in 2011 from $15.7 million in 2010. This sales growth was due to (i) comparable retail stores sales growth of 7.6% contributing $1.0 million, or 13.2%, driven by the strength of our existing and expanded product categories and the increasing recognition of the Vince brand by consumers; (ii) opening three stores (bringing our total retail store count to 19 as of January 28, 2012 from 16 as of January 28, 2011) contributing $4.1 million, or 53.3%, and (iii) e-commerce sales growth of 146.7% contributing $2.5 million, or 33.1%.
Segment Adjusted EBITDA from our direct-to-consumer segment increased $0.7 million, or 63.9%, to $1.7 million in fiscal 2011 from $1.0 million in fiscal 2010. The increase was due primarily to a sales volume increase of $7.6 million during fiscal 2011, which more than offset the additional expenses incurred during the period to support sales growth.
Cost of products sold for fiscal 2011 was $89.5 million, increasing $33.9 million, or 60.8%, versus $55.7 million for fiscal 2010. The increase in costs of products sold compared to the prior year is primarily due to (i) additional sales volume contributing $17.5 million, or 51.8%, and (ii) increased material costs and a product shift to more expensive products but lower margin items contributing $16.3 million, or 48.2%.
Gross Profit/Gross Margin decreased 114 basis points to 48.9% in fiscal 2011 from 50.0% in fiscal 2010. The decrease in gross margin was due to increased off-price wholesale sales, which decreased margin by 56 basis points, and the use of more expensive but lower margin raw materials such as leathers and furs in our products, which had a 58 basis point impact.
 
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Selling, general and administrative expenses for fiscal 2011 were $42.1 million, increasing $9.4 million, or 28.9%, versus $32.7 million for fiscal 2010. The increase in SG&A expenses compared to the prior year is primarily due to:
 
 	Ÿ 	 	Increased incentive compensation expense of $0.5 million related to the brand’s strong financial performance;	
 
 	Ÿ 	 	Increased occupancy expense of $1.7 million due primarily to new retail store openings;	
 
 	Ÿ 	 	Increased design, development and marketing expenses of $1.8 million to support our brand awareness growth efforts and the opening of new retail stores; and	
 
 	Ÿ 	 	Increased salaries, benefits, travel expenses, outside services and costs to support our information systems of $4.6 million due to increased focus on expanding our direct-to-consumer segment.	
Amortization of intangible assets for fiscal 2011 and fiscal 2010 was unchanged at $0.6 million in each period.
Interest expense for fiscal 2011 was $15.0 million, increasing $7.8 million, or 109.2%, from $7.2 million in fiscal 2010. Interest expense increased as we had higher average debt balances period over period, partially offset by a one-time charge of $1.7 million to write off debt issuance costs during the third quarter of fiscal 2011. The increase in overall debt balances was primarily due to (i) additional borrowings on the Sun Term Loan Agreements during fiscal 2011 to fund capital spending, combined with the payment-in-kind feature of the interest recognized on these instruments and (ii) entering into the Cerberus Term Loan during the third quarter of fiscal 2011.
Other expense, net for fiscal 2011 and fiscal 2010 was $0.5 million and $0.4 million, respectively, for management fees payable to Sun Capital Management under the Management Services Agreement.
Provision for income taxes for fiscal years 2011 and 2010 was an expense of $10.8 million and $5.9 million, respectively. Our effective tax rate on pretax income for fiscal 2011 and fiscal 2010 was 39.3% and 39.6%, respectively. The rates for the fiscal year 2011 and fiscal 2010 differed from the U.S. statutory rate of 34.0% primarily due to state taxes for the periods presented.
 
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Quarterly Financial Data
The following table presents our unaudited quarterly results of operations for the ten fiscal quarters ended August 3, 2013. This information includes all adjustments, consisting only of normal recurring adjustments that management considers necessary for the fair presentation of such data. This quarterly data should be read in conjunction with our audited financial statements and related notes. Our historical unaudited quarterly consolidated results of operations are not necessarily indicative of results for any future fiscal quarters or fiscal years.

 	 	Three Months Ended	 	
 	 	April 30,
2011	 	 	July 30,
2011	 	 	October 29,
2011	 	 	January 28,
2012	 	 	April 28,
2012	 	 	July 28,
2012	 	 	October 27,
2012	 	 	February 2,
2013	 	 	May 4,
2013	 	 	August 3,
2013	 	
(In thousands,
unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	25,993	  	 	$	43,492	  	 	$	57,459	  	 	$	48,311	  	 	$	33,376	  	 	$	57,155	  	 	$	76,990	  	 	$	72,831	  	 	$	40,363	  	 	$	74,294	  	
Cost of products sold	 	 	12,715	  	 	 	21,609	  	 	 	28,931	  	 	 	26,290	  	 	 	18,599	  	 	 	31,520	  	 	 	41,872	  	 	 	40,165	  	 	 	22,850	  	 	 	40,656	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	13,278	  	 	 	21,883	  	 	 	28,528	  	 	 	22,021	  	 	 	14,777	  	 	 	25,635	  	 	 	35,118	  	 	 	32,666	  	 	 	17,513	  	 	 	33,638	  	
Selling, general and administrative expenses	 	 	9,100	  	 	 	10,414	  	 	 	10,498	  	 	 	12,136	  	 	 	12,323	  	 	 	14,734	  	 	 	19,406	  	 	 	20,176	  	 	 	15,456	  	 	 	18,498	  	
Amortization of intangible assets	 	 	150	  	 	 	149	  	 	 	150	  	 	 	150	  	 	 	149	  	 	 	150	  	 	 	150	  	 	 	149	  	 	 	150	  	 	 	150	  	
Interest expense	 	 	2,649	  	 	 	2,839	  	 	 	5,289	  	 	 	4,227	  	 	 	4,887	  	 	 	5,803	  	 	 	6,059	  	 	 	6,154	  	 	 	6,025	  	 	 	6,404	  	
Other expense, net	 	 	117	  	 	 	118	  	 	 	118	  	 	 	125	  	 	 	193	  	 	 	203	  	 	 	193	  	 	 	190	  	 	 	125	  	 	 	387	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before provision for income taxes	 	 	1,262	  	 	 	8,363	  	 	 	12,473	  	 	 	5,383	  	 	 	(2,775	) 	 	 	4,745	  	 	 	9,310	  	 	 	5,997	  	 	 	(4,243	) 	 	 	8,199	  	
Provision for income taxes	 	 	503	  	 	 	3,320	  	 	 	4,949	  	 	 	2,040	  	 	 	(1,101	) 	 	 	1,890	  	 	 	3,748	  	 	 	2,427	  	 	 	(1,688	) 	 	 	3,244	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	759	  	 	$	5,043	  	 	$	7,524	  	 	$	3,343	  	 	$	(1,674	) 	 	$	2,855	  	 	$	5,562	  	 	$	3,570	  	 	$	(2,555	) 	 	$	4,955	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Our wide-range of merchandise and our strategy of carrying a broad selection but limited quantities of each item reduce our overall seasonality relative to other contemporary brands. Nevertheless, our business is mildly seasonal in nature and sales are generally the highest in the third and fourth fiscal quarters due to the year-end holiday season and lowest in the first and second fiscal quarters. As a result of this seasonality and generally because of variation in consumer spending habits, we experience fluctuations in net sales and EBITDA during the year.
We incurred certain public company transition and certain one-time costs during the last three quarters of fiscal 2012 and the first six months of fiscal 2013. Those costs totaled $9.3 million in fiscal 2012 and $4.0 million in the first six months of fiscal 2013, which were recorded in SG&A. These costs include transition payments to our founders, charges that are directly attributable to this offering, incremental costs for legal counsel and consulting fees incurred to effect the Restructuring Transactions and other one-time costs. Such costs incurred during the second, third and fourth quarters of fiscal 2012 were $1.7 million, $4.2 million and $3.4 million, respectively.
 
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Liquidity and Capital Resources
Our primary cash requirements are to support inventory purchases, working capital and capital expenditures for retail store expansion and remodeling. Historically, we were financed as part of Kellwood Company. Interest expense associated with a portion of Kellwood Company’s indebtedness, including under the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements, is included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. Vince, LLC will have no obligations under such debt (or under the 12.875% Notes, the 7.625% Notes or the 3.5% Convertible Notes which are also to be repaid by Kellwood Company, LLC with proceeds from the repayment of the Kellwood Note Receivable), after giving effect to the consummation of this offering and the application of the related proceeds.
Capital expenditures are expected to aggregate approximately $10.0 to $12.0 million in fiscal 2013, including approximately $5.0 million to $7.0 million for new and remodeled stores, approximately $1.0 to $2.0 million for wholesale shop-in-shop build-out, and the remainder for other corporate activities, including a new corporate headquarters and information technology enhancements.
Capital expenditures are expected to increase as we invest in the direct-to-consumer store expansion and wholesale shop-in-shop buildout. In fiscal 2014, we project capital expenditures to aggregate $9.0 to $11.0 million, including $4.0 to $6.0 million for new and remodeled stores, approximately $2.0 to $3.0 million on new and updated store-in-store locations and the remainder for other corporate activities.
We anticipate funding our cash requirements and growth initiatives primarily from internally generated cash flow from operations and availability under our new revolving credit facility. If our business fails to perform, to our expectations we may require additional liquidity resources or we may need to reduce our growth initiatives.
We intend to enter into a new $         million revolving credit facility and a new $         million term loan facility, with interest rates ranging from     % to     %, in connection with the consummation of this offering. We expect that our new credit facilities will contain significant restrictive covenants. These covenants may limit or impair our financing and operational flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements.
We expect that cash flow from operations, availability under our new credit and term loan facilities, and proceeds from this offering will be sufficient to fund our operations for at least the next 18 months.
 
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Operating Cash Flow Information

 	  	Fiscal Years	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Operating Activities:	  				 				 				 				 				
Net income	  	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	$	1,181	  	 	$	2,400	  	
Add (deduct) items not affecting operating cash flows:	  				 				 				 				 				
Depreciation	  	 	894	  	 	 	1,102	  	 	 	1,411	  	 	 	622	  	 	 	806	  	
Amortization of intangible assets	  	 	598	  	 	 	599	  	 	 	598	  	 	 	299	  	 	 	300	  	
Amortization of debt issuance costs	  	 	1,289	  	 	 	1,499	  	 	 	2,154	  	 	 	1,104	  	 	 	1,050	  	
Deferred income taxes	  	 	3,091	  	 	 	5,825	  	 	 	(2,050	) 	 	 	2,441	  	 	 	1,173	  	
Capitalized PIK interest	  	 	1,486	  	 	 	5,614	  	 	 	10,468	  	 	 	4,511	  	 	 	5,999	  	
Deferred debt issuance cost write-off	  	 	738	  	 	 	1,747	  	 	 	—	  	 	 	—	  	 	 	—	  	
Loss on disposition of property, plant and equipment	  	 	—	  	 	 	8	  	 	 	—	  	 	 	—	  	 	 	262	  	
Changes in assets and liabilities:	  				 				 				 				 				
Receivables, net	  	 	(4,423	) 	 	 	(12,174	) 	 	 	(7,457	) 	 	 	(10,366	) 	 	 	(5,972	) 	
Inventories, net	  	 	(3,987	) 	 	 	(2,592	) 	 	 	(8,360	) 	 	 	(10,905	) 	 	 	(9,118	) 	
Prepaid expenses and other current assets	  	 	(2,036	) 	 	 	(490	) 	 	 	(2,455	) 	 	 	(3,829	) 	 	 	(6,588	) 	
Accounts payable and accrued expenses	  	 	3,779	  	 	 	3,133	  	 	 	17,108	  	 	 	8,138	  	 	 	1,213	  	
Other assets and liabilities	  	 	30	  	 	 	350	  	 	 	900	  	 	 	468	  	 	 	307	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	  	$	10,509	  	 	$	21,290	  	 	$	22,630	  	 	$	(6,336	) 	 	$	(8,168	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Because we have been financed as part of Kellwood Company and cash is centrally managed by Kellwood Company, our cash balance as of August 3, 2013 was $0.1 million and represents retail store deposits.
Net cash provided by (used in) operating activities primarily consists of net income, adjusted for certain non-cash items including PIK interest on the Cerberus Term Loan and the Sun Term Loan Agreements depreciation, amortization and changes in deferred income taxes and the effects of changes in working capital and other activities.
Net cash used in operating activities for the first six months of fiscal 2013 was $8.2 million, which consisted of net income of $2.4 million, impacted by non-cash items of $9.6 million and cash used in working capital of $20.2 million. Net cash used in working capital primarily resulted from an increase in receivables, net of $6.0 million due to the timing of customer receipts as well as increases in inventories and prepaid expenses of $15.7 million due to anticipated retail store openings and shipments for the fall season. This was offset in part due to increases in our accounts payable and other accrued expenses of $1.2 million.
Net cash used in operating activities for the first six months of fiscal 2012 was $6.3 million, which consisted of net income of $1.2 million, impacted by non-cash items of $9.0 million and cash used in working capital of $16.5 million. Non-cash expenses included depreciation, amortization and PIK interest expense of $6.5 million, offset in part by a $2.4 million decrease in deferred income taxes. Net cash used in working capital primarily resulted from an increase in receivables, net of $10.4 million due to the timing of customer receipts as well as increases in inventories and prepaid expenses of $14.7 million due to anticipated shipments for the fall season. This was offset in part due to increases in our accounts payable and other accrued expenses of $8.1 million due to the timing of vendor payments.
Net cash provided by operating activities for fiscal 2012 was $22.6 million, which consisted of net income of $10.3 million, impacted by non-cash items of $12.6 million and cash used in working capital
 
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of $0.3 million. Non-cash expenses included depreciation, amortization and PIK interest expense of $14.6 million, offset in part by a $2.1 million decrease in deferred income taxes. Net cash used in working capital resulted primarily from an increase in receivables, net of $7.5 million due to timing of customer receipts and an increase in inventories, net of $8.4 million due to timing of inventory receipts. This was partially offset by an increase in our accounts payable and other accrued expenses of $17.1 million due to timing of payments to our vendors, as well as the accrual of $6.4 million in transition payment to our founders, which was subsequently paid during fiscal 2013.
Net cash provided by operating activities for fiscal 2011 was $21.3 million, which consisted of net income of $16.7 million, impacted by non-cash items of $16.4 million and cash used in working capital of $11.8 million. Non-cash expenses included depreciation, amortization and PIK interest expense of $8.8 million, the write-off of debt placement costs of $1.8 million, as well as a $5.8 million increase to deferred income taxes. Net cash used in working capital resulted from an increase in receivables, net of $12.2 million due to timing of customer receipts and increase in inventories, net of $2.6 million due to timing of inventory receipts. This was partially offset by an increase in our accounts payable and other accrued expenses of $3.1 million due to timing of payments to our vendors.
Net cash provided by operating activities for 2010 was $10.5 million, which consisted of net income of $9.1 million, impacted by non-cash items of $8.1 million and cash used in working capital of $6.6 million. Non-cash expenses included depreciation, amortization and PIK interest expense of $4.3 million, the write-off of debt placement costs of $0.7 million, as well as a $3.1 million increase to deferred income taxes. Net cash used in working capital primarily resulted from an increase in receivables, net of $4.4 million due to timing of customer receipts and an increase in inventories, net of $4.0 million due to timing of inventory receipts. This was partially offset by an increase in our accounts payable and other accrued expenses of $3.8 million due to timing of payments to our vendors.
Investing Cash Flow Information

 	  	Fiscal Years	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Investing Activities:	  				 				 				 				 				
Payments for capital expenditures	  	$	(1,602	) 	 	$	(1,450	) 	 	$	(1,821	) 	 	$	(457	) 	 	$	(3,406	) 	
Payments for contingent purchase price	  	 	(4,475	) 	 	 	(58,465	) 	 	 	(806	) 	 	 	(806	) 	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash used in investing activities	  	$	(6,077	) 	 	$	(59,915	) 	 	$	(2,627	) 	 	$	(1,263	) 	 	$	(3,406	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash used in investing activities.     Cash used in investing activities represents capital expenditures, primarily related to retail store build-outs, including leasehold improvements and store fixtures, and cash payments paid to CRL Group related to the acquisition of the Vince business as a result of achievement of performance goals as specified in the purchase agreement.
Cash used in investing activities increased $2.1 million from $1.3 million used in investing activities in the first six months of fiscal 2012 to $3.4 million used in investing activities in the first six months of fiscal 2013. The increase is primarily attributable to an increase in capital expenditures of $2.9 million as a result of timing of retail store construction.
Cash used in investing activities decreased $57.3 million from $59.9 million used in investing activities in fiscal 2011 to $2.6 million used in investing activities in fiscal 2012. The decrease is primarily attributable to the cash purchase consideration of $58.5 million paid to CRL Group related to the acquisition of the Vince business, offset by a small increase in capital expenditures.
 
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Cash used in investing activities increased $53.8 million from $6.1 million used in investing activities in fiscal 2010 to $59.9 million used in investing activities in fiscal 2011. The decrease is due to the cash purchase consideration paid to CRL Group during fiscal 2011 related to the acquisition of the Vince business.
Financing Cash Flow Information

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
(In thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Financing activities:	 				 				 				 				 				
Borrowing of short-term debt obligations	 	$	—	  	 	$	14,900	  	 	$	—	  	 	$	—	  	 	$	—	  	
Payments for short-term debt obligations	 	 	—	  	 	 	(14,900	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Borrowings of long-term loan obligations	 	 	22,393	  	 	 	79,900	  	 	 	30,000	  	 	 	30,000	  	 	 	5,000	  	
Payments for debt extinguishment	 	 	—	  	 	 	—	  	 	 	(15,000	) 	 	 	—	  	 	 	—	  	
Borrowings of revolving credit facilities	 	 	185,172	  	 	 	399,621	  	 	 	620,367	  	 	 	221,940	  	 	 	392,627	  	
Payments for revolving credit facilities	 	 	(127,576	) 	 	 	(368,995	) 	 	 	(623,806	) 	 	 	(205,404	) 	 	 	(356,809	) 	
Fees paid for amendments to credit facility	 	 	(3,644	) 	 	 	—	  	 	 	—	  	 	 	(114	) 	 	 	—	  	
Fees paid for short-term debt obligations	 	 	—	  	 	 	(101	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Fees paid for revolving credit facilities	 	 	—	  	 	 	(2,147	) 	 	 	(114	) 	 	 	(609	) 	 	 	32	  	
Fees paid for long-term loan obligations	 	 	—	  	 	 	(2,675	) 	 	 	(643	) 	 	 	(34	) 	 	 	(60	) 	
Distributions to Kellwood Company	 	 	(80,773	) 	 	 	(66,959	) 	 	 	(30,806	) 	 	 	(38,185	) 	 	 	(29,145	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	 	$	(4,428	) 	 	$	38,644	  	 	$	(20,002	) 	 	$	7,594	  	 	$	11,645	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities.     Net cash (used in) provided by financing activities primarily relates to distributions to Kellwood Company, borrowings and repayments of certain Kellwood Company’s short-term debt obligations, long-term debt obligations, revolving credit facilities, and debt issuance costs related thereto.
Historically, Kellwood Company provided all cash management functions on our behalf through a centralized treasury function. Substantially all of our cash balances were swept to Kellwood Company on a daily basis, where the cash is managed and invested by Kellwood Company. As a result, all charges from Kellwood Company are transacted through the centralized treasury function and are deemed to have been paid by us to Kellwood Company, in cash, during the period in which the charges are recorded. In addition, all of our cash receipts were advanced to Kellwood upon receipt. We consider all transactions with Kellwood Company to be financing activities, which are presented as one net amount.
Net cash provided by financing activities was $11.6 million in the first six months of fiscal 2013 due to net borrowings on the Wells Fargo Facility of $35.8 million and additional borrowings of $5.0 million on the Sun Term Loan Agreements, offset in part by distributions to Kellwood Company of $29.1 million. Net cash provided by financing activities was $7.6 million in the first six months of fiscal 2012 due to net borrowings on the Wells Fargo Facility of $16.5 million and additional borrowings of $30.0 million on the Sun Term Loan Agreements, offset in part by distributions to Kellwood Company of $38.2 million. Net cash (used in) provided by financing activities changed by $58.6 million from $38.6 million provided by financing activities in fiscal 2011 to $20.0 million used in financing activities in fiscal 2012. The change is primarily due to a decrease in net repayments on our revolving credit facilities of $3.4 million and borrowings on long-term loan obligations of $30.0 million, as well as $15.0 million in payments for debt extinguishment during fiscal 2012. This compares to net borrowings of $30.6 million on our revolving credit facilities and $79.9 million of long-term loan obligations during fiscal 2011. Finally, distributions to Kellwood Company decreased period over period. Net cash from financing activities changed by $43.1 million from $4.4 million used in financing activities in fiscal 2010
 
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to $38.6 million provided by financing activities in fiscal 2011. This increase is primarily due to increased net borrowings of long-term loan obligations of $57.5 million in fiscal 2011 as compared to fiscal 2010, as well as an increase in fees paid for borrowings of $4.9 million period over period. This compares to $80.0 million of borrowings and $3.6 million in related fees in fiscal 2010.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations and commitments as of February 2, 2013, and the effect such obligations will have on our liquidity and cash flows in future periods.
AHC has substantial indebtedness. Vince, LLC is a borrower party to a significant amount of this debt, with borrowings under the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. These debt instruments and the related interest expense are included in the Vince, LLC financial statements as Vince, LLC is a borrower party thereunder. Vince, LLC will have no obligations under such debt after giving effect to the consummation of this offering and the application of the related proceeds.
We intend to enter into a new revolving credit facility and new term loan facility in connection with the consummation of this offering and expect to incur interest expense on those at market rates prevailing at the time. We intend to borrow approximately $         million under our new term loan facility at that time. The interest expense of this borrowing, had it been incurred on the first day of fiscal 2012 or the first day of fiscal 2013, would have been $         million or $         million, respectively.

 	 	Future payments due by period(1)	 	
 	 	Less than
1 Year	 	 	1 – 3 Years	 	 	3 – 5 Years	 	 	After
5 Years	 	 	Total	 	
(In thousands)	 	 	 	
Operating lease obligations	 	$	6,613	  	 	$	13,599	  	 	$	12,501	  	 	$	17,335	  	 	$	50,048	  	
Employment contracts(2)	 	 	142	  	 	 	332	  	 	 	—	  	 	 	—	  	 	 	474	  	
Purchase commitments	 	 	16	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	16	  	
Kellwood Company’s Wells Fargo Facility(3)(4)	 	 	—	  	 	 	79,783	  	 	 	—	  	 	 	—	  	 	 	79,783	  	
Kellwood Company’s long-term debt— principal and PIK interest(4)(5)	 	 	—	  	 	 	152,675	  	 	 	—	  	 	 	—	  	 	 	152,675	  	
Kellwood Company’s long-term debt—cash interest(3)(4)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Tax Receivable Agreement(6)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	172,087	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	6,771	  	 	$	246,389	  	 	$	12,501	  	 	$	17,335	  	 	$	455,083	  	

(1)	In connection with consummation of this offering, Vince, LLC will enter into the Shared Services Agreement with Kellwood Company, LLC pursuant to which Kellwood will provide support services in various operational areas including, among other things, distribution, information technology and back office support (as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement”). We have excluded the amounts due under such agreement as from the table herein as we cannot precisely estimate the future payments to be made thereunder and timing thereof. However, we currently expect to pay between $8.0 million to $10.0 million on an annualized basis in the near to intermediate term after consummation of the IPO for services to be provided by Kellwood under the Shared Services Agreement.	
(2)	We have entered into agreements with certain employees to provide for relocation benefits.	
(3)	The cash interest commitment excludes cash interest on the Wells Fargo Facility and Cerberus Term Loan as the agreements contain variable interest provisions for which no reliable estimate of future payment amounts can be made. In connection with the consummation of this offering, we intend to enter into a new $         million revolving credit facility, with interest rates ranging from     % to     %.	
(4)	Payments under these instruments will not be required in any period after consummation of this offering, as most of the proceeds from this offering, along with the borrowings under our new term loan facility, will be used to repay the Kellwood Note Receivable. In turn, Kellwood Company, LLC will use a portion of the proceeds from such repayment to repay, discharge or repurchase a portion of Kellwood’s indebtedness (after giving effect to any indebtedness to be forgiven or a capital contribution to be made by Sun Capital or its affiliates) and will refinance the remainder. The remainder of such Kellwood Note Receivable proceeds will be used by Kellwood Company, LLC to (i) pay a restructuring fee equal to 1% of this offering to Sun Capital Management pursuant to the Management Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Management Fees,” and (ii) pay a debt recovery bonus of up to $6.0 million to our Chief Executive Officer, as described in “Additional	
 
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 	Information Related to Vince—Vince Executive Compensation—Employment Agreements.” It is currently estimated that the restructuring fee described in clause (i) above and payable to Sun Capital Management in connection with this offering will total $3.5 million.	
(5)	The 12.875% Notes, which totaled $143.2 million in aggregate principal amount (including capitalized PIK interest) as of February 2, 2013, are guaranteed by various AHC subsidiaries on a secured basis, including Vince, LLC. This security interest is contractually subordinated to security interests of lenders under the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. The 12.875% Notes contain certain customary provisions that, among other things, limit the ability of Kellwood Company and its restricted subsidiaries, which include Vince, LLC, to incur additional indebtedness, make certain restricted payments, dispose of assets or redeem or repurchase capital stock or prepay subordinated indebtedness. In the event that Kellwood Company fails to satisfy any of its obligations thereunder, Vince, LLC, as a subsidiary guarantor, shall be jointly and severally liable to satisfy such obligations (along with the other guarantors), until such time as its guarantee is discharged or released, which will occur in connection with the consummation of this offering.	
(6)	In connection with the consummation of this offering, Vince Holding Corp. will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders (as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement”). Although Vince, LLC is not the obligor under such agreement, we have included the total amount estimated to be due. We cannot, however, reliably estimate in which future periods these amounts would become due. The amount set forth in this line represents 85% of the value of these net tax assets.	
Inflation
While inflation may impact our sales and cost of goods sold, we believe the effects of inflation on our results of operations and financial condition are not significant. We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future.
Quantitative and Qualitative Disclosures About Market Risk
We do not believe that foreign currency risk, commodity price or inflation risks are expected to be material to our business or our consolidated financial position, results of operations or cash flows. All of our foreign sales and purchases are made in U.S. dollars. We will enter into a new $         million revolving credit facility and a new $         million term loan facility in connection with the consummation of this offering, with interest rates ranging from     % to     %. A 10% increase or decrease to the interest rate applicable to our new term loan facility would increase or decrease our annual interest expense on the $         million of indebtedness to be outstanding thereunder after the consummation of this offering by $         million. While we are still in preliminary discussions with potential arrangers and lenders with respect to the terms of the new credit facilities, interest thereunder will accrue at a specified floating rate plus a specified margin. We do not anticipate that interest rate changes thereunder will affect the fair market value of such indebtedness but will impact future earnings and cash flows, assuming other factors are held constant, as we do not expect to enter into interest rate hedges with respect to these new credit facilities.
Off-Balance Sheet Arrangements
Vince, LLC did not maintain any off-balance sheet arrangements during fiscal 2010, fiscal 2011, fiscal 2012 or the first six months of fiscal 2013.
Critical Accounting Policies and Estimates
Revenue Recognition .    Sales are recognized when goods are shipped in accordance with customer orders for the wholesale and e-commerce businesses, and at the time of sale to consumer for the retail business. The estimated amounts of sales discounts, returns and allowances are accounted for as reductions of sales when the associated sale occurs. These estimated amounts are
 
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adjusted periodically based on changes in facts and circumstances when the changes become known. Accrued discounts, returns and allowances are included as an offset to accounts receivable in the Vince, LLC’s audited financial statements included elsewhere in this prospectus.
Accounts Receivable—Reserves for Allowances.     Accounts receivable are recorded net of allowances for expected future chargebacks and margin support from wholesale partners. It is the nature of the apparel industry that suppliers like us face significant pressure from wholesale partners in the retail industry to provide allowances to compensate for their margin shortfalls. This pressure often takes the form of customers requiring us to provide price concessions on prior shipments as a prerequisite for obtaining future orders. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of our products at retail. To the extent our wholesale partners have more of our goods on hand at the end of the season, there will be greater pressure for us to grant markdown concessions on prior shipments. Our accounts receivable balances are reported net of expected allowances for these matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season in order to collect the receivables. We evaluate the allowance balances on a continual basis and adjust them as necessary to reflect changes in anticipated allowance activity. We also provide an allowance for sales returns based on historical return rates.
Accounts Receivable—Allowance for Doubtful Accounts.     We maintain an allowance for doubtful accounts receivable for estimated losses resulting from wholesale partners that are unable to meet their financial obligations. Our estimation of the allowance for doubtful accounts involves consideration of the financial condition of specific customers as well as general estimates of future collectability based on historical experience and expected future trends. The estimation of these factors involves significant judgment. In addition, actual collection experience, and thus bad debt expense, can be significantly impacted by the financial difficulties of as few as one customer.
Inventory Valuation .    Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost. Our products can be classified into two types: replenishment and non-replenishment. Replenishment items are those basics that are not highly seasonal or dependent on fashion trends. The same products are sold by retailers 12 months a year and styles evolve slowly. Retailers generally replenish their stocks of these items as they are sold. Only a relatively small portion of our business involves replenishment items.
The majority of our products consist of items that are non-replenishment as a result of being tied to a season. For these products, the selling season generally ranges from three to six months. The value of this seasonal merchandise might be sufficient for us to generate a profit over its cost throughout the season, but after its season a few months later the same inventory might be saleable at less than cost. The value may rise again the following year when the season in which the goods sell approaches—or it may not, depending on the level of prior year merchandise on the market and on year-to-year fashion changes.
The majority of out-of-season inventories may be sold to off-price retailers and other customers who serve a customer base that will purchase prior year fashions in addition to liquidation through our Vince outlets. The amount, if any, that these customers will pay for prior year fashions is determined by the desirability of the inventory itself as well as the general level of prior year goods available to these customers. The assessment of inventory value, as a result, is highly subjective and requires an assessment of the seasonality of the inventory, its future desirability, and future price levels in the off-price sector.
Many of our products are purchased for and sold to specific customers’ orders. Others are purchased in anticipation of selling them to a specific customer based on historical trends. The loss of
 
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a major customer, whether due to the customer’s financial difficulty or other reasons, could have a significant negative impact on the value of the inventory expected to be sold to that customer. This negative impact can also extend to purchase obligations for goods that have not yet been received. These obligations involve product to be received into inventory over the next one to six months.
Deferred Rent and Deferred Lease Incentives.     We lease various office spaces, showrooms and retail stores. Many of these operating leases contain predetermined fixed escalations of the minimum rentals during the original term of the lease. For these leases, we recognize the related rental expense on a straight-line basis over the life of the lease and record the difference between the amount charged to operations and amounts paid as deferred rent. Certain of our retail store leases contain provisions for contingent rent, typically a percentage of retail sales once a predetermined threshold has been met. These amounts are expensed as incurred. Additionally, we received lease incentives in certain leases. These allowances have been deferred and are amortized on a straight-line basis over the life of the lease as a reduction of rent expense.
Fair Value Assessments of Goodwill and Other Intangible Assets .    Goodwill and other indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if a triggering event occurs. We completed our annual impairment testing on our goodwill and indefinite-lived intangible assets during the fourth quarters of fiscal 2010, fiscal 2011 and fiscal 2012.
Goodwill represents the excess of the cost of acquired businesses over the fair market value of their identifiable net assets. As the acquisition by Kellwood Company of the net assets of Vince occurred prior to the current requirements of ASC Topic 805 Business Combinations , the additional purchase consideration paid to the former owners of Vince subsequent to the acquisition date was recorded as an addition to the purchase price, and therefore goodwill, once determined.
In September 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to ASC Topic 350 Intangibles-Goodwill and Other . Under this amendment, an entity may elect to perform a qualitative impairment assessment for goodwill. If adverse trends are identified during the qualitative assessment that indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is required. “Step one” of this quantitative impairment test requires that the fair value of the reporting unit be estimated and compared to its carrying amount. If the carrying amount exceeds the estimated fair value of the asset, “step two” of the impairment test is performed to calculate the impairment loss. An impairment loss is recognized to the extent the carrying amount of the reporting unit exceeds the implied fair value.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. The amendment is effective for annual and interim impairment tests for goodwill performed for fiscal years beginning after December 15, 2011. We adopted this amendment during fiscal 2012.
In fiscal 2012, we performed a qualitative assessment on the goodwill and determined that it was more likely than not that the carrying value of the reporting unit was greater than the fair value. In fiscal 2011, we performed “step one” of the impairment test for the goodwill rather than electing early adoption of the guidance noted above due to the additional capitalized contingent purchase price. We estimated the fair value of the reporting unit primarily based on an income approach, which uses discounted cash flow assumptions. The implied fair value of the reporting unit exceeded the book value. As such, we were not required to perform “step two” of the impairment test.
In July 2012, FASB issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite Lived Assets for Impairment . Under this amendment, an entity may elect to perform a qualitative impairment assessment for indefinite-lived intangible assets similar to the goodwill impairment testing guidance discussed above.
 
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An entity may pass on performing the qualitative assessment for an indefinite-lived intangible asset and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. The amendment is effective for annual and interim impairment tests for indefinite-lived intangible assets performed for fiscal years beginning after September 15, 2012. We early adopted this amendment during fiscal 2012.
In fiscal 2012, we elected to perform a qualitative assessment on indefinite-lived intangible assets and determined that it was more likely than not that the carrying value of the assets exceeded the fair value. In fiscal 2011, we performed “step one” of the impairment test for indefinite-lived intangible assets. We estimated the fair value of the indefinite-lived assets primarily based on a relief from royalty model, which uses revenue projections, royalty rates and discount rates to estimate fair value. The implied fair value of the assets exceeded the book value, as such we were not required to perform “step two” of the impairment test.
Determining the fair value of goodwill and other intangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. It is possible that estimates of future operating results could change adversely and impact the evaluation of the recoverability of the carrying value of goodwill and intangible assets and that the effect of such changes could be material.
Definite-lived intangible assets are comprised of customer relationships and are being amortized on a straight-line basis over their useful lives of 20 years.
Provision for income taxes .    We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria. We recognize tax positions in our consolidated balance sheets as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts.
Our operating results have historically been included in the U.S. federal and state income tax returns for AHC. Provision for income taxes in the Vince, LLC financial statements have been determined on a stand-alone basis (i.e., on a “separate return” basis). As such, we are required to assess the realization of our net deferred tax assets, the need for a valuation allowance and judgments on the recognition of tax benefits based on our own facts and circumstances and exclude from that assessment any impact of the overall results of AHC. We believe the assumptions underlying the allocation of income taxes are reasonable; however the amounts allocated for income taxes in the Financial Statements are not necessarily indicative of the income taxes that would have been recorded had Vince been a separate, stand-alone entity during the periods presented.
Recent Accounting Pronouncements
In September 2011 and July 2012, the FASB issued amendments to the Intangibles-Goodwill and Other topic of ASC. Under these amendments, an entity may elect to perform a qualitative impairment assessment for goodwill and indefinite-lived intangible assets. We adopted the provisions of these new standards during fiscal 2012.
 
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 VINCE BUSINESS
Vince is a prominent, high-growth contemporary apparel brand known for its modern, effortless style and everyday luxury essentials. The Vince brand is synonymous with a clean, timeless aesthetic, sophisticated design and superior quality. We believe these attributes have generated strong customer loyalty and allow us to hold a distinctive position among contemporary apparel brands. We also believe that we will achieve continued success by expanding our product assortment and distributing this expanded product assortment through our premier wholesale partners in the U.S. and select international markets, as well as through our growing number of branded retail locations and on our e-commerce platform.
The Vince brand was founded in 2002 with a collection of stylish women’s knits and cashmere sweaters that rapidly attracted a loyal customer base drawn to the casual sophistication and luxurious feel of our products. Over the last decade, Vince has generated strong sales momentum and has successfully grown to include a men’s collection in 2007, expanded denim, leather and outerwear lines in 2010 and women’s footwear, which was launched through a licensing partnership in 2012. Led by an experienced management team, Vince is evolving from a U.S. wholesale-driven women’s apparel business to a global, dual-gender, multi-channel lifestyle brand. We believe we have significant and visible growth opportunities that include:
 
 	Ÿ 	 	expanding the brand’s appeal with new product offerings;	
 
 	Ÿ 	 	increasing wholesale penetration and productivity in premier department stores and specialty stores;	
 
 	Ÿ 	 	opening new retail locations and improving productivity in existing Vince stores;	
 
 	Ÿ 	 	growing our e-commerce business;	
 
 	Ÿ 	 	selectively adding new points of distribution globally; and	
 
 	Ÿ 	 	building brand awareness to attract new customers.	
We serve our customers through a variety of channels that reinforce the Vince brand image. Our diversified channel strategy allows us to introduce our products to customers through multiple distribution points that are reported in two segments: wholesale and direct-to-consumer. Our wholesale segment is comprised of sales to premier department stores and specialty stores in the U.S. and in select international markets, with U.S. wholesale representing 76% of our fiscal 2012 sales and 70.4% of our sales in the first six months of fiscal 2013. We believe that our success in the U.S. wholesale segment and strong relationships with premier wholesale partners provide opportunities for continued growth. These growth initiatives include creating enhanced product assortments and brand extensions through both in-house development activities and licensing arrangements, as well as by continuing the build-out of Vince branded shop-in-shops in select wholesale partner locations. We also believe international wholesale, which represented 8% of net sales for fiscal 2012 and 10.3% of our net sales for the first six months of fiscal 2013, presents a significant growth opportunity as we strengthen our presence in existing geographies and introduce Vince in new markets globally.
In 2008, we began to broaden our distribution beyond the wholesale channel with the opening of our first retail store. Since then, we have expanded our direct-to-consumer presence, and as of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 free-standing Vince store locations. The direct-to-consumer segment also includes our website, www.vince.com , which was launched in 2008. The direct-to-consumer segment accounted for 16% of fiscal 2012 net sales and 19.3% of net sales in the first six months of fiscal 2013, and we expect sales from this channel to accelerate as we drive productivity in existing stores, open new stores and upgrade and re-launch our website in 2014.
 
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The strength of the Vince brand is exhibited through our growth trajectory:
 
 	Ÿ 	 	Total net sales of $111.5 million, $175.3 million and $240.4 million in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, representing year-over-year growth of 57.2% in fiscal 2011 and 37.1% in fiscal 2012, and total net sales of $90.5 million and $114.7 million in the first six months of fiscal 2012 and fiscal 2013, respectively, representing growth of 26.6% between the first six months of fiscal 2012 and fiscal 2013;	
 
 	Ÿ 	 	Comparable store sales growth of 9.3%, 7.6% and 23.1% in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, and of 13.9% and 31.7% in the first six months of fiscal 2012 and fiscal 2013, respectively;	
 
 	Ÿ 	 	Adjusted EBITDA of $23.6 million, $44.2 million and $51.5 million in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, representing year-over-year growth of 86.9% in fiscal 2011 and 16.6% in fiscal 2012, and Adjusted EBITDA of $15.3 million and $21.5 million in the first six months of fiscal 2012 and fiscal 2013, respectively, representing growth of 40.9% between the first six months of fiscal 2012 and fiscal 2013. See “Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC—Non-GAAP Financial Measures” for the definition of Adjusted EBITDA and a reconciliation from net income to Adjusted EBITDA; and	
 
 	Ÿ 	 	Net income of $9.1 million, $16.7 million and $10.3 million in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, and net income of $1.2 million and $2.4 million in the first six months of fiscal 2012 and fiscal 2013, respectively.	
Kellwood and Vince are both currently owned by the Pre-IPO Stockholders. After consummation of this offering, we will continue to have an ongoing relationship with Kellwood through the Shared Services Agreement, which will set out various services, such as distribution, information technology and back office support that Kellwood will provide us after this offering. These services will allow us to continue to benefit from Kellwood’s infrastructure, providing us with the necessary capabilities needed to meet the growing operational needs of our business. We have also agreed to pay 85% of the future tax benefits we expect to realize as a result of certain tax attributes related to the non-Vince businesses to the Pre-IPO Stockholders. See “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Tax Receivable Agreement.”
Our Competitive Strengths
Differentiated Brand for Everyday Luxury Essentials.     We believe that the Vince brand holds a distinct position in today’s marketplace driven by a premium product assortment that combines sophisticated comfort with contemporary and timeless fashion that can be worn virtually everyday. The Vince brand is distinguished by a refined, modern aesthetic with superior quality and attention to detail and fit. Our assortment features luxurious basics such as cashmere sweaters and silk blouses as well as more fashion-forward offerings including leather jackets, leather and suede leggings and fur-trimmed coats and vests. The premium nature of the Vince brand is reinforced through our highly selective wholesale partnerships with premier department stores and specialty stores and a retail strategy designed to ensure a consistent brand presentation and enhanced customer experience. We believe the enduring fashion and effortless style of the Vince brand, coupled with a pricing strategy that positions us as an affordable luxury, have created strong and proven global appeal.
Exceptional Customer Loyalty and Reach.     The quality, consistency and design of our products have attracted a loyal following among style-savvy consumers across a broad age demographic. Based on a 2012 third-party survey that we commissioned among 500 qualified consumers, Vince has high levels of brand affinity and purchase intent. Among women surveyed who are aware of Vince, 41% express that they “love” the brand, and 35% report that they are “highly likely” to purchase the brand within the next six months, representing the highest levels of affinity and purchase intent
 
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compared to 20 other peer brands included in the survey. While our target customer is between the ages of 30 and 50, we have successfully attracted fashion-conscious customers as young as 18 and customers over 55 who appreciate our brand’s sophistication and design aesthetic.
Established Network of Premier Wholesale Partners .    Vince is a leading brand in premier U.S. department stores, including Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s, as well as in select specialty stores nationwide. Based on industry experience we believe that in the majority of these U.S. department stores, Vince was a top selling brand on the contemporary floor in fiscal 2012 and the first six months of fiscal 2013. Our product offerings and brand also resonate with customers outside the U.S., as demonstrated by the strong growth experienced through premium international stores including Harrods and Harvey Nichols in both these periods and by Lane Crawford in the first six months of fiscal 2013. Our wholesale relationships enable us to gain access to a geographically diverse consumer base while simultaneously increasing awareness of the Vince brand. We are implementing initiatives to further drive wholesale productivity, including product line extensions and the transformation of additional Vince product displays at select department stores into branded shop-in-shops. By utilizing targeted strategies to capture additional dedicated floor space, we believe we can better showcase the Vince lifestyle and offer consumers a more personalized shopping experience while helping to ensure the consistency of the brand image through customized visual elements.
Scalable and Flexible Retail Format.     We opened our first retail location in 2008 and have since grown our retail footprint in the U.S. to a total of 26 stores, which consist of 21 full-price retail stores and 5 outlet locations, as of August 31, 2013. Our stores offer a personalized, service-oriented shopping experience in a boutique setting that reflects the lifestyle and modern aesthetic of the brand. We have a proven and flexible full-price retail format that targets both street and mall locations. These locations are selected based on rigorous financial, geographic and demographic criteria, and can accommodate both dual and single gender assortments. Our three outlet stores allow us to extend our reach to additional consumer groups. The strength of our retail channel is evidenced by the revenue growth across our existing store base, with 9.3%, 7.6% and 23.1% comparable store sales growth in fiscal 2010, fiscal 2011 and fiscal 2012, respectively, and 31.7% comparable store sales growth in the first six months of fiscal 2013. Given the increasing scale of our retail operations, we continue to invest in our infrastructure and appointed a new Senior Vice President, Retail and E-Commerce, in June 2012, to drive growth across our direct-to-consumer segment.
Experienced Management Team.     We have assembled a world-class management team with extensive experience across a broad range of disciplines including global brand building, merchandising, marketing, design, operations, retail, international, licensing and finance. Our highly skilled team is led by our CEO, Jill Granoff, who was previously CEO of Kenneth Cole Productions, our President, Karin Gregersen, who was previously Managing Director of Chloé/Richemont Americas, and our CFO, Lisa Klinger, who was previously CFO of The Fresh Market. Our CEO and CFO bring public company experience and, along with our President, are committed to the expansion of the brand and the profitable growth of the company.
Growth Strategy
Capitalize on New and Existing Product Opportunities.     We believe there are significant opportunities to capitalize on our strong customer loyalty and growing customer base by enhancing our current product assortment and introducing new product categories in order to provide additional reasons to shop the Vince brand. We plan to build sales of existing product categories by elevating our men’s collection, expanding our denim and outerwear collections, increasing our assortment of women’s bottoms and dresses and implementing a replenishment program for core items. Additionally, we continue to identify new product categories that will allow us to capture incremental share from existing customers and attract new customers. Categories already identified include handbags and
 
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leather accessories as well as more tailored collections for women and men. We also entered into a licensing agreement for women’s footwear, which launched in 2012, and signed a licensing agreement in 2013 for the launch of children’s apparel in 2014. We will continue to explore additional licensing opportunities for select categories requiring specialized expertise, such as intimates/loungewear, men’s footwear and fashion accessories.
Increase Wholesale Penetration.     In fiscal 2012 and the first six months of fiscal 2013, we grew our wholesale net sales in the U.S. by 35% compared to fiscal 2011. This revenue growth exceeded our growth of 17% in the number of wholesale doors during the same period, which illustrates our ability to improve productivity within existing locations. We believe we can continue to increase wholesale net sales by enhancing assortments in existing product categories, introducing new product categories and improving our visual presentation, space layout and fixtures. Working with our wholesale partners, we are planning to open 15 to 20 new branded shop-in-shops in fiscal 2013 and believe there is a an attractive opportunity to open additional shop-in-shops in 2014 and beyond. These shop-in-shops underscore the commitment of our wholesale partners to the Vince brand and are expected to generate a sales lift as we can better showcase the Vince lifestyle via customized presentations with branded fixtures and utilize a staff that is trained to offer a more elevated retail shopping experience.
Accelerate Growth of U.S. Direct-to-Consumer Segment.     As of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 Vince free-standing store locations. We plan to double our current store base over the next three to five years, including opening net six new stores in fiscal 2013. Our new full-price store model ranges from 2,000 to 3,000 gross square feet, and we target a payback period on our new store investments of two to three years. In addition to new store expansion, we also have an opportunity to increase productivity in our existing stores through enhanced merchandising with a focus on a broad lifestyle presentation, personalized customer service strategies, the launch of new product categories, improved inventory management and the expansion of made-for-outlet product. We believe our e-commerce strategy, which is focused on increasing brand awareness, customer traffic and conversion, creates additional opportunities for growth. As a component of this strategy, we intend to upgrade and re-launch our www.vince.com website in 2014 to offer a more compelling shopping experience and richer content to allow consumers to more fully engage with the brand on a more frequent basis.
Expand Our International Business.     Given increasing worldwide demand for affordable luxury goods, targeted international expansion represents a compelling growth opportunity. Our success in our current international markets demonstrates how our modern, sophisticated style resonates globally. Vince products are currently sold in 43 countries, either directly to premier department and specialty stores, or through distribution relationships with highly-regarded international partners with exclusive rights to certain territories. As of August 31, 2013, we had seven international shop-in-shops. We believe we can increase international sales by supplementing existing distribution partnerships, increasing wholesale penetration and productivity and selectively adding retail locations with current and prospective partners in attractive international markets including Canada, select European countries, Asia and the Middle East.
Build Our Brand Awareness.     Vince has a significant opportunity to increase brand awareness and drive incremental sales. Based on a 2012 third-party consumer survey we commissioned, Vince has aided brand awareness of 20% compared to 30% to 50% for other contemporary brands and approximately 75% to 90% for brands like Michael Kors, Diane von Furstenburg and Ralph Lauren. Aided brand awareness is when a respondent indicates recognition of a specific brand from a list of possible names presented by those conducting the survey instead of indicating recognition of a specific brand without being offered a list of potential responses. Our low awareness level, coupled with the
 
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high affinity and purchase intent we have among existing consumers, underscores what we believe is a significant growth opportunity to convert potential new customers to loyal brand enthusiasts. To address this opportunity, we intend to increase our marketing investment across a range of strategic initiatives including cooperative advertising with wholesale partners, print media, digital media, editorial coverage, direct mail, search engine optimization, social media initiatives, targeted product placement, celebrity outreach and in-store events. We also believe our brand awareness will increase as we open new retail stores in prominent, high-visibility locations, increase the number of shop-in-shops at our wholesale partner locations and upgrade and re-launch our www.vince.com website.
Our Market Opportunity
We operate in the global personal luxury goods industry. According to the Bain Studies, which defines such market to include design, hospitality, wines & spirits, foods, cars and yachts:
 
 	Ÿ 	 	the global personal luxury goods market grew at a compound annual growth rate of 11% for fiscal 2010 through fiscal 2012 (the periods through which we disclose summary historical financial data in this prospectus);	
 
 	Ÿ 	 	the global personal luxury goods market is expected to grow at approximately 4% to 5% in 2013, and at a 5% to 6% compounded annual growth rate over the next few years, reflecting a growing middle class possessing increased purchasing power in select international markets, increased demand for higher-end apparel and leather goods, and growing demand for luxury goods in China and South-East Asia;	
 
 	Ÿ 	 	within the global personal luxury goods market, apparel and accessories are the largest categories, accounting for 26% and 27%, respectively, of total spending as of 2012; and	
 
 	Ÿ 	 	the global luxury apparel category grew at an annual growth rate of 10%, with estimated sales of approximately $68 billion, in 2012.	
According to the Bain Studies, the global women’s ready-to-wear category totaled $33 billion in 2011, an 8% increase from 2010, driven by outperformance of strong brands and fashion trends including furs and fur-wear. The global men’s ready-to-wear category totaled $32 billion in 2011, a 9% increase from 2010, as more brands, department stores and online players focused on men through dedicated concepts. We believe we are well positioned to continue to benefit from growth in both categories as we enhance our existing product offerings and expand into new categories in both women’s and men’s apparel.
In addition, according to the Bain studies, the Americas luxury market grew at an annual growth rate of 5%, with estimated sales of approximately $81 billion in 2012. U.S. growth continues to be driven by increased consumer confidence, the growing importance of omni-channel shopping, strong performance of department stores, the main personal luxury distribution channel where we have a strong presence, and increased tourist and destination-based shopping for luxury goods. We believe we are well-positioned to continue to take market share in the U.S. market as we expand our product assortment and grow our store base.
Company History
Vince was founded in Los Angeles in 2002 by Rea Laccone and Christopher LaPolice. In 2006, the Vince business was sold to Kellwood Company, which was later acquired by affiliates of Sun Capital in 2008. Over the last decade, Vince has experienced strong sales momentum and has begun to evolve from a U.S. wholesale-driven women’s apparel business into a global dual-gender, multi-channel lifestyle brand. This is evidenced by our successful expansion into new product categories, the growth of our direct-to-consumer business, and the acceptance and appeal of the Vince brand in many
 
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international markets. In order to prepare for the next phase of growth, we carefully planned and orchestrated a management transition and built our retail, wholesale and international teams to enhance our talent and capabilities. Key leadership appointments are outlined below:
 
 	Ÿ 	 	Jill Granoff as CEO, bringing over 25 years of industry and strategic leadership experience, including most recently as CEO of Kenneth Cole Productions. Ms. Granoff previously held senior executive roles at Liz Claiborne, Victoria’s Secret and Estée Lauder;	
 
 	Ÿ 	 	Lisa Klinger as CFO, bringing 24 years of relevant financial experience, including most recently as the EVP—CFO of The Fresh Market where she helped to lead The Fresh Market through its successful IPO in 2010. Ms. Klinger previously held senior financial management positions at Michaels Stores and Limited Brands;	
 
 	Ÿ 	 	Karin Gregersen as President, bringing 19 years of industry experience in the designer and contemporary segments, including most recently as Managing Director of Chloé/Richemont Americas. Ms. Gregersen brings merchandising, marketing and business development expertise that will support Vince’s continued evolution into a global lifestyle brand; and	
 
 	Ÿ 	 	Doo-Ri Chung as Creative Director, bringing 18 years of design experience, including most recently as creative director at her own fashion label and as the first assistant to Geoffrey Beene. Ms. Chung has a long list of accomplishments including winning multiple Council of Fashion Designers of America (“CFDA”) awards, such as the CFDA/Swarovski Perry Ellis Award and the CFDA/Vogue Fashion Fund Award.	
Our Brand and Products
Since our inception in 2002, we have offered contemporary apparel with a focus on clean and authentic design and superior quality. We believe that our differentiated design aesthetic and strong attention to detail and fit allow us to maintain premium pricing, and that the combination of quality and value positions Vince as an everyday luxury brand that encourages repeat purchases among our customers.
Over 85% of Vince’s net sales were comprised of women’s products with particular strength in sweaters and knit tops in fiscal 2012 and the first six months of fiscal 2013. Our women’s line includes seasonal collections of luxurious cashmere sweaters and silk blouses, leather and suede leggings and jackets, dresses, denim, tanks and t-shirts and a growing assortment of outerwear. Our men’s collection includes t-shirts, woven tops, sweaters, denim, pants, blazers, outerwear and stylish leather jackets.
We have identified additional brand extension opportunities, including elevating and expanding our men’s collections, denim offerings, outerwear, women’s bottoms and dress product lines and implementing a replenishment program for core items. In addition to apparel, we currently offer women’s footwear through a licensing arrangement and are preparing to launch children’s apparel in 2014 with another licensing partner. We are also evaluating other brand extension opportunities through both in-house development activities and licensing arrangements with third parties.
Business Segments
Wholesale Segment
We began in 2002 as a wholesale business, and we continue to sell our products through premier department stores and select specialty stores in the U.S. and targeted international markets.
 
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Wholesale distribution is an important component of our overall strategy as it provides access to customers in a variety of geographic areas. Our three largest wholesale partners, which include Nordstrom, Saks Fifth Avenue and Neiman Marcus, each accounted for more than 10% of our total revenue for fiscal 2011, 2012 and the first six months of fiscal 2013. We work closely with our wholesale partners to ensure consistent product presentation across all channels. We do not have written agreements with any of these wholesale partners. Prices are set by the company and communicated to accounts during market. As such, purchases from our wholesale partners generally occur on an order-by-order basis. As a result we generally have less certainty into our required levels of inventory and run a greater risk of producing unsalable inventory than if we were creating such products under long term contractual commitments. We believe, however, that operating on a purchase order basis is very common in the apparel industry and that the timeless nature of our fashions helps partially insulate us from this risk. Between fiscal 2010 and 2012, we grew our wholesale business more than 30% annually, with the entire wholesale segment accounting for $203.1 million, or 84% of total net sales, in fiscal 2012. We grew our wholesale business more than 18.6% between the first six months of fiscal 2012 and the first six months of 2013, with the entire wholesale channel accounting for $92.6 million, or 80.7% of total net sales, during the first six months of fiscal 2013.
United States.     Premier department stores and select specialty stores are a significant distribution channel in the U.S. for Vince. Our top four wholesale partners, based on sales, are Nordstrom, Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s. We believe we have significant opportunities to increase our wholesale productivity through enhanced product assortments, brand extensions and the build-out of shop-in-shops in select locations. As of August 31, 2013 we had seven shop-in-shops with our U.S. wholesale partners. We expect to add 15 to 20 new shop-in-shops in fiscal 2013, and we believe there is continued opportunity to open additional shop-in-shops with key wholesale partners in fiscal 2014 and beyond.
International .    We believe the Vince brand, with its distinctive designs, sophisticated comfort and superior quality, resonates with customers globally, and, based on sales in recent periods, we believe that international expansion offers a significant growth opportunity. Vince products are currently sold in 43 countries. As of August 31, 2013, we had seven international shop-in-shops. We have established direct relationships with premier department stores, such as Harrods, Harvey Nichols and Lane Crawford, specialty stores and highly-regarded distribution partners with exclusive rights to certain territories outside the U.S. We believe we can continue to drive growth in our current markets such as Canada, select European countries, Asia and the Middle East by improving our wholesale penetration and productivity and selectively adding new retail locations. We are also pursuing attractive growth opportunities in new geographies such as the Middle East and select European countries where we plan to supplement and elevate our existing presence by forming strategic alliances with highly regarded distribution partners.
Licensing .    We believe the establishment of strong licensing partnerships will be a contributor to future growth. In fiscal 2012, we signed our first licensing agreement for Vince footwear, a segment which we believe offers significant growth potential. Our footwear is sold in our own stores and by our licensee to select wholesale partners, and we earn a royalty based on total net sales through our wholesale partners. We are continuously evaluating new licensing opportunities for categories requiring specialized expertise to accelerate the growth of our brand. We have signed a licensing agreement to launch children’s apparel in 2014 and continue to evaluate new categories including intimates/loungewear, men’s footwear and fashion accessories. We are, and will continue to be, integrally involved in the design of all our licensed products and the approval of related marketing, distribution and other branding decisions.
 
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Direct-to-Consumer Segment
Our direct-to-consumer segment is critical to expanding brand recognition and reinforcing the Vince image. It also presents a key near-term growth opportunity in the U.S. The direct-to-consumer segment currently generates sales through full-price retail stores, outlet stores and our e-commerce platform. We opened our first retail store in 2008, and as of August 31, 2013, we operated 26 stores, which consist of 21 full-price retail stores and 5 outlet locations. Our retail stores, together with our website, collectively accounted for $37.2 million, or 16%, of total net sales in fiscal 2012 and accounted for $22.1 million, or 19.3%, of total net sales in the first six months of fiscal 2013. We plan to double our store base over the next three to five years, including opening net six new stores in fiscal 2013. Based on a combination of third-party analyses and internal projections, we believe the U.S. market can currently support at least 100 free-standing Vince store locations. In addition, we have built a successful and growing e-commerce business that allows us to expand our customer base and to market and distribute Vince products more broadly and cost-effectively. We believe our e-commerce channel, including mobile technology, represents a key growth driver over the mid- to long-term.
Full-Price Retail .    Our full-price retail stores offer a personalized, service-oriented shopping experience in a boutique setting that reflects the clean, modern aesthetic of the brand. Our new stores are designed by the world-class design firm Marmol Radziner, known for its award-winning retail spaces. Vince boutiques combine sophisticated, elevated design elements such as warm lighting and rich palettes that include reclaimed oak floors, leather, suede and velvet upholstery as well as architectural wood and metal cube fixtures that showcase our product. Our stores carry a wide range of women’s, and in some cases men’s, merchandise and provide a venue in which to test new products and brand extension initiatives. Vince retail stores are strategically selected to best position the brand and avoid cannibalization with the wholesale segment while also maximizing foot traffic among our targeted demographics. Our full-price retail stores are located on high-end shopping streets and in upscale shopping malls. Our new full-price store model ranges from 2,000 to 3,000 gross square feet, and we target a payback period on our new store investments of two to three years.
Outlet .    Our outlet stores provide us with an opportunity to reach additional customer segments and also act as a vehicle to sell excess and seasonal inventory outside of our full-price wholesale and retail channels, while controlling the product pricing, presentation and customer experience in a brand-right manner. We currently operate five outlet locations in premium outlet centers. We believe we have significant opportunity to grow our outlet store business through the combination of new store openings and improved productivity in existing outlet locations by introducing enhanced product assortments, including products specifically designed for the outlet channel.
E-Commerce .    We launched our website, www.vince.com , in 2008 and achieved 103% sales growth in fiscal 2012 compared to fiscal 2011 and 68.9% sales growth in the first six months of fiscal 2013 compared to the first six months of fiscal 2012. We are preparing to upgrade and re-launch our website in 2014 to enhance the customer experience through improved website functionality and product presentation, a greater focus on head-to-toe styling and the introduction of editorial content to increase customer engagement and visit frequency. Our website serves as an extension of the Vince brand, allowing us to market directly to consumers, and acts as a storefront where consumers can find the entire Vince collection.
Design and Merchandising
Our product design and merchandising efforts are led by our President, Karin Gregersen, our Creative Director, Doo-Ri Chung, and a team of designers and merchandisers based in Los Angeles. Ms. Gregersen has extensive experience in the designer and contemporary markets and oversees our design and merchandising teams. Ms. Chung, a multiple CFDA award winner, and the design team are
 
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focused on developing an elevated collection of Vince apparel and accessories that build upon the brand’s product heritage of modern, effortless style and everyday luxury essentials. The current design vision is to create a cohesive and compelling lifestyle product assortment with sophisticated head-to-toe looks for multiple wear occasions. Our design efforts are supported by well-established product development and production teams and processes that allow us to bring new products to market quickly. We are looking to further build our merchant capabilities and believe continued collaboration between design and merchandising will ensure we respond to consumer preferences and market trends with new innovative product offerings while maintaining our core fashion foundation.
Marketing, Advertising and Public Relations
We use marketing, advertising and public relations as critical tools to deliver a consistent brand message. Our marketing is focused on showcasing our product and a sophisticated style, as well as building an emotional connection with the customer. The Vince brand image is developed and cultivated by dedicated creative marketing, visual merchandising and public relations teams that, along with the Vince design team and select outside agencies, work closely to ensure consistency of the brand message across various consumer touchpoints.
We engage in a wide range of direct marketing programs that include traditional media (direct mail, print advertising, cooperative advertising with wholesale partners and outdoor advertising), digital media (email, web) and social media (Facebook, Instagram and Pinterest) to drive traffic across channels. We believe our customers will continue to be receptive to our marketing and social media efforts, which, in management’s opinion, have presented us with a strong new marketing channel to reach existing and prospective customers. We use Facebook as the main social media hub to generate conversation about the brand through daily lifestyle posts, focusing on product launches, style tips and in-store events. Social media platforms like Instagram allow us to tell our brand story creatively by offering behind-the-scenes access to events, press reviews and the Vince showroom, as well as featuring Vince enthusiasts wearing our products. In addition, the growing number of visits to www.vince.com , which totaled 1.7 million in fiscal 2012, representing a 42% increase from fiscal 2011, provides an opportunity to grow our customer base and communicate directly with our customers.
Our public relations team conducts a wide variety of press activities to reinforce the Vince brand image and create excitement around the brand. Vince apparel has appeared in the pages of major fashion magazines such as Vogue, Harper’s Bazaar, Elle, W, GQ, Esquire and Vanity Fair . Well-known trend-setters in entertainment and fashion are also regularly seen wearing the brand.
Sourcing and Manufacturing
Vince does not own or operate any manufacturing facilities. We contract for the purchase of finished goods with manufacturers who are responsible for the entire manufacturing process, including the purchase of piece goods and trim. Although we do not have written contracts, we have long-standing relationships with a diverse base of vendors which we believe to be mutually satisfactory. We work with over 30 manufacturers across five countries, with 70% and 73% of our products produced in China in fiscal 2012 and the first six months of fiscal 2013, respectively. For cost and control purposes, we contract with select third-party vendors in the U.S. to produce a small portion of our merchandise that includes woven bottoms and products manufactured with man-made fibers.
All of our garments are produced according to our specifications, and we require that all of our manufacturers adhere to strict regulatory compliance and standards of conduct. Our factories are monitored annually by our production team to ensure quality control, and they are monitored by independent third-party inspectors we employ for compliance with local manufacturing standards and
 
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regulations on an annual basis. Our quality assurance staff in the U.S. and Asia also monitors our manufacturing facilities regularly, providing technical assistance and performing in-line and final audits to ensure the highest possible quality.
Distribution Facilities
Kellwood will continue to provide distribution facilities and services in the U.S. pursuant to the Shared Services Agreement, as described in “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Shared Services Agreement.” These services include distribution, storage and fulfillment. Kellwood will continue to provide these services until such time as we elect to terminate the provision of such services in accordance with the terms of the Shared Services Agreement.
As of August 31, 2013, we operated out of three distribution centers, two located in the U.S. and one in Belgium. The primary warehouse, located in City of Industry, California, includes 75,000 square feet dedicated to fulfilling orders for our wholesale partners and retail locations. An adjacent warehouse spanning 22,000 square feet supports Vince’s e-commerce business and offers additional capacity to support our projected growth over the next several years. Our space in both of the California warehouses utilize state-of-the-art warehouse management systems that are fully customer and vendor compliant and are completely integrated with our ERP and accounting systems.
The warehouse in Belgium is operated by a third-party logistics provider and supports our wholesale orders for customers located in Europe. The warehouse management systems of the Belgium warehouse are integrated with our ERP systems to provide us with near real-time visibility into our international distribution. We believe we have sufficient capacity in our domestic and international distribution facilities to support our continued growth.
Information Systems
Kellwood will continue to provide certain information technology services to us until such time as we elect to terminate provision of such services in accordance with the terms of the Shared Services Agreement. These services include information technology planning and administration, desktop support and help desk, our ERP system, financial applications, warehouse systems, reporting and analysis applications and our retail and e-commerce interfaces.
Our ERP system was developed from a core system that is widely used in the apparel and fashion industry, which we have customized to suit our inventory management and order processing requirements. We have integrated Oracle Financials with our ERP system to meet our financial reporting and accounting requirements. Additionally, we use a suite of third-party hosted retail applications integrated with our ERP system that provide us with merchandising, retail inventory management, point-of-sale systems, customer relationship management and retail accounting. Our retail applications are supported through a “Software as a Service” model, which allows for new implementations to occur quickly. Our ERP and warehouse management systems are also integrated with a hosted, third-party e-commerce platform.
Competition
We face strong competition in each of the product categories and markets where we compete on the basis of style, quality, price and brand recognition. Some of our competitors have achieved significant recognition for their brand names or have substantially greater financial, marketing,
 
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distribution and other resources than us. However, we believe that we have established a sustainable advantage and distinct position in the current marketplace, driven by a product assortment that combines classic and fashion-forward styling, and a pricing strategy that offers customers affordable luxury. Our competitors are varied but include Theory, Helmut Lang, Rag & Bone, James Perse, J. Crew, Michael Kors, Diane von Furstenberg and Tory Burch.
Employees
As of August 31, 2013, we had 317 employees, of which 176 were employed in retail stores. None of our employees are currently covered by a collective bargaining agreement, and we believe our employee relations are good.
Intellectual Property
We own the Vince trademark for the production, marketing and distribution of our products in the U.S. and internationally. We have registered the trademark domestically and have registrations on file or pending in 16 foreign jurisdictions. We intend to continue to strategically register, both domestically and internationally, trademarks that we use today and those we develop in the future. We license the domain name for our website, www.vince.com , pursuant to the License Agreement. Under the License Agreement, we have an exclusive, irrevocable license to use the www.vince.com domain name without restriction at a nominal annual cost. While we may terminate the License Agreement at our discretion, the agreement does not provide for termination by the licensor. We also own unregistered copyright rights in our design marks.
Properties
We do not own any real estate. Our 16,283-square-foot principal executive and administrative offices are located at 1441 Broadway, 6th Floor, New York, New York 10018 and are leased under an agreement expiring in December 2014. Our 5,900-square-foot showroom is located at 80 W. 40th Street, New York, New York 10018 and is leased under an agreement expiring in December 2017. Our 17,640 square-foot design studios are located at 5410 Wilshire Boulevard, Los Angeles, California and are leased under an agreement expiring in January 2015. We are currently in the process of evaluating our long-term corporate real estate needs and expect to consolidate our New York offices into one location by the end of fiscal 2014.
As of August 31, 2013, we leased approximately 50,362 gross square feet related to our 26 retail stores. Our leases generally have initial terms of 10 years and cannot be extended or can be extended for one additional 5-year term. Our leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount. Most of our leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities. Although we generally cannot cancel these leases at our option, certain of our leases allow us, and in some cases, the lessor, to terminate the lease if we do not achieve a specified gross sales threshold.
 
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The following store list shows the location, opening date, type and size of our retail locations as of August 31, 2013:

Vince Location	  	State	  	Opening Date	  	Type	  	Gross Square
Feet	 	  	Selling Square
Feet	 	
Robertson (Los Angeles)	  	CA	  	April 9, 2008	  	Street	  	 	1,151	  	  	 	938	  	
Melrose (Los Angeles)	  	CA	  	September 4, 2008	  	Street	  	 	1,537	  	  	 	1,385	  	
Washington St. (Meatpacking)	  	NY	  	February 3, 2009	  	Street	  	 	2,000	  	  	 	1,239	  	
Prince St. (Nolita)	  	NY	  	July 25, 2009	  	Street	  	 	1,396	  	  	 	1,108	  	
San Francisco	  	CA	  	October 15, 2009	  	Street	  	 	1,895	  	  	 	1,408	  	
Chicago	  	IL	  	October 1, 2010	  	Street	  	 	2,590	  	  	 	1,371	  	
Madison Ave.	  	NY	  	August 3, 2012	  	Street	  	 	3,503	  	  	 	1,928	  	
Westport	  	CT	  	March 28, 2013	  	Street	  	 	1,801	  	  	 	1,344	  	
Greenwich	  	CT	  	July 19, 2013	  	Street	  	 	2,463	  	  	 	1,724	  	
Mercer St. (Soho)	  	NY	  	August 22, 2013	  	Street	  	 	4,500	  	  	 	3,080	  	
	  		  		  		  	 	 	 	  	 	 	 	
Total Street (10):	  	 	22,836	  	  	 	15,525	  	
						
Malibu	  	CA	  	August 9, 2009	  	Mall	  	 	797	  	  	 	705	  	
Dallas	  	TX	  	August 28, 2009	  	Mall	  	 	1,368	  	  	 	1,182	  	
Boca Raton	  	FL	  	October 13, 2009	  	Mall	  	 	1,547	  	  	 	1,199	  	
Boston	  	MA	  	October 20, 2009	  	Mall	  	 	1,370	  	  	 	1,015	  	
White Plains	  	NY	  	November 6, 2009	  	Mall	  	 	1,325	  	  	 	1,045	  	
Atlanta	  	GA	  	April 16, 2010	  	Mall	  	 	1,643	  	  	 	1,356	  	
Palo Alto	  	CA	  	September 17, 2010	  	Mall	  	 	2,028	  	  	 	1,391	  	
Bellevue Square	  	WA	  	November 5, 2010	  	Mall	  	 	1,460	  	  	 	1,113	  	
Manhasset	  	NY	  	April 22, 2011	  	Mall	  	 	1,414	  	  	 	1,000	  	
Newport Beach	  	CA	  	May 20, 2011	  	Mall	  	 	1,656	  	  	 	1,242	  	
The Grove	  	CA	  	November 20 ,  2012	  	Mall	  	 	1,862	  	  	 	1,160	  	
	  		  		  		  	 	 	 	  	 	 	 	
Total Mall (11):	  	 	16,470	  	  	 	12,408	  	
	  		  		  		  	 	 	 	  	 	 	 	
Total Full-Price (21):	  				  				
						
Orlando	  	FL	  	July 17, 2009	  	Outlet	  	 	2,065	  	  	 	1,165	  	
Cabazon	  	CA	  	November 11, 2011	  	Outlet	  	 	2,066	  	  	 	1,118	  	
Riverhead	  	NY	  	November 30, 2012	  	Outlet	  	 	2,100	  	  	 	1,490	  	
Chicago	  	IL	  	August 1, 2013	  	Outlet	  	 	2,611	  	  	 	1,828	  	
Seattle	  	WA	  	August 30, 2013	  	Outlet	  	 	2,214	  	  	 	1,550	  	
	  		  		  		  	 	 	 	  	 	 	 	
Total Outlets (5) :	  	 	11,056	  	  	 	7,151	  	
	  		  		  		  	 	 	 	  	 	 	 	
Total (26):	  	 	50,362	  	  	 	35,084	  	
	  		  		  		  	 	 	 	  	 	 	 	
Seasonality
Our wide-range of merchandise and our strategy of carrying a broad selection but limited quantities of each item reduce our overall seasonality relative to other contemporary brands. Nevertheless, our business is mildly seasonal in nature and sales are generally the highest in the third and fourth fiscal quarters due to the year-end holiday season and lowest in the first and second fiscal quarters. As a result of this seasonality and generally because of variation in consumer spending habits, we experience fluctuations in net sales and EBITDA during the year. See “—Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC—Quarterly Financial Data” for more information.
Legal Proceedings
We are subject to various legal proceedings and claims, which arise in the ordinary course of our business. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition, cash flows or results of operation.
 
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 VINCE MANAGEMENT
Below is a list of names, ages and a brief overview of the business experience of the executive officers and directors of Vince that we anticipate will be serving in these capacities upon consummation of this offering:

Name	  	Age	  	Position/Title	
Christopher T. Metz	  	48	  	Director and Chairman	
Mark E. Brody	  	51	  	Director	
Jason H. Neimark	  	42	  	Director	
Jerome Griffith	  	55	  	Director Nominee	
Jill Granoff	  	51	  	Director and Chief Executive Officer	
Lisa Klinger	  	46	  	Chief Financial Officer and Treasurer	
Karin Gregersen	  	43	  	President	
Doo-Ri Chung	  	40	  	Creative Director	
Beth Cohn	  	45	  	Senior Vice President, Retail and E-Commerce	
Rebecca Damavandi	  	41	  	Group President, Global Business Development	
Deena Gianoncelli	  	39	  	Senior Vice President, Human Resources	
Michele Sizemore	  	50	  	Senior Vice President, Operations	
Jill Steinberg	  	37	  	Senior Vice President, Wholesale	
Directors and Executive Officers
We believe that our board of directors should be composed of individuals with knowledge and experience in many substantive areas that impact our business. The following areas are the most important to us: fashion and consumer goods; retail and wholesale; marketing and merchandising; sales and distribution; international business development; strategic planning and leadership of complex organizations; accounting, finance, and capital structure; legal/regulatory and government affairs; talent management; and board practices of other major corporations. We believe that all of our current board members possess the professional and personal qualifications necessary for board service, and have highlighted in the individual biographies below the specific experience, attributes, and skills that led to the conclusion that each board member should serve as a director.
Christopher T. Metz.     Mr. Metz has served as a director since 2008 and will be appointed to serve as the Chairman of our board of directors prior to the consummation of this offering. Mr. Metz has served as Managing Director of Sun Capital since 2005 and has extensive global operating and leadership experience in the consumer and durable goods industries. Prior to joining Sun Capital, Mr. Metz was President at Black & Decker, leading its Hardware and Home Improvement Group from 1999 to 2005. During his 13 years at Black & Decker, Mr. Metz held various other senior leadership positions, including President of Kwikset Corporation, President of Price Pfister faucets, President of Baldwin Hardware, and General Manager of European Professional Power Tools and Accessories, based in Frankfurt, Germany. Mr. Metz also serves on several boards of Sun Capital portfolio companies, including Avion Services Group Holding Corp., Captain D’s Holding Corp., Friendly’s Ice Cream LLC, Grandy’s Holding Corp., Lexington Furniture Industries, Inc., Pemco World Air Services, Inc., Rowe Fine Furniture, Inc., and SK Financial Services Corp. Mr. Metz also served on the board of Amicus Wind Down Corporation, a public company, from 2010 to 2012. Mr. Metz brings to our board extensive public company and international leadership experience.
Mark E. Brody.     Mr. Brody has served as a director since 2008. Mr. Brody has served as a Managing Director and Group Chief Financial Officer of Sun Capital since 2006. Prior to joining Sun Capital, Mr. Brody served from 2001 to 2006 as Chief Financial Officer for Flight Options, a leading provider of fractional jet services. Prior to Flight Options, he served as Chief Financial Officer or Vice President, Finance for manufacturing-related public companies, including Sudbury, Inc., Essef
 
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Corporation, Anthony & Sylvan Pools, and Waterlink, Inc. Mr. Brody also serves on several boards of Sun Capital portfolio companies, including Limited Stores Company, LLC, Cello-Foil Products, Inc., Emerald Performance Materials LLC, Exopack Holding Corp., Garden Fresh Restaurant Corp., and TPG Enterprises, Inc. Mr. Brody started his career as an auditor with Ernst & Young. Mr. Brody brings to the board significant experience in finance, accounting and corporate strategy development.
Jason H. Neimark.     Mr. Neimark has served as a director since May 2013. Mr. Neimark has served as a Managing Director of Sun Capital since 2001. Mr. Neimark has led more than 65 buyout and capital markets transactions in a broad range of industries on behalf of affiliates of Sun Capital in the U.S. and Europe. From 2000 to 2001, Mr. Neimark was a Principal and President of K&D Distributors, a national direct marketer and specialty distributor of optical products where he led a financial and operational turnaround which concluded in a successful sale. From 1995 to 2000, Mr. Neimark served as a principal of Midwest Mezzanine Funds, a provider of junior capital to middle market businesses. After receiving his CPA designation in 1992, Mr. Neimark worked as a tax consultant and auditor for KPMG Peat Marwick. Mr. Neimark also serves on several boards of Sun Capital portfolio companies, including Gordmans Stores Inc. Mr. Neimark was a director of Accuride Corporation, a public company, from February 2009 to October 2009 and was a director of Loud Technologies, a private company, from May 2005 to July 2008. Mr. Neimark provides strong finance skills to our board of directors and valuable experience gained from previous board service.
Jerome Griffith.     Mr. Griffith will be appointed to our board of directors in connection with the consummation of this offering. Mr. Griffith has served as the Chief Executive Officer, President and a member of the board of directors of Tumi Holding, Inc. since April 2009. From 2002 to February 2009, Mr. Griffith was employed at Esprit Holdings Limited, a global fashion brand, where he was promoted to Chief Operating Officer and appointed to the board of directors in 2004, then promoted to President of Esprit North and South America in 2006. From 1999 to 2002, Mr. Griffith worked as an Executive Vice President at Tommy Hilfiger. From 1998 to 1999, Mr. Griffith worked as the President of Retail at the J. Peterman Company, a catalog-based apparel and retail company. From 1989 through 1998, Mr. Griffith worked in various positions at Gap, Inc. Mr. Griffith brings to our board experience as a public company director, experience as a senior executive of a major global consumer products company and a proven track record of innovation and driving international growth and expansion.
Jill Granoff.     Ms. Granoff has served as Vince’s Chief Executive Officer and a director since August 2012. Ms. Granoff has also served as AHC’s Chief Executive Officer and a director since May 2012. Previously, Ms. Granoff served as Chief Executive Officer of Kenneth Cole Productions, Inc., a designer and marketer of women’s and men’s apparel, footwear and accessories, from 2008 until 2011. Prior to that, Ms. Granoff served as Executive Vice President of Liz Claiborne Inc. where she had global responsibility for Juicy Couture, Lucky Brand Jeans, Kate Spade and the company’s e-commerce and outlet businesses. Prior to joining Liz Claiborne, Ms. Granoff was President and Chief Operating Officer of Victoria Secret Beauty, a division of Limited Brands, where she worked from 1999 to 2006. From 1990 to 1999, Ms. Granoff held various executive positions at The Estée Lauder Companies. Ms. Granoff is a member of the board of directors of Demandware and the Fashion Institute of Technology Foundation. Ms. Granoff brings significant senior leadership, operating and industry experience to our board of directors. Ms. Granoff’s position as Vince’s Chief Executive Officer also allows her to advise the board of directors on management’s perspective over a full range of issues affecting the company.
Lisa Klinger.     Ms. Klinger has served as Vince’s Chief Financial Officer and Treasurer since December 2012. Ms. Klinger has also served as AHC’s Chief Financial Officer since December 2012. Previously, Ms. Klinger served as Executive Vice President and Chief Financial Officer of The Fresh Market, Inc., a specialty retailer, from 2009 until 2012. Prior to that, Ms. Klinger served as interim Chief Financial Officer of Michael’s Stores during 2008 and Senior Vice President of Finance and Treasurer from 2005 to 2009. Ms. Klinger previously served as Assistant Treasurer at Limited Brands from 2000 to 2005. 
 
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Karin Gregersen.     Ms. Gregersen has served as Vince’s President since May 2013. Previously, Ms. Gregersen worked at Chloé/Richemont for 13 years, where she last served as the Executive Vice President and Managing Director of Chloé/Richemont Americas from 2007 to 2013. Prior to this role, she served as the Sales and Marketing Director for Chloé/Richemont Europe/Middle East from 1999 to 2007. Ms. Gregersen previously served as the Europe Sales Manager for Givenchy from 1997 to 1999. 
 
Doo-Ri Chung .    Ms. Chung has served as Vince’s Creative Director since January 2013. Previously, Ms. Chung founded and served as creative director of Doo-Ri Clothing Company LLC from 2003 to 2012. Ms. Chung has over 18 years of design experience, including service as the first assistant to Geoffrey Beene from 1996 to 2001, and work with Alber Elbaz (now creative director of Lanvin) from 1996 to 1997. Ms. Chung has a long list of design accomplishments, including winning the CFDA Swarovski Perry Ellis Award and the CFDA Vogue Fashion Fund Award.
Beth Cohn.     Ms. Cohn has served as Vince’s Senior Vice President of Retail and E-Commerce since June 2012. Previously, Ms. Cohn served as Senior Vice President of Retail for Theory and Helmut Lang from 2009 to 2012. Prior to that, Ms. Cohn served as General Manager of Retail and Vice President for Juicy Couture from 2006 to 2009 and General Merchandise Manager, Retail and Senior Vice President for Prada North America from 1997 to 2006.
Rebecca Damavandi.     Ms. Damavandi has served as Vince’s Group President of Global Business Development since August 2012. Ms. Damavandi has also served as AHC’s Group President of Global Business Development since August 2012. Previously, Ms. Damavandi worked as a self-employed global apparel consultant from 2010 to 2012. Prior to that, Ms. Damavandi served as President of Licensing and Global Business Development for Elie Tahari from 2006 to 2010, Vice President of International and Licensing for Earl Jeans/VF Corporation from 2004 to 2006 and Senior Director of Global Product Licensing for Guess?, Inc. from 1999 to 2003, after joining the company in 1996.
Deena Gianoncelli.     Ms. Gianoncelli began serving as our Senior Vice President, Human Resources in September 2013. Previously, Ms. Gianoncelli served as the Director of Human Resources for Amazon.com from 2012 to 2013. Prior to that, Ms. Gianoncelli served as the Vice President of Human Resources for Hugo Boss Americas from 2010 to 2012. In addition, Ms. Gianoncelli served as the Senior Director of Human Resources for Medco Health Solutions from 2005 to 2010.
Michele Sizemore .     Ms. Sizemore has served as Vince’s Senior Vice President, Operations since May 2013. Previously, Ms. Sizemore worked at Gap, Inc. for 20 years, where she last served as Senior Vice President of Global Sourcing for the Gap brand worldwide from 2011 to 2013. Prior to that, she served as Vice President of Global Sourcing for Banana Republic from 2009 to 2011.
Jill Steinberg.     Ms. Steinberg has served as Vince’s Senior Vice President, Wholesale since March 2013. Previously, Ms. Steinberg served as Vince’s Senior Vice President, Women’s Sales from 2012 to 2013. Prior to that, Ms. Steinberg served as Vice President of Sales for Diane von Furstenberg from 2005 to 2012. Previously, Ms. Steinberg served as Senior Account Executive for BCBG from 2003 to 2005 and Senior Account Executive for Theory from 2001 to 2003.
Family Relationships
There are no family relationships between any of our executive officers or directors.
 
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Corporate Governance
Board Composition
Our amended and restated certificate of incorporation, which will be in effect prior to the consummation of this offering, will provide that our board of directors shall consist of such number of directors as determined from time to time by resolution adopted by a majority of the total number of directors then in office. Initially, our board of directors will consist of six members. For so long as Sun Capital and its affiliates own 30% or more of our outstanding shares of common stock, Sun Cardinal, an affiliate of Sun Capital, will have the right to designate a majority of our board of directors under our amended and restated certificate of incorporation, provided that, at such time as we are not a “controlled company” under the NYSE corporate governance standards, a majority of our board of directors will be “independent directors,” as defined under the rules of the NYSE market, subject to the applicable phase-in requirements. During the period when Sun Capital and its affiliates own 30% or more of our outstanding shares of common stock, Sun Cardinal shall also have the ability to fill any vacancy on our board of directors, whether resulting from an increase to the board size, death, resignation or removal. Thereafter, only our board of directors shall be authorized to fill such vacancies.
Our board of directors will be divided into three classes, with one class being elected at each year’s annual meeting of stockholders. Mr. Brody and              will serve as the Class I directors with an initial term expiring in 2014. Messrs. Neimark, and Metz will serve as Class II directors with an initial term expiring in 2015. Ms. Granoff and Mr. Griffith will serve as Class III directors with an initial term expiring in 2016. Following the expiration of the initial term of a class of directors, each class of directors will serve a three-year term. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the total number of directors.
Controlled Company
Upon consummation of this offering, affiliates of Sun Capital will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” under the NYSE corporate governance standards. As a controlled company, exemptions under the standards will free us from the obligation to comply with certain corporate governance requirements, including the requirements:
 
 	Ÿ 	 	that a majority of our board of directors consists of “independent directors,” as defined under the rules of the NYSE market;	
 
 	Ÿ 	 	that we have a nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;	
 
 	Ÿ 	 	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	
 
 	Ÿ 	 	that we conduct annual performance evaluations of the nominating committee and compensation committee.	
These exemptions do not modify the independence requirements for our Audit Committee. The rules of the NYSE market permit the composition of our Audit Committee to be phased in as follows: (1) one independent committee member at the time of our initial public offering; (2) a majority of independent committee members within 90 days of our initial public offering; and (3) all independent committee members within one year of our initial public offering.
 
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We intend to comply with the applicable requirements of the Sarbanes-Oxley Act and rules with respect to our Audit Committee by having two independent directors on our Audit Committee at the time of pricing of this offering and appointing the remaining independent director to our Audit Committee within the applicable time frame.
Similarly, once we are no longer a “controlled company,” we must comply with the independent board committee requirements as they relate to our Nominating and Corporate Governance Committee and our Compensation Committee, on the same phase-in schedule as set forth above, with the trigger date being the date we are no longer a “controlled company” as opposed to our initial public offering date. In addition, we will have 12 months from the date we cease to be a “controlled company” to have a majority of independent directors on our board of directors.
Board Committees
Prior to the consummation of this offering, our board of directors will establish an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The directors designated by Sun Cardinal, an affiliate of Sun Capital, are expected to constitute a majority of each committee of our board of directors (other than the Audit Committee) and the chairman of each of the committees (other than the Audit Committee) is expected to be a director serving on such committee who is selected by Sun Cardinal, provided that, at such time as we are not a “controlled company” under the NYSE corporate governance standards, our committee membership will comply with all the applicable requirements of those standards. The composition, duties and responsibilities of these committees are set forth below. In the future, our board may establish other committees, as it deems appropriate, to assist it with its responsibilities.
Audit Committee
The Audit Committee will be responsible for, among other matters: (1) appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; (2) discussing with our independent registered public accounting firm their independence from management; (3) reviewing with our independent registered public accounting firm the scope and results of their audit; (4) approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; (5) overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; (6) reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; (7) establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; and (8) reviewing and approving related person transactions.
Upon consummation of this offering, our Audit Committee will consist of Mr. Griffith,             , and             . Our board of directors has determined that              will qualify as an “audit committee financial expert,” as such term is defined in Item 401(h) of Regulation S-K. Our board of directors will adopt a new written charter for the Audit Committee, which will be available on our corporate website at www.vince.com prior to the consummation of this offering. Our website is not part of this prospectus.
Compensation Committee
The Compensation Committee will be responsible for, among other matters: (1) reviewing key corporate compensation goals, policies, plan and programs; (2) reviewing and approving the compensation of our directors, chief executive officer and other named executive officers; (3) reviewing and approving employment agreements and other similar arrangements between us and our named executive officers; and (4) administering stock plans and other incentive compensation plans (including the Vince 2013 Incentive Plan and the Vince ESPP).
 
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Upon consummation of this offering, our Compensation Committee will consist of Messrs. Metz, Brody and Neimark. Our board of directors will adopt a written charter for the Compensation Committee, which will be available on our corporate website at www.vince.com prior to the consummation of this offering. Our website is not part of this prospectus.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee will be responsible for, among other matters: (1) identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors; (2) overseeing the organization of our board of directors so that it can satisfy its duties and responsibilities properly and efficiently; (3) identifying best practices and recommending corporate governance principles; and (4) developing and recommending to our board of directors a set of corporate governance guidelines and principles applicable to us.
Upon consummation of this offering, our Nominating and Corporate Governance Committee will consist of Messrs. Metz, Brody and Neimark. Our board of directors will adopt a written charter for the Nominating and Corporate Governance Committee, which will be available on our corporate website at www.vince.com prior to the consummation of this offering. Our website is not part of this prospectus.
Compensation Committee Interlocks and Insider Participation
In fiscal year 2012, we did not have a Compensation Committee. All compensation decisions were made by the board of directors of AHC, which held deliberations during fiscal year 2012 concerning executive officer compensation. As a member of the board of directors of AHC, Ms. Granoff participated in deliberations concerning compensation of executive officers. See “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements” for a description of the employment agreements of our executive officers.
None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors.
Code of Business Conduct and Ethics
We will adopt a code of business conduct and ethics applicable to our principal executive, financial and accounting officers and all persons performing similar functions. A copy of that code will be available on our corporate website at www.vince.com upon consummation of this offering. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website. Our website is not part of this prospectus.
Risk Oversight
Our board of directors will oversee the risk management activities designed and implemented by our management. The board of directors will execute its oversight responsibility for risk management both directly and through its committees. The full board of directors will also consider specific risk topics, including risks associated with our strategic plan, business operations and capital structure. In addition, the board of directors will receive detailed regular reports from members of our senior management and other associates that include assessments and potential mitigation of the risks and exposures involved with their respective areas of responsibility.
Our board of directors will delegate to the Audit Committee oversight of our risk management process. Our other board committees will also consider and address risk as they perform their respective committee responsibilities. All committees will report to the full board of directors as appropriate, including when a matter rises to the level of a material or enterprise level risk.
 
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Other Committees
Our board of directors may establish other committees as it deems necessary or appropriate from time to time.
 
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 VINCE EXECUTIVE COMPENSATION
The following section provides compensation information pursuant to the scaled disclosure rules applicable to “emerging growth companies” under the rules of the SEC and may contain statements regarding future individual and company performance targets and goals. These targets and goals are disclosed in the limited context of the company’s executive compensation program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts. Vince’s Named Executive Officers for fiscal 2012 and the positions they held with us during fiscal 2012 are set forth below:
Jill Granoff, Chief Executive Officer
Lisa Klinger, Chief Financial Officer and Treasurer
Arthur Gordon, Chief Operating Officer
Rea Laccone, former Chief Executive Officer
This executive compensation section contains certain forward-looking statements that are based on our current plans and expectations regarding future compensation plans and arrangements. The actual compensation plans and expectations that we adopt may differ materially from the currently anticipated plans and arrangements as summarized in this discussion.
Neither Mr. Gordon nor Ms. Laccone will be Named Executive Officers for Vince after fiscal 2012.
Overview
We are a privately-held company owned almost exclusively by affiliates of Sun Capital. As a result, we were not subject to any stock exchange listing or SEC rules requiring a majority of our board of directors to be independent or relating to the formation and functioning of board committees, including audit, compensation and nominating and corporate governance committees. As such, all compensation decisions have historically been made by the board of directors of AHC. Furthermore, our executive officers are currently compensated by Kellwood Company for performing services on our behalf. To date, the compensation of the executive officers identified in the “Summary Compensation Table” in this prospectus, who are referred to as Vince’s Named Executive Officers, has consisted of a combination of base salary, bonuses (sign-on, performance based and guaranteed) and long-term incentive compensation in the form of Kellwood Company stock options issued under its 2010 Stock Option Plan (the “2010 Option Plan”). Executive officers and all salaried employees are also eligible to receive health and welfare benefits. Pursuant to employment agreements or an offer letter, the Named Executive Officers were also eligible to receive certain payments and benefits upon termination of employment under certain circumstances, as well as acceleration of vesting of certain outstanding equity awards in connection with a change in control. See “—Employment Agreements” for additional information.
In connection with the consummation of the IPO Restructuring Transactions and this offering, Kellwood Company will assign to Vince Holding Corp. or one of its subsidiaries (after giving effect to the IPO Restructuring Transactions) Kellwood Company’s obligations under those of the Vince executive employment agreements to which Kellwood Company is a party. See “—Employment Agreements” for additional information. Going forward, we intend to grant long-term equity incentives to our executives under the Vince 2013 Incentive Plan, as described below in “—Employee Stock Plans—Vince 2013 Incentive Plan.”
We will also establish a compensation committee that will assume the responsibility, from our board of directors, for making compensation decisions for Vince’s executive officers and directors. We
 
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expect that that our new compensation committee will review compensation elements and amounts for our Named Executive Officers on an annual basis and at the time of a promotion or other change in level of responsibilities, as well as when competitive circumstances or business needs may require. In addition, as we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve. Accordingly, the compensation paid to Vince’s Named Executive Officers for fiscal 2012 may not necessarily be indicative of how we may compensate Vince’s Named Executive Officers following the consummation of this offering.
Executive Compensation Design Overview
Vince’s executive compensation programs have historically been designed to provide competitive total compensation opportunities. They were designed to align pay with achievement of our annual and long-term financial and operational goals and recognize individual achievement. In setting pay levels, we reviewed published survey information and other available compensation data that was specific to companies of similar size or positioning in our industry. As currently structured, our executive compensation program is designed to:
 
 	Ÿ 	 	provide aggregate compensation that reflects the market compensation for executives with similar responsibilities in similar companies with appropriate adjustments to reflect the experience, performance and other distinguishing characteristics of specific individuals;	
 
 	Ÿ 	 	be commensurate with our short-term and long-term financial performance;	
 
 	Ÿ 	 	be aligned with the value for stockholders; and	
 
 	Ÿ 	 	provide a competitive compensation opportunity to allow us to attract and retain key executive talent.	
We believe that an important criterion for the determination of the aggregate value of our compensation program and the allocation of such value among the various elements of our compensation plans is market data on the amounts, allocations and structures utilized by similarly situated companies for positions of comparable responsibility.
In fiscal 2013, we retained the services of Aon Hewitt (“Aon”), a compensation consultant to prepare a comprehensive analysis of our compensation packages for our executive officers (including our Named Executive Officers), to compare the specific elements of compensation and the aggregate value with a group of peer companies selected by Aon and to assist us in establishing the elements of our compensation program following consummation of this offering, including elements of our compensation for fiscal 2013. We intend to continue to collaborate with Aon, using the results of their benchmarking study, to determine the elements of our go-forward public company compensation program. We anticipate that this program will include grants under the Vince 2013 Incentive Plan and the Vince ESPP, each of which we intend to adopt in connection with this offering and implement after the closing thereof.
Risk Assessment and Compensation Practices
Our management assesses and discusses with the board of directors our compensation policies and practices for our employees as they relate to our overall risk management, and based upon this assessment, we believe that any risks arising from such policies and practices are not reasonably likely to have a material adverse effect on us.
 
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Compensation of Named Executive Officers
Base Salaries .    In fiscal 2012, our board of directors reviewed and held deliberations concerning the compensation of our executive officers, including our Named Executive Officers. Going forward, our compensation committee will review the base salaries of our executive officers, including the Named Executive Officers, at least annually and make adjustments as it determines to be reasonable and necessary. The current base salaries of the Named Executive Officers are as follows:

Named Executive Officer	  	Base Salary	 	
Jill Granoff, Chief Executive Officer(1)	  	$	1,000,000	  	
Lisa Klinger, Chief Financial Officer and Treasurer(2)	  	$	450,000	  	
Arthur Gordon, Chief Operating Officer(3)	  	 	N/A	  	
Rea Laccone, former Chief Executive Officer(4)	  	 	N/A	  	

(1)	Ms. Granoff assumed the executive functions of Chief Executive Officer from Ms. Laccone in June 2012, and was officially appointed as Chief Executive Officer in August 2012. The board of directors approved a base salary increase for Ms. Granoff from $900,000 to $1,000,000 effective as of February 1, 2013.	
(2)	Ms. Klinger was hired and began performing the duties of Chief Financial Officer and Treasurer in December 2012.	
(3)	Mr. Gordon has been employed by Kellwood Company since 1979 and was appointed as Vince’s Chief Operating Officer effective September 2, 2009. Mr. Gordon also serves as the Chief Executive Officer of Kellwood Western Region, a division of Kellwood Company. He received an annual base salary of $800,000 during fiscal 2012. In connection with the appointment of Ms. Sizemore as Senior Vice President, Operations for Vince in May 2013, Mr. Gordon ceased serving as our Chief Operating Officer and now solely serves as the Chief Executive Officer of Kellwood Western Region. Mr. Gordon does not have, and will not have, any operational responsibilities relating to Vince following consummation of this offering and will not be one of our Named Executive Officers for fiscal 2013 or beyond.	
(4)	Ms. Laccone resigned from her position as Chief Executive Officer and became our Chief Creative Officer in June 2012. She received an annual base salary of $1,000,000 during the period from January 28, 2012 through August 23, 2012, at which time her salary was increased to $2,400,000 for the remainder of her tenure with the company. Ms. Laccone relinquished all of her duties for the company when she resigned on January 31, 2013 and will not be one of our Named Executive Officers for fiscal 2013 or beyond.	
Sign-On Bonuses .     Certain executives received a one-time sign-on bonus when they joined us. For fiscal 2012, no Named Executive Officers received any sign-on bonuses.
Guaranteed Bonus .     Certain executives were eligible to receive a guaranteed minimum bonus based on their annual salary and their targeted bonus opportunity. If an executive’s award in fiscal 2012 under the Performance Management and Incentive Compensation Program, as described below in “—Cash Bonus Plan,” (the “AHC 2012 Bonus Plan”), was lower than their guaranteed minimum bonus as set forth in their employment agreement or offer letter, they received a cash bonus for such year in an amount equal to the difference, so that their total cash bonus award for fiscal 2012 was equal to their guaranteed minimum bonus. For fiscal 2012, Ms. Granoff, Ms. Klinger and Mr. Gordon had guaranteed bonuses of $500,000, $350,000 and $250,000, respectively. Ms. Laccone did not have a guaranteed bonus for fiscal 2012. See “Summary Compensation Table” and “—Cash Bonus Plan” for additional information.
Cash Bonus Plan .     The AHC 2012 Bonus Plan was designed to encourage a high level of performance in each year so that the achievement of targeted performance levels is rewarded with a target incentive payout, and performance above such levels is rewarded with higher-level payouts. Each executive officer is assigned a target annual award opportunity based on the achievement of EBITDA performance that is expressed as a percentage of such executive’s base salary. Our board of directors has historically approved these targeted award opportunities for each Vince executive officer. Ms. Granoff and Ms. Klinger received additional cash bonus payments for fiscal 2012, as the amount of their guaranteed bonus was greater than the amounts they received based on the EBITDA targets under the AHC 2012 Bonus Plan. For fiscal 2012, the threshold, target and maximum EBITDA targets for AHC were $42.4 million, $47.4 million and $57.4 million, respectively. Actual EBITDA for AHC for
 
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fiscal 2012 was $46.9 million. Mr. Gordon did not receive any additional cash bonus payment for fiscal 2012 as the amount he received under the AHC 2012 Bonus Plan was greater than his guaranteed bonus for fiscal 2012. Ms. Laccone was not a participant in the AHC 2012 Bonus Plan.
Our board of directors established EBITDA targets for fiscal 2013 for our Named Executive Officers under the Performance Management and Incentive Compensation Program (the “AHC 2013 Bonus Plan”).
For fiscal 2013, Ms. Granoff’s and Ms. Klinger’s targeted incentive payouts under the ACH 2013 Bonus Plan are based on the following allocations:
 
 	Ÿ 	 	From February 2, 2013 to July 31, 2013, 50% of their targeted incentive payout under the AHC 2013 Bonus Plan is based on the achievement of EBITDA targets for AHC’s non-Vince businesses and 50% of such payment is based on the achievement of Vince EBITDA targets;	
 
 	Ÿ 	 	From August 1, 2013 until the date of consummation of this offering, 25% of their targeted incentive payout under the AHC 2013 Bonus Plan is based on the achievement of EBITDA targets for AHC’s non-Vince businesses and 75% of such payment is based on the achievement of Vince EBITDA targets; and	
 
 	Ÿ 	 	After the date of consummation of this offering, 100% of such payout will be based on the achievement of Vince EBITDA targets.	
AHC believes it is currently on track to achieve the targeted AHC non-Vince and Vince EBITDA performance levels under the AHC 2013 Bonus Plan.
Mr. Gordon’s EBITDA targets under the AHC 2013 Bonus Plan are based on the achievement of AHC non-Vince businesses EBITDA levels and AHC regional EBITDA levels.
Although we are using EBITDA performance as a financial measure for fiscal 2013 and have done so historically, Vince may use other objective financial performance indicators for the cash bonus plan in the future, including but not limited to the price of our common stock, stockholder return, return on equity, return on investment, return on capital, sales productivity, same-store sales growth, economic value added, gross margin, cash flow, earnings per share or market share.
Kellwood Equity Incentives.     On June 30, 2010, the board of directors of Kellwood Company, a wholly-owned subsidiary of AHC, approved the 2010 Stock Option Plan. The 2010 Option Plan provides for the grant of options to acquire up to 100,000 shares of non-voting common stock of Kellwood Company. Options granted under the 2010 Option Plan (i) have an exercise price based on the fair market value; (ii) vest over a five year period at a rate of 20% per year, (iii) expire on the earlier of the tenth anniversary of the grant date or upon termination of employment for cause and (iv) become exercisable upon termination or a liquidity event, as defined by the 2010 Option Plan. The fair value of the stock options is determined at the grant date using a probability-weighted expected return method model, which requires us to make several significant assumptions including long-term EBITDA growth rates, future enterprise value, discount rates, and timing and probability of a future liquidity event. This methodology was selected based on the current capital structure and forecasted operational performance.
In addition, 100% of any outstanding and unvested shares granted under the 2010 Option Plan will vest upon a “Sale of the Company.” Sale of the Company is defined as (i) any consolidation, merger or other transaction in which Kellwood Company is not the surviving entity or which results in the acquisition of all or substantially all of Kellwood Company’s outstanding shares of common stock by a single person or entity or by a group of persons or entities acting in concert; (ii) any sale or transfer of all or substantially
 
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all of (A) Kellwood Company’s assets (excluding, however, for this purpose any real estate “sale-lease back” transaction) or (B) the subsidiaries which make up Kellwood Company’s “women’s business;” or (iii) the date that (A) more than fifty percent (50%) of the shares of voting stock of the surviving or acquiring entity is owned and/or controlled (by agreement or otherwise), directly or indirectly, by a single person or entity or by a group of persons or entities acting in concert other than Sun Capital or its affiliates; and (B) Sun Capital or its affiliates no longer controls Kellwood Company’s board of directors; provided, however, that the term “sale” shall not include transactions either (x) with affiliates of Kellwood Company or Sun Capital (as determined by the board of directors of Kellwood Company in its good faith sole discretion) or (y) pursuant to which more than fifty percent (50%) of the shares of voting stock of the surviving or acquiring entity is owned and/or controlled (by agreement or otherwise), directly or indirectly, by Sun Capital or its affiliates. Because the IPO Restructuring Transactions all involve transactions with affiliates of Kellwood Company or Sun Capital, they will not constitute a “Sale of the Company” which would result in the vesting of Kellwood Company options held by our named executive officers.
In determining the number of shares underlying each option grant, the Kellwood Company board of directors took into account each executive officer’s existing unvested equity grants and made awards that they determined would be sufficient to motivate and retain each executive officer past the expected date of this offering. The stock option grants made to these Named Executive Officers in fiscal 2012 were as follows:

Named Executive Officer	  	Date of Grant	  	Number of Shares	 	  	Exercise Price(1)	 	
Jill Granoff	  	May 4, 2012	  	 	44,000	  	  	$	150.78	  	
Lisa Klinger	  	December 10, 2012	  	 	7,500	  	  	$	150.78	  	
Arthur Gordon	  	—	  	 	—	  	  	 	—	  	
Rea Laccone	  	—	  	 	—	  	  	 	—	  	

(1)	The grant date fair value of these option grants is reflected in the “Summary Compensation Table” under the “Option Awards” column.	
Summary Compensation Table
The following table provides information regarding the total compensation for services rendered in all capacities that was earned by each individual who served as our principal executive officer at any time during fiscal 2012 and our two other most highly compensated executive officers who were serving as executive officers during the fiscal year ended February 2, 2013.

Name and Principal Position	 	Year	 	 	Salary ($)	 	 	Bonus ($)	 	 	Option
Awards
($)(1)	 	 	Non-Equity
Incentive
Plan
Compen-
sation
($)(2)	 	 	All Other
Compen-
sation
($)	 	 	Total ($)	 	
Jill Granoff	 	 	2012	  	 	$	661,154	(4) 	 	$	27,363	(5) 	 	$	2,128,920	  	 	$	472,637	  	 	$	11,245	(6) 	 	$	3,301,319	  	
Chief Executive Officer(3)	 				 				 				 				 				 				 				
								
Lisa Klinger	 	 	2012	  	 	$	60,577	(6) 	 	$	336,861	(7) 	 	$	309,924	  	 	$	13,139	  	 	 	—	  	 	$	720,501	  	
Chief Financial Officer and Treasurer(3)	 				 				 				 				 				 				 				
								
Arthur Gordon	 				 				 				 				 				 				 				
Chief Operating Officer	 	 	2012	  	 	$	800,000	  	 	 	—	  	 	 	—	  	 	$	308,766	(8) 	 	$	21,074	(9) 	 	$	1,129,840	  	
	 	 	2011	  	 	$	800,000	  	 	 	—	  	 	 	—	  	 	$	190,109	  	 	$	21,645	(9) 	 	$	1,011,754	  	
								
Rea Laccone 	 				 				 				 				 				 				 				
Former Chief Executive Officer	 	 	2012	  	 	$	1,875,385	(10) 	 	$	5,427,867	(11) 	 	 	—	  	 	 	—	  	 	$	187,259	(12) 	 	$	7,490,511	  	
	 	 	2011	  	 	$	849,231	  	 	$	240,000	  	 	 	—	  	 	 	—	  	 	$	47,571	(12) 	 	$	1,136,802	  	

(1)	The fair value of stock options granted in fiscal 2012 was determined at the grant date using a Black-Scholes model, which requires us to make several significant assumptions including risk-free interest rate, volatility, expected term, and discount factors for stockholders in a privately-held company. At the grant date, the options granted in fiscal year 2012 had a weighted average fair value of $43.01 per share.	
 
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(2)	Amounts reflect the annual incentive cash bonus earned in the fiscal year shown but paid in the following fiscal year.	
(3)	Neither Ms. Granoff nor Ms. Klinger was employed by the company in fiscal 2011.	
(4)	Salary reflects base compensation from hire date of May 4, 2012 through February 2, 2013.	
(5)	Amount reflects cash bonus payment after giving effect to the $472,637 which was paid upon the achievement of targeted objectives under the AHC 2012 Bonus Plan. The aggregate of such amounts (or $500,000) represents the amount of Ms. Granoff’s guaranteed bonus under the terms of her employment agreement.	
(6)	Salary reflects base compensation from hire date of December 10, 2012 through February 2, 2013.	
(7)	Amount reflects cash bonus payment after giving effect to the $13,139 which was paid upon the achievement of targeted objectives under the AHC 2012 Bonus Plan. The aggregate of such amounts (or $350,000) represents the amount of Ms. Klinger’s guaranteed bonus under the terms of her employment agreement.	
(8)	Reflects compensation paid under the AHC 2012 Bonus Plan. Because this amount exceeds Mr. Gordon’s guaranteed minimum bonus of $250,000, no additional cash bonus payments were made to Mr. Gordon for fiscal 2012.	
(9)	Amounts reflect the value of their clothing allowance, car allowance and excess life insurance.	
(10)	Salary reflects base compensation through January 31, 2013, the effective date of Ms. Laccone’s resignation.	
(11)	Amounts reflect a $3,616,438 transition bonus payment and $1,811,429 performance bonus payment paid pursuant to Ms. Laccone’s employment agreement. See “—Employment Agreements” for additional information.	
(12)	For fiscal 2012, amounts reflect $57,346 in clothing allowance, $9,600 in car allowance, $8,124 in excess life insurance payments and $112,188 in unused vacation payout. For fiscal 2011, amounts reflect $31,605 in clothing allowance, $9,600 in car allowance and $6,366 in excess life insurance payments.	
Employment Agreements
Jill Granoff, Chief Executive Office r .     Kellwood Company entered into an employment agreement with Ms. Granoff on May 4, 2012. Pursuant to the terms of the employment agreement, Ms. Granoff received an annual base salary of $900,000 in fiscal 2012. In addition to base salary, Ms. Granoff was eligible to participate in the AHC 2012 Bonus Plan which provided her with the opportunity to earn a bonus targeted at 75% of her base salary in fiscal 2012. Under her employment agreement, Ms. Granoff was guaranteed an annual cash bonus of $500,000 for fiscal 2012. Effective February 1, 2013, Ms. Granoff received a base salary increase to $1,000,000 and her targeted bonus opportunity increased to 100% of her base salary. Ms. Granoff has no guaranteed bonus for fiscal 2013.
In connection with the consummation of this offering and the repayment of certain Kellwood Company indebtedness, Ms. Granoff will earn a debt recovery bonus under the terms of her, employment agreement (as amended by her debt recovery side letter, dated as of June 11, 2013). The amount of the bonus is equal to 4.4% of the related debt recovery, subject to the aggregate maximum bonus cap of $6.0 million; provided, that she remain continuously employed with us through the related payment date. As set forth therein, she is eligible to receive a debt recovery bonus upon any reduction in the debt outstanding under the Cerberus Term Loan, the Sun Term Loan Agreements and the Public Bonds. In connection with Kellwood Company’s sale of Royal Robbins in December 2012, Kellwood Company repaid $10.0 million of indebtedness under the Cerberus Term Loan. This repayment triggered a $440,000 debt recovery bonus for Ms. Granoff. Ms. Granoff has agreed to delay the payment of such bonus until the earlier of (i) December 31, 2013, (ii) the consummation of this offering, (iii) the consummation of a sale of all or substantially all of the Vince business to a third-party not affiliated with Kellwood Company or (iv) the termination of Ms. Granoff’s employment for any reason. This payment will reduce the amount of debt recovery bonus to which she would otherwise be entitled to receive upon the repayment of the Cerberus Term Loan, the Sun Term Loan Agreements and the Public Bonds in connection with the consummation of this offering on a dollar for dollar basis.
On September 24, 2013, Ms. Granoff and Kellwood Company entered into an amendment to her employment agreement. Pursuant to the terms of the amendment, Kellwood Company has agreed to pay the debt recovery bonus to Ms. Granoff upon the closing of this offering prior to paying the 1% restructuring fee to Sun Capital Management or repaying, refinancing or repurchasing the 7.625% Notes, each as described in “Use of Proceeds” and “Restructuring Transactions.” Vince, LLC is not a guarantor or obligor of the 7.625% Notes.
 
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In the event Ms. Granoff’s employment is terminated without cause or Ms. Granoff terminates her employment for good reason, she would be eligible to receive (i) any unpaid base salary through her termination date, together with a pro-rated portion of the annual bonus for the year in which her termination occurs, (ii) reimbursement for any unreimbursed business expenses incurred through her termination date, (iii) any accrued and unused vacation time, (iv) all other payments, benefits or fringe benefits to which she is entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant, (v) her base salary during a period ending on the 18-month anniversary of her termination date, less any salary she receives from other full-time employment after the 12-month anniversary of her termination, (vi) continued participation in our group health plan for 18 months or until she obtains other employment following the first anniversary of her termination and such employment offers comparable group health benefits for which she is eligible, (vii) the pro rata portion of shares subject to Ms. Granoff’s option grants which would have otherwise vested on the next scheduled vesting date had her employment continued until such time and (viii) any prior period bonus earned and not yet paid.
Lisa Klinger, Chief Financial Officer and Treasurer.     Effective December 10, 2012, Ms. Klinger entered into an employment agreement with Kellwood Company. Pursuant to the terms of her employment agreement, Ms. Klinger receives an annual base salary of $450,000. Her annual base salary will be increased to a minimum of $500,000 upon the earlier of completing her relocation or 18 months after the commencement of her employment. Under her employment agreement, Ms. Klinger was guaranteed an annual cash bonus of $350,000 for fiscal 2012. Beginning in fiscal 2013, in addition to base salary, Ms. Klinger is eligible to participate in the AHC 2013 Bonus Plan that provides her with the opportunity to earn a bonus targeted at 50% of her base salary.
In the event Ms. Klinger’s employment is terminated without cause, she would be eligible to receive (i) her base salary during a period ending on the earlier of the 12 month anniversary of her termination date and the date on which she secures replacement employment (the “salary continuation period”) and (ii) continued medical and dental coverage in accordance with the company’s medical plans that are then in place until the end of the salary continuation period, or at the company’s option, coverage under another medical and/or dental plan.
Arthur Gordon, Chief Operating Officer .    Beginning fiscal 2009, Mr. Gordon received an annual base salary of $800,000. In addition to base salary, Mr. Gordon was eligible to participate in the AHC 2012 Bonus Plan that provided him with the opportunity to earn a bonus targeted at 70% of his base salary. Effective May 1, 2013, Mr. Gordon entered into an amended and restated retirement agreement and related option cancellation agreement with Kellwood Company. Pursuant to the terms of his retirement agreement, Kellwood Company agreed to make the following payments to Mr. Gordon in the event he is terminated without cause or voluntarily resigns or retires after February 1, 2014: (i) any unpaid and earned cash incentive bonus for the prior year; (ii) a lump sum equal to 18 months of his base salary, plus a lump sum equal to the average of his three prior year cash incentive bonuses, each subject to Mr. Gordon’s execution of a satisfactory release; and (iii) provided that Mr. Gordon is paying the employee portion of his COBRA premium, the amount in excess of the COBRA premium for a period of 18 months or until he secures other employment. In such event, Kellwood Company may retain his exclusive consulting services, upon the mutual agreement of the parties, for a period beginning on his termination date and ending on the earlier of: (A) the 12-month anniversary of his termination date; (B) his death or disability; and (C) his termination as a consultant for cause. Mr. Gordon will earn a bonus of $130,563 upon the consummation of this offering, which constitutes a “Sale” under the terms of his retirement agreement. Such amount shall be paid upon the earlier of (1) 30 days following the consummation of this offering; (2) the payment of severance amounts to him; and (3) February 1, 2014. Notwithstanding the foregoing, he shall not be entitled to any payments under his retirement agreement if he voluntarily resigns or retires before February 2, 2014, upon his death or disability or if he is terminated for cause. Mr. Gordon agreed to cancel his
 
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outstanding Kellwood Company stock options in exchange for his entry into and payments under his retirement agreement. Mr. Gordon does not have, and will not have, any operational responsibilities relating to Vince following consummation of this offering and will not be one of our Named Executive Officers for fiscal 2013 or beyond.
Rea Laccone, former Chief Executive Officer.     Effective October 31, 2006, Ms. Laccone entered into an employment agreement with Kellwood Company, a subsidiary of AHC prior to the consummation of this offering. The agreement was amended and restated on August 13, 2010 and further amended on August 23, 2012. Pursuant to the terms of her amended and restated employment agreement, Ms. Laccone received an annual base salary of $800,000 from August 13, 2010 until November 1, 2011. In addition, Ms. Laccone was eligible to participate in the cash bonus plan which provided her with the opportunity to earn a bonus targeted at 40% of her base salary in fiscal 2011. Under the terms of the amended and restated employment agreement, Ms. Laccone’s base salary increased to $1,000,000 on November 1, 2011 and she became eligible to receive an annual cash incentive bonus in an amount equal to 3.5% of Vince EBITDA for Kellwood’s 2012, 2013 and 2014 fiscal years. Pursuant to the terms of her employment agreement as amended on August 23, 2012, Ms. Laccone received an annual base salary of $2,400,000 from June 26, 2012 through her resignation on January 31, 2013. The terms of the amended employment agreement also provided that Ms. Laccone was eligible to receive an annual cash incentive bonus in an amount equal to 3.5% of Vince EBITDA through June 26, 2012 and 2.4% of Vince EBITDA thereafter. In addition, Ms. Laccone was eligible to receive a transition bonus of up to $6.0 million during the period from June 26, 2012 through June 26, 2013. The amount of her actual transition bonus was $3.6 million, reflecting a prorated amount in accordance with the terms of her agreement as she resigned on January 31, 2013. See “—Summary Compensation Table” for the specific amounts of the performance bonus and transition payments paid to Ms. Laccone in fiscal 2011 and fiscal 2012 in accordance with the terms of her amended employment agreement. Ms. Laccone will not be one of our Named Executive Officers in fiscal 2013 or beyond.
Outstanding Equity Awards at Fiscal 2012 Year-End
The following table sets forth information regarding outstanding equity awards of Kellwood Company held by our Named Executive Officers at the end of fiscal 2012:

 	  	Options Awards(1)	
Name	  	Vesting
Commencement
Date(2)	  	Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable	 	  	Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable	 	  	Option
Exercise
Price
($)	 	  	Option
Expiration Date	
Jill Granoff	  	May 4, 2012	  	 	—	  	  	 	44,000	  	  	$	150.78	  	  	May 4, 2022	
Lisa Klinger	  	December 10, 2012	  	 	—	  	  	 	7,500	  	  	$	150.78	  	  	December 10, 2022	
Arthur Gordon(3)	  	—	  	 	—	  	  	 	—	  	  	 	—	  	  	—	
Rea Laccone	  	—	  	 	—	  	  	 	—	  	  	 	—	  	  	—	

(1)	Each stock option was granted pursuant to the 2010 Option Plan. As discussed above in “—Compensation of Named Executive Officers—Kellwood Equity Incentives,” the options previously issued to Ms. Granoff and Ms. Klinger will be exchanged for                  and                 options, respectively, to acquire Apparel Holding Corp. common stock, with an exercise price equal to $         .	
(2)	Ms. Granoff’s and Ms. Klinger’s options will vest 20% each year on the anniversary of the grant date beginning on the first anniversary of the grant date so long as they remain continuously employed with Kellwood Company. Notwithstanding the foregoing, unvested options will automatically vest upon the consummation of certain sale and change of control transactions involving Kellwood Company.	
(3)	As described below in “—Employment Agreements,” Mr. Gordon agreed to cancel his outstanding Kellwood Company stock options in exchange for payments under his retirement agreement. Such options were effectively surrendered and cancelled on October 4, 2012 in accordance with the terms of the related option cancellation agreement.	
 
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Director Compensation
During fiscal 2012, we did not make any compensation payments (including any equity grants) to our directors, for service as directors, as all of our directors were employees of AHC or affiliates Sun Capital, which will continue to be our controlling stockholder after consummation of this offering. Sun Cardinal, an affiliate of Sun Capital, will also have the authority to designate a majority of our directors after consummation of this offering. We did reimburse directors for out-of-pocket expenses they incurred in connection with their service as directors, including those incurred in connection with attending all board and committee meetings.
We will adopt a compensation policy with respect to our directors in contemplation of the consummation of this offering. All members of our board of directors that are not employed by us will be entitled to receive compensation for their services to the board of directors and related committees pursuant to the policy described below.
Following this offering, the annual fees paid to our non-employee directors and directors not employed by Sun Capital or its affiliates will be as follows:

Description	  	Amount	
Annual Retainer(1)	  	$50,000	
Retainer for Chair of Committee(1)	  	$15,000 for chairing our audit committee; $10,000 for chairing our compensation committee; and $5,000 for chairing our nominating and corporate governance committee	

(1)	Such amounts shall be paid to each of our non-employee directors elected or appointed to our board and, as applicable, for serving as the chair of one of our board committees in connection with the consummation of this offering. Such amounts shall be paid to each non-employee director elected or appointed after the consummation of this offering to our board and, as applicable, to serve as the chair of one of our committees, upon his or her appointment or election, with such amount calculated on a pro rata basis for the first year of service.	
All directors will also be entitled to be reimbursed for their reasonable out-of-pocket expenses incurred to attend meetings of our board of directors and related committees.
In addition, following this offering, our non-employee directors will be entitled to receive the following equity awards:
Annual Restricted Stock Grant.     On an annual basis, each of our non-employee directors then in office will receive a grant of $75,000 worth of restricted common stock. These shares of restricted common stock will vest over a three-year period from the grant date. Each non-employee director elected or appointed to our board in connection with the consummation of this offering will receive his or her annual grant of $75,000 worth of restricted stock in connection with the closing of this offering. Each non-employee director elected or appointed after the consummation of this offering will receive a pro rata amount of the annual grant for the first year in which he or she serves on our board based on the date such non-employee director is elected or appointed.
Director and Officer Indemnification and Limitation of Liability
Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we will indemnify our directors and 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 for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders or (ii) for acts or omissions not in good faith or acts or omissions that involve intentional misconduct or a knowing violation of law.
In addition, prior to the consummation of this offering, we will enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will
 
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provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL.
There is no pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.
Employee Stock Plans
2010 Option Plan
The 2010 Option Plan was adopted by the board of directors of Kellwood Company on June 30, 2010. As of February 2, 2013, Kellwood Company had reserved 100,000 shares of its common stock for issuance under the 2010 Option Plan. AHC will not grant any further awards under the 2010 Option Plan to any of Vince’s officers or directors after the consummation of this offering. Future awards to Vince’s executive officers and directors shall be granted by our board of directors or compensation committee under the Vince 2013 Incentive Plan, as described below.
Vince 2013 Incentive Plan
In connection with this offering, we intend to adopt the Vince 2013 Incentive Plan. We expect that the Vince 2013 Incentive Plan will provide for grants of stock options, stock appreciation rights, restricted stock, and other stock-based awards. Directors, officers and our employees, as well as others performing consulting or advisory services for us, would be eligible for grants under the Vince 2013 Incentive Plan. The purpose of the Vince 2013 Incentive Plan is to provide incentives that will attract, retain and motivate high performing officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our long-term success or compensation based on their performance in fulfilling their personal responsibilities. Set forth below is a summary of what we expect will be the material terms of the Vince 2013 Incentive Plan.
Administration .    The Vince 2013 Incentive Plan will be administered by our compensation committee. Among the compensation committee’s powers will be to determine the form, amount and other terms and conditions of awards; clarify, construe or resolve any ambiguity in any provision of the Vince 2013 Incentive Plan or any award agreement; amend the terms of outstanding awards; and adopt such rules, forms, instruments and guidelines for administering the Vince 2013 Incentive Plan as it deems necessary or proper. The compensation committee will have authority to administer and interpret the Vince 2013 Incentive Plan, to grant discretionary awards under the Vince 2013 Incentive Plan, to determine the persons to whom awards will be granted, to determine the types of awards to be granted, to determine the terms and conditions of each award, to determine the number of shares of common stock to be covered by each award, to make all other determinations in connection with the Vince 2013 Incentive Plan and the awards thereunder as the compensation committee deems necessary or desirable and to delegate authority under the Vince 2013 Incentive Plan to our executive officers.
Available Shares .    The aggregate number of shares of common stock which may be issued or used for reference purposes under the Vince 2013 Incentive Plan or with respect to which awards may be granted may not exceed              shares. The number of shares available for issuance under the Vince 2013 Incentive Plan may be subject to adjustment in the event of a reorganization, stock split, merger or similar change in the corporate structure or the outstanding shares of common stock. In the event of any of these occurrences, we may make any adjustments we consider appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the
 
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plan or covered by grants previously made under the plan. The shares available for issuance under the plan may be, in whole or in part, 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 the Vince 2013 Incentive Plan are for any reason cancelled, or expire or terminate unexercised, the shares covered by such awards may again be available for the grant of awards under the Vince 2013 Incentive Plan.
The maximum number of shares of our common stock with respect to which any stock option, stock appreciation right, shares of restricted stock or other stock-based awards that are subject to the attainment of specified performance goals and intended to satisfy Section 162(m) of the Code and may be granted under the Vince 2013 Incentive Plan during any fiscal year to any eligible individual will be              shares (per type of award). The total number of shares of our common stock with respect to all awards that may be granted under the Vince 2013 Incentive Plan during any fiscal year to any eligible individual will be              shares. There will be no annual limits on the number of shares of our common stock with respect to an award of restricted stock that are not subject to the attainment of specified performance goals to eligible individuals. The maximum number of shares of our common stock subject to any performance award which may be granted under the Vince 2013 Incentive Plan during any fiscal year to any eligible individual will be              shares. The total number of shares of our common stock subject to any award which may be granted under the Vince 2013 Incentive Plan during any fiscal year to any non-employee director will be             shares. The maximum value of a cash payment made under a performance award which may be granted under the Vince 2013 Incentive Plan during any fiscal year to any eligible individual will be $        . The maximum value of a cash payment made under a performance award which may be granted under the Vince 2013 Incentive Plan during any fiscal year to any non-employee director will be $        .
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 will be eligible to receive awards under the Vince 2013 Incentive Plan.
Award Agreement .    Awards granted under the Vince 2013 Incentive Plan are evidenced by award agreements, which need not be identical, that provide additional terms, conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, additional terms providing for the acceleration of exercisability or vesting of awards in the event of a change of control or conditions regarding the participant’s employment, as determined by the compensation committee.
Stock Options .    The compensation committee may grant nonqualified stock options to eligible individuals and incentive stock options only to eligible employees. The compensation committee will determine the number of shares of our common stock subject to each option, the term of each option, which may not exceed ten years, or five years in the case of an incentive stock option granted to a ten percent stockholder, the exercise price, the vesting schedule, if any, and the other material terms of each option. No incentive stock option or nonqualified stock option may have an exercise price less than the fair market value of a share of our common stock at the time of grant or, in the case of an incentive stock option granted to a ten percent stockholder, 110% of such share’s fair market value. Options will be exercisable at such time or times and subject to such terms and conditions as determined by the compensation committee at grant and the exercisability of such options may be accelerated by the compensation committee.
Stock Appreciation Rights .    The compensation committee may grant stock appreciation rights, which we refer to as SARs, either with a stock option, which may be exercised only at such times and to the extent the related option is exercisable, which we refer to as a Tandem SAR, or independent of a stock option, which we refer to as a Non-Tandem SAR. A SAR is a right to receive a payment in shares of our common stock or cash, as determined by the compensation committee, equal in value to the excess of the fair market value of one share of our common stock on the date of exercise over the
 
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exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by an SAR will be the exercise price per share of the related option in the case of a Tandem SAR and will be the fair market value of our common stock on the date of grant in the case of a Non-Tandem SAR. The compensation committee may also grant limited SARs, either as Tandem SARs or Non-Tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the Vince 2013 Incentive Plan, or such other event as the compensation committee may designate at the time of grant or thereafter.
Restricted Stock .    The compensation committee may award shares of restricted stock. Except as otherwise provided by the compensation committee upon the award of restricted stock, the recipient generally has the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or specifically set forth in the recipient’s restricted stock agreement. The compensation committee may determine at the time of award that the payment of dividends, if any, will be deferred until the expiration of the applicable restriction period.
Recipients of restricted stock are required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant restrictions is based on the attainment of performance goals, the compensation committee will establish for each recipient the applicable performance goals, formulae or standards and the applicable vesting percentages with reference to the attainment of such goals or satisfaction of such formulae or standards while the outcome of the performance goals are substantially uncertain. Such performance goals may incorporate provisions for disregarding, or adjusting for, changes in accounting methods, corporate transactions, including, without limitation, dispositions and acquisitions, and other similar events or circumstances. Section 162(m) of the Code requires that performance awards be based upon objective performance measures in order to qualify as “performance based compensation” for purposes of Section 162(m). The performance goals for restricted stock intended to qualify as “performance based compensation” will be based on one or more of the objective criteria set forth on an exhibit to the Vince 2013 Incentive Plan and are further discussed in general below.
Other Stock-Based Awards .    The compensation committee may, subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock and deferred stock units under the Vince 2013 Incentive Plan that are payable in cash or denominated or payable in or valued by shares of our common stock or factors that influence the value of such shares. The compensation committee may determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals for purposes of compliance with Section 162(m) of the Code and/or a minimum vesting period. The performance goals for performance-based other stock-based awards intended to qualify as “performance based compensation” will be based on one or more of the objective criteria set forth on an exhibit to the Vince 2013 Incentive Plan and discussed in general below.
Other Cash-Based Awards .    The compensation committee may grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as the compensation committee will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or conditions. If a cash-based award is subject to vesting conditions, the compensation committee may accelerate the vesting of such award in its discretion.
 
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Performance Awards .    The compensation committee may grant a performance award to a participant payable upon the attainment of specific performance goals. If the performance award is payable in cash, it may be paid upon the attainment of the relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the compensation committee. Based on service, performance and/or other factors or criteria, the compensation committee may, at or after grant, accelerate the vesting of all or any part of any performance award.
Performance Goals .    The compensation committee may grant awards of restricted stock, performance awards, and other stock-based awards that are intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. These awards may be granted, vest and be paid based on attainment of specified performance goals established by the committee. These performance goals may be based on the attainment of a certain target level of, or a specified increase or decrease in, one or more of the following measures selected by the compensation committee: (1) earnings per share; (2) operating income; (3) gross income; (4) net income, before or after taxes; (5) cash flow; (6) gross profit; (7) gross profit return on investment; (8) gross margin return on investment; (9) gross margin; (10) operating margin; (11) working capital; (12) earnings before interest and taxes; (13) earnings before interest, tax, depreciation and amortization; (14) return on equity; (15) return on assets; (16) return on capital; (17) return on invested capital; (18) net revenues; (19) gross revenues; (20) revenue growth; (21) annual recurring revenues; (22) recurring revenues; (23) service revenues; (24) license revenues; (25) sales or market share; (26) total stockholder return; (27) economic value added; (28) specified objectives with regard to limiting the level of increase in all or a portion of our bank debt or other long-term or short-term public or private debt or other similar financial obligations, which may be calculated net of cash balances and other offsets and adjustments as may be established by the compensation committee; (29) the fair market value of a share of our common stock; (30) the growth in the value of an investment in our common stock assuming the reinvestment of dividends; or (31) reduction in operating expenses.
To the extent permitted by law, the compensation committee may also exclude the impact of an event or occurrence which the compensation committee determines should be appropriately excluded, such as (1) restructurings, discontinued operations, extraordinary items and other unusual or non-recurring charges; (2) an event either not directly related to our operations or not within the reasonable control of management; or (3) a change in accounting standards required by generally accepted accounting principles.
Performance goals may also be based on an individual participant’s performance goals, as determined by the compensation committee.
In addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary, division or other operational unit, under one or more of the measures described above relative to the performance of other corporations. The compensation committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend those criteria.
Change in Control .    In connection with a change in control, as defined in the Vince 2013 Incentive Plan, the compensation committee may accelerate vesting of outstanding awards under the Vince 2013 Incentive Plan. In addition, such awards may be, in the discretion of the committee, (1) assumed and continued or substituted in accordance with applicable law; (2) purchased by us for an amount equal to the excess of the price of a share of our common stock paid in a change in control over the exercise price of the awards; or (3) cancelled for no consideration if the price of a share of our common stock paid in a change in control is less than the exercise price of the award. The compensation committee may also provide for accelerated vesting or lapse of restrictions of an award at any time.
 
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Stockholder Rights .    Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant has no rights as a stockholder with respect to shares of our common stock covered by any award until the participant becomes the record holder of such shares.
Amendment and Termination.     Notwithstanding any other provision of the Vince 2013 Incentive Plan, our board of directors may at any time amend any or all of the provisions of the Vince 2013 Incentive Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise required by law or specifically provided in the Vince 2013 Incentive Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely affected without the consent of such participant.
Transferability.     Awards granted under the Vince 2013 Incentive Plan generally will be nontransferable, other than by will or the laws of descent and distribution, except that the committee may provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members.
Recoupment of Awards.     The Vince 2013 Incentive Plan will provide that awards granted thereunder are subject to any recoupment policy that we may have in place or any obligation that we may have regarding the clawback of “incentive-based compensation” under the Exchange Act or under any applicable rules and regulations promulgated by the Securities and Exchange Commission.
Effective Date; Term.     The Vince 2013 Incentive Plan will be effective when adopted by the board of directors and approved by stockholders. The Vince 2013 Incentive Plan will expire ten years following its approval by our board of directors. Any award outstanding under the Vince 2013 Incentive Plan at the time of expiration will remain in effect until such award is exercised or has expired in accordance with its terms.
Severance Benefits
Upon certain types of terminations of employment, severance benefits may be payable to our Named Executive Officers. Severance benefits payable to the Named Executive Officers are addressed in their employment agreements. See “—Employment Agreements.”
Vince Employee Stock Purchase Plan
Prior to consummation of this offering, our board of directors and stockholders intend to adopt the Vince ESPP. If adopted, the Vince ESPP would be effective as of the consummation of this offering. The Vince ESPP would generally be designed to encourage employees to become stockholders and to increase their ownership of our common stock. We anticipate that shares of our common stock issued under the Vince ESPP would be issued at a discount to market no greater than     % and with a measurement period equal to                     . The ESPP would also be intended to comply with the requirements of Section 423 of the Code and to assure the participants of the tax advantages provided thereby.
Section 401(k) Plan
We provide the defined contribution Kellwood Retirement Savings Plan, a 401(k) Plan, as well as various group health and welfare programs that are generally available to all Kellwood and Vince employees, including the Named Executive Officers.
 
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Under the plan, eligible employees electing to participate may contribute up to 100% of their pretax income, subject to IRS rules limiting an individual’s total contributions and the application of IRS tests designed to ensure that the plan does not discriminate in favor of highly compensated employees.
Effective February 1, 2013, we reinstated the 401(k) for all employees. We will match 50% up to the first 3% of the employee’s deferral. We did not make any contributions to any Named Executive Officer’s 401(k) account in fiscal 2012.
 
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 DESCRIPTION OF CERTAIN INDEBTEDNESS OF VINCE, LLC
In connection with this offering and the debt refinancing we intend to complete concurrent with the consummation of this offering, we anticipate entering into a new revolving facility and a new term loan facility. We are still in preliminary discussions with potential arrangers and lenders with respect to the terms of our new credit facilities and the specific form of the debt refinancing transaction. In general, we expect that our new credit facilities will contain representations and warranties, financial and restrictive covenants, events of default and collateral arrangements that are customary for this type of financing. In this regard, we expect that our new credit facilities will condition our ability to pay dividends on our common stock on our continued compliance with one or more financial ratios. The actual terms of our new credit facilities will depend on the results of negotiations with our lenders. We expect that affiliates of certain of the underwriters will participate as arrangers and/or lenders under our new credit facilities.
 
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 OTHER INFORMATION RELATED TO THIS OFFERING
This section contains additional information related to Apparel Holding Corp., the entity offering shares of common stock in this offering. Investors will be investing in the Vince business, however they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC.
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF AHC
Shared Services Agreement
In connection with consummation of this offering, Vince, LLC will enter into the Shared Services Agreement with Kellwood Company, LLC pursuant to which Kellwood will provide support services in various operational areas including, among other things, retail e-commerce, finance, distribution, logistics, information technology, accounts payable, credit and collections and payroll and benefits.
The Shared Services Agreement may be modified or supplemented to include new services under terms and conditions to be mutually agreed upon in good faith by the parties. The fees for all services received by Vince, LLC from Kellwood, including any new services mutually agreed upon by the parties, will be at cost. Such costs shall be the full amount of any and all actual and direct out-of-pocket expenses (including base salary and wages but without providing for any margin of profit or allocation of depreciation or amortization expense) incurred by the service provider or its affiliates in connection with the provision of the services.
We may terminate any or all of the services at any time for any reason (with or without cause) upon giving Kellwood the required advance notice for termination for that particular service. Additionally, the provision of the following services, which are services which require a term as a matter of law and services which are based on a third-party agreement with a set term, shall terminate automatically upon the related date specified on the schedules to the Shared Services Agreement:                     ;                     ; and                     . If no specific notice requirement has been provided, 90 days prior written notice shall be required to be given. Upon the termination of certain services, Kellwood may no longer be in a position to provide certain other related services. Kellwood must notify us within 10 days following our request to terminate any services if they will no longer be able to provide other related services. Assuming we proceed with our request to terminate the original services, such related services shall also be terminated in connection with such termination.
We will be invoiced by Kellwood monthly for these amounts and generally be required to pay within 15 business days of receiving such invoice. The payments will be trued-up and can be disputed once each fiscal quarter.
Tax Receivable Agreement
In connection with the consummation of this offering, Vince Holding Corp. will enter into the Tax Receivable Agreement with the Pre-IPO Stockholders. AHC and its former subsidiaries have generated certain tax benefits (including NOLs and tax credits) prior to the IPO Restructuring Transactions and will generate certain section 197 intangible deductions, or the Pre-IPO Tax Benefits, which would reduce the actual liability for taxes that we might otherwise be required to pay. The Tax Receivable Agreement provides for payments to the Pre-IPO Stockholders in an amount equal to 85% of the aggregate reduction in taxes payable realized by us and our subsidiaries from the utilization of the Pre-IPO Tax Benefits (the “Net Tax Benefit”).
For purposes of the Tax Receivable Agreement, the Net Tax Benefit shall equal (i) with respect to a taxable year, the excess, if any, of (A) our liability for taxes using the same methods, elections, conventions and similar practices used on the relevant company return assuming there were no Pre-IPO Tax Benefits over (B) our actual liability for taxes for such taxable year (the “Realized Tax Benefit”), plus (ii) for each prior taxable year, the excess, if any, of the Realized Tax Benefit reflected on an amended schedule applicable to such prior taxable year over the Realized Tax Benefit reflected on the original tax benefit schedule for such prior taxable year, minus (iii) for each for each prior taxable year, the excess, if any, of the Realized Tax Benefit reflected on the amended schedule for
 
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such prior taxable year; provided, however, that to extent any of the adjustments described in clauses (ii) and (iii) were reflected in the calculation of the tax benefit payment for any subsequent taxable year, such adjustments shall not be taken into account in determining the Net Tax Benefit for any subsequent taxable year.
While the Tax Receivable Agreement is designed with the objective of causing our annual cash costs attributable to federal, state and local income taxes (without regard to our continuing 15% interest in the Pre-IPO Tax Benefits) to be the same as that which we would have paid had we not had the Pre-IPO Tax Benefits available to offset our federal, state and local taxable income, there are circumstances in which this may not be the case. In particular, the Tax Receivable Agreement provides that any payments by us thereunder shall not be refundable. In that regard, the payment obligations under the Tax Receivable Agreement differ from a payment of a federal income tax liability in that a tax refund would not be available to us under the Tax Receivable Agreement even if we were to incur a net operating loss for federal income tax purposes in a future tax year. Similarly, the Pre-IPO Stockholders will not reimburse us for any payments previously made if any tax benefits relating to such payments are subsequently disallowed, although the amount of any such tax benefits subsequently disallowed will reduce future payments (if any) otherwise owed to such Pre-IPO Stockholders. In addition, depending on the amount and timing of our future earnings (if any) and on other factors including the effect of any limitations imposed on our ability to use the Pre-IPO Tax Benefits, it is possible that all payments required under the Tax Receivable Agreement could become due within a relatively short period of time following this offering.
If we did not enter into the Tax Receivable Agreement, we would be entitled to realize the full economic benefit of the Pre-IPO Tax Benefits to the extent allowed by federal, state and local law. The Tax Receivable Agreement is designed with the objective of causing our annual cash costs attributable to federal, state and local income taxes (without regard to our continuing 15% interest in the Pre-IPO Tax Benefits) to be the same as we would have paid had we not had the Pre-IPO Tax Benefits available to offset our federal, state and local taxable income. As a result, stockholders purchasing shares in this offering will not be entitled to the economic benefit of the Pre-IPO Tax Benefits that would have been available if the Tax Receivable Agreement were not in effect, except to the extent of our continuing 15% interest in the Pre-IPO Benefits.
Additionally, the payments we make to the Pre-IPO Stockholders under the Tax Receivable Agreement are not expected to give rise to any incidental tax benefits to us, such as deductions or an adjustment to the basis of our assets.
An affiliate of Sun Capital may elect to terminate the Tax Receivable Agreement upon the occurrence of a Change of Control (as defined below). In connection with any such termination, we will be obligated to pay the present value (calculated at a rate per annum equal to LIBOR plus 300 basis points as of such date) of all remaining Net Tax Benefit payments that would be required to be paid to the Pre-IPO Stockholders from such termination date, applying the valuation assumptions set forth in the Tax Receivable Agreement (the “Early Termination Period”). “Change of control,” as defined in the Tax Receivable Agreement means the occurrence of: (i) the acquisition by any person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than Sun Capital and any investment fund controlled by or under common control with Sun Capital (collectively with Sun Capital, the “Sun Entities”) in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (as defined in Rule 13d-3 and 13d-5 under the Exchange Act or any successor provision), directly or indirectly of 50% of more of the total voting power of the voting stock of Apparel Holding Corp. or any of its direct or indirect parent entities; or (ii) the sale, lease, transfer or other conveyance, in one or a series of related transactions, of all or
 
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substantially all of the assets of Apparel Holding Corp. and its subsidiaries, taken as a whole, to any person other than to a Sun Entity. We may also terminate the Tax Receivable Agreement by paying the Early Termination Payment to the Pre-IPO Stockholders. Additionally, the Tax Receivable Agreement provides that in the event that we breach any material obligations under the Tax Receivable Agreement by operation of law as a result of the rejection of the Tax Receivable Agreement in a case commenced under the Bankruptcy Code, then the Early Termination Payment plus other outstanding amounts under the Tax Receivable Agreement shall become due and payable.
The term of the Tax Receivable Agreement will commence upon consummation of the IPO Restructuring Transactions and will continue until the earlier of (i) the date all such tax benefits have been utilized or expired and (ii) the last day of the tax year including the tenth anniversary of the IPO Restructuring Transactions, unless earlier terminated in accordance with the terms thereof.
Transfer Agreement
In connection with consummation of the IPO Restructuring Transactions, Kellwood Company, LLC and Vince Intermediate Holding, LLC will enter into a transfer agreement (the “Transfer Agreement”). Pursuant to the terms of the Transfer Agreement, Kellwood Company, LLC will distribute the Vince, LLC equity interests to Vince Intermediate Holding, LLC in exchange for the Kellwood Note Receivable.
Apparel Holding Corp. will agree to contribute the proceeds of this offering to Vince Intermediate Holding, LLC immediately following the consummation of this offering. Vince Intermediate Holding, LLC will agree to pay Kellwood Company, LLC the principal amount outstanding under the Kellwood Note Receivable in full satisfaction of its obligations thereunder after the receipt of such proceeds and will assume Apparel Holding Corp.’s obligations under the merger agreement related to the 2008 acquisition of Kellwood Company by affiliates of Sun Capital pursuant to the terms of the Transfer Agreement. Additionally, Kellwood Company, LLC will be obligated to use proceeds from the Kellwood Note Receivable to immediately repay, refinance or discharge indebtedness outstanding under the Cerberus Term Loan, the Sun Term Loan Agreements, the Public Bonds and the 3.5% Convertible Notes (after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates), or to place an amount equal to the face value of any such indebtedness that is not immediately repaid, refinanced or discharged at the closing of this offering into escrow, as described in “Use of Proceeds” and the “Restructuring Transactions,” and to separately refinance the Wells Fargo Facility.
In accordance with the terms of the Transfer Agreement, Kellwood Company, LLC will agree to indemnify us for any losses which we may suffer, sustain or become subject to, relating to the Kellwood Company, LLC business or in connection with any contract contributed to us by Kellwood Company which is not by its terms permitted to be assigned. Additionally, Vince Intermediate Holding, LLC will agree to indemnify Kellwood Company, LLC against any losses which Kellwood Company, LLC may suffer, sustain or become subject to relating to the Vince business. The parties also agreed, upon the request of either the other party to, without further consideration, execute and deliver, or cause to be executed and delivered, such other instruments of conveyance, transfer, assignment and confirmation, and shall take or cause to be taken, such further or other actions as the other party may deem necessary or desirable to carry out the intent and purpose of the Transfer Agreement and give effect to the transactions contemplated thereby.
Kellwood Note Receivable
In connection with the Vince Intermediate Holding, LLC’s acquisition of Vince, LLC, Vince Intermediate Holding, LLC will issue the Kellwood Note Receivable in the aggregate principal amount
 
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of $         million to Kellwood Company, LLC. No interest will accrue under the Kellwood Note Receivable as the Kellwood Note Receivable will be issued immediately prior to the consummation of this offering and repaid on the date of issuance.
Debt Recovery Bonus to Our Chief Executive Officer
Jill Granoff, our CEO, will receive a debt recovery bonus in connection with the repayment of certain Kellwood Company indebtedness, calculated as 4.4% of the related debt recovery, capped at $6.0 million (which includes $440,000 in a prior unpaid debt recovery bonus) upon consummation of this offering. See “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements” for additional information. Kellwood Company, LLC will use proceeds from the repayment of the Kellwood Note Receivable to pay this bonus to Ms. Granoff at the closing of this offering. See “Use of Proceeds” and “Restructuring Transactions.” Kellwood Company has agreed, pursuant to the terms of her amended employment agreement to pay such fee to her prior to paying the 1% restructuring fee to Sun Capital Management or repaying, refinancing or repurchasing the 7.625% Notes. Vince, LLC is not a guarantor or obligor of the 7.625% Notes. See “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements.”
Earnout Agreement
In connection with the acquisition of the Vince business, Kellwood Company entered into an agreement with CRL Group providing for contingent earnout payments as additional consideration for the purchase of substantially all of the assets and properties of CRL Group (the “Earnout Agreement”). Rea Laccone is a member of the CRL Group. The Earnout Agreement provides for the payment of contingent annual earnout payments to CRL Group for five periods between 2007 and 2011, with the contingent amounts earned based on the amount of net sales and gross margin in each such period. The Earnout Agreement also provides for a cumulative contingent payment based on the amount of net sales during the Earnout Agreement period. Kellwood Company made payments under the Earnout Agreement of $0.8 million, $58.5 million and $4.5 million for fiscal 2012, fiscal 2011 and fiscal 2010, respectively.
Certain Indebtedness to Sun Capital
Sun Capital Loan Agreement.     Apparel Holding Corp. is party to a Loan Authorization Agreement, originally dated February 13, 2008, by and between Apparel Holding Corp, SCSF Kellwood Finance and Sun Kellwood, as successors to Bank of Montreal for a $72.0 million line of credit (the “Sun Capital Loan Agreement”). On July 19, 2012, Apparel Holding Corp., SCSF Finance and Sun Kellwood Finance entered into an Amendment No. 4 of the Sun Capital Loan Agreement pursuant to which the maturity date of our indebtedness was extended to August 6, 2014. On December 28, 2012, Apparel Holding Corp., SCSF Finance and Sun Kellwood Finance entered into an Agreement Regarding Amendment No. 4 forgiving all our unpaid interest accrued under the Sun Capital Loan Agreement prior to July 19, 2012. During fiscal 2012, fiscal 2011 and fiscal 2010, we made no payments (whether with respect to principal or interest thereon) on our indebtedness under the Sun Capital Loan Agreement. From July 19, 2012, interest accrues at a rate equal to the rate per annum announced by the Bank of Montreal, Chicago, Illinois, from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the U.S. plus 2%. Effective June 18, 2013, affiliates of Sun Capital contributed all indebtedness outstanding the Sun Capital Loan Agreement to AHC as a capital contribution in the Sun Capital Contribution. See “Restructuring Transactions” for additional information.
 
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Sun Promissory Notes.     Apparel Holding Corp. is party to a $225,000,000 Senior Subordinated Promissory Note and a $75,000,000 Senior Subordinated Promissory Note, each in favor of Sun Kellwood Finance and originally dated May 2, 2008 (collectively, the “Sun Promissory Notes”). On July 19, 2012, we entered into an Amendment No. 1 with Sun Kellwood Finance regarding each of our Sun Promissory Notes pursuant to which the maturity date of our indebtedness thereunder was extended to October 15, 2016 and our interest rate thereunder was decreased from 15% per annum to 12% per annum. On December 28, 2012, Apparel Holding Corp. and Sun Kellwood Finance entered into an Agreement Regarding Amendment No. 1 with respect to each Sun Promissory Notes forgiving all our unpaid interest which accrued prior to July 19, 2012. During fiscal 2012, fiscal 2011 and fiscal 2010, we paid no interest on our indebtedness under the Sun Promissory Notes and we paid none of the principal. Affiliates of Sun Capital contributed all indebtedness outstanding under the Sun Promissory Notes, respectively, to AHC as a capital contribution effective June 18, 2013. See “Restructuring Transactions” for additional information.
Capital Contribution.     On June 18, 2013, in anticipation of this offering, affiliates of Sun Capital contributed $407.5 million of indebtedness under the Sun Capital Loan Agreement and the Sun Promissory Notes to Apparel Holding Corp. in the Sun Capital Contribution. See “Restructuring Transactions” for additional information.
Sun Term Loan Agreements.     Kellwood Company and certain of its domestic subsidiaries, as borrowers, affiliates of Sun Capital, as lenders, and Sun Kellwood Finance, as collateral agent, are party to the Sun Term Loan Agreements. On September 1, 2012, Vince, LLC was joined to each of the Sun Term Loan Agreements and the related security agreement as a borrower party. As a result, Vince, LLC is jointly and severally liable up to its allocable amount for Kellwood’s outstanding indebtedness under the Sun Term Loan Agreements, and substantially all of Vince, LLC’s assets are collateral for such indebtedness. Vince, LLC will be released as a borrower party or guarantor thereunder in connection with consummation of the IPO Restructuring Transactions upon repayment of the Sun Term Loan Agreements. The Term A Loan, Term B Loan, Term C Loan and Term D Loan under the Sun Term Loan Agreements bear interest at a rate of 10% per annum. The Term E Loan, Term F Loan and Term G Loan under the Sun Term Loan Agreements bear interest at a rate of 12% per annum. During fiscal 2012, fiscal 2011 and fiscal 2010, Kellwood Company paid no interest on, and repaid no principal amounts under, the Sun Term Loan Agreements. During fiscal 2012, fiscal 2011 and fiscal 2010, the largest aggregate principal amount outstanding under each Sun Term Loan Agreement was as follows:

Term A Loan:	  	$	17,251,562	  	
Term B Loan:	  	$	27,507,775	  	
Term C Loan:	  	$	17,945,208	  	
Term D Loan:	  	$	11,595,349	  	
Term E Loan:	  	$	5,600,546	  	
Term F Loan:	  	$	27,343,843	  	
The Term G Loan was entered into on June 28¸ 2013 and there were no amounts outstanding under that loan in each of fiscal 2012, fiscal 2011 and fiscal 2010. The Sun Term Loan Agreements will terminate on the earlier of (i) January 19, 2017 and (ii) the date on which the Cerberus Term Loan has been paid in full and commitments to lenders thereunder have been terminated, except if the maturity of the Cerberus Term Loan is extended, the termination date of the Sun Term Loan Agreements will be extended to the same date.
The indebtedness outstanding under the Sun Term Loan Agreements will be repaid in connection with this offering (after giving effect to the forgiveness of certain indebtedness or a capital contribution to be made by Sun Capital or its affiliates). See “Use of Proceeds” and “Restructuring Transactions.”
 
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For additional information on our indebtedness to affiliates of Sun Capital, see “Additional Information Related to Vince—Supplemental Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vince, LLC” and “Information Related to AHC—Management’s Discussion and Analysis of Financial Condition and Results of Operations of AHC.”
Management Fees
In connection with the acquisition of Kellwood Company by affiliates of Sun Capital in 2008, Sun Capital Management, an affiliate of Sun Capital, entered into a Management Services Agreement with Kellwood Company that expires in May 2018, with automatic one-year extensions thereafter. Under this agreement, Sun Capital Management provides Kellwood Company with consulting and advisory services, including services relating to financing alternatives, financial reporting, accounting and management information systems. In exchange, Kellwood Company reimburses Sun Capital Management for reasonable out-of-pocket expenses incurred in connection with providing consulting and advisory services, additional and customary and reasonable fees for management consulting services provided in connection with corporate events, and also pays an annual management fee equal to $2.2 million payable in equal quarterly installments. A portion of the management fees incurred by Kellwood Company were charged to Vince, LLC in the amounts of $0.8 million, $0.4 million and $0.4 million for fiscal 2012, fiscal 2011 and fiscal 2010, respectively.
Upon the consummation of certain corporate events involving Kellwood Company or its direct or indirect subsidiaries (including restructurings and equity offerings), Kellwood Company is required to pay Sun Capital Management a transaction fee in an amount equal to 1% of the aggregate consideration (including assumed debt and long-term liabilities and the value of any refinancing consummated by Kellwood Company, LLC in connection with this offering) paid to or by Kellwood Company and any of its direct or indirect subsidiaries or stockholders. It is currently estimated that this restructuring fee will total $3.5 million. The obligation to pay such amount to Sun Capital Management will be an obligation of Kellwood Company, LLC after consummation of the IPO Restructuring Transactions; provided that such amount shall be repaid at the closing of this offering with proceeds from the repayment of the Kellwood Note Receivable. See “Use of Proceeds” and “Restructuring Transactions.”
As a subsidiary of Kellwood Company, Vince, LLC guarantees, jointly and severally, Kellwood Company’s payment obligations under the Management Services Agreement, which payment Sun Capital Management may seek from Vince, LLC in the first instance without first proceeding against Kellwood Company. In addition, as a subsidiary of Kellwood Company, Vince, LLC has agreed to indemnify Sun Capital Management and certain affiliates, related persons and any successor by operation of law against any liabilities, including legal fees, whether or not related to the performance by such persons of Sun Capital Management’s obligations under the Management Services Agreement. Vince, LLC will be released as a guarantor of the Management Services Agreement following the completion of the IPO Restructuring Transactions and this offering and the payment of this 1% restructuring fee, at which time the Management Services Agreement will be terminated.
Sun Capital Consulting Agreement
In connection with this offering, we intend to enter into an agreement with Sun Capital Management to (i) reimburse Sun Capital Management or any of its affiliates providing consulting services under the agreement for out-of-pocket expenses incurred in providing consulting services to us and (ii) provide Sun Capital Management with customary indemnification for any such services.
 
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The agreement will commence upon completion of this offering and, unless earlier terminated by us or Sun Capital Management as described below, will terminate on the tenth anniversary of the completion of this offering. Under the consulting agreement, we will have no obligation to pay Sun Capital Management or any of its affiliates any consulting fees other than those which are approved by a majority of our directors that are not affiliated with Sun Capital. To the extent such fees are approved, we will be obligated to pay such fees in addition to reimbursing Sun Capital Management or any of its affiliates that provide us services under the consulting agreement for all reasonable out-of-pocket fees and expenses incurred by such party in connection with the provision of consulting services under the consulting agreement and any related matters. Reimbursement of such expenses shall not be conditioned upon the approval of a majority of our directors that are not affiliated with Sun Capital Management, and shall be payable in addition to any fees that such directors may approve.
Neither Sun Capital Management nor any of its affiliates will be liable to us or our affiliates, securityholders or creditors for (1) any liabilities arising out of, related to, caused by, based upon or in connection with the performance of services under the consulting agreement, unless such liability is proven to have resulted directly and primarily from the willful misconduct of such person or (2) pursuing any outside activities or opportunities that may conflict with our best interests, which outside activities we consent to and approve under the consulting agreement, and which opportunities neither Sun Capital Management nor any of its affiliates will have any duty to inform us of. In no event will the aggregate of any liabilities of Sun Capital Management or any of its affiliates exceed the aggregate of any fees paid under the consulting agreement.
In addition, we are required to indemnify Sun Capital Management, its affiliates and any successor by operation of law against any and all liabilities, whether or not arising out of or related to such party’s performance of services under the consulting agreement, except to the extent proven to result directly and primarily from such person’s willful misconduct. We are also required to defend such parties in any lawsuits which may be brought against such parties and advance expenses in connection therewith. In the case of affiliates of Sun Capital Management that have rights to indemnification and advancement from affiliates of Sun Capital, we agree to be the indemnitor of first resort, to be liable for the full amounts of payments of indemnification required by any organizational document of such entity or any agreement to which such entity is a party, and that we will not make any claims against any affiliates of Sun Capital Partners for contribution, subrogation, exoneration or reimbursement for which they are liable under any organizational documents or agreement.
Sun Capital Management may, in its sole discretion, elect to terminate the consulting agreement at any time. We may elect to terminate the consulting agreement if SCSF Cardinal, LLC, Sun Cardinal, LLC or any of their respective affiliates’ aggregate ownership of our equity securities falls below 10%.
Indemnification Agreements
Prior to the consummation of this offering, we will enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation will provide that for so long as affiliates of Sun Capital own 30% or more of our outstanding shares of common stock, Sun Cardinal, a Sun Capital affiliate, will have the right to designate a majority of our board of directors. For so long as Sun Cardinal has the right to designate a majority of our board of directors, the directors designated by Sun
 
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Cardinal are expected to constitute a majority of each committee of our board of directors (other than the Audit Committee), and the chairman of each of the committees (other than the Audit Committee) is expected to be a director serving on the committee who is selected by affiliates of Sun Capital, provided that, at such time as we are not a “controlled company” under the NYSE corporate governance standards, our committee membership will comply with all applicable requirements of those standards and a majority of our board of directors will be “independent directors,” as defined under the rules of the NYSE, subject to any applicable phase in requirements.
Stockholders’ Agreement
In connection with the February 2008 acquisition of Kellwood Company by affiliates of Sun Capital, Apparel Holding Corp. entered into a stockholders’ agreement with affiliates of Sun Capital and certain minority stockholders of Apparel Holding Corp. on February 20, 2008. Under the terms of this agreement, these minority stockholders have agreed and any future minority stockholders must agree to vote all of their Apparel Holding Corp. capital stock (including warrants and options to purchase such capital stock and securities convertible or exchangeable for capital stock), to the extent such capital stock has voting rights, in the manner specified by Sun Cardinal in connection with certain fundamental transactions, including this offering and in the IPO Restructuring Transactions, in the election of our directors and any other matter on which stockholders of Delaware corporations generally have a right to vote, and to grant an irrevocable proxy to Sun Cardinal with respect to such securities. This agreement also subjects such minority stockholders to certain transfer restrictions and drag-along rights with respect to their Apparel Holding Corp. capital stock, and grants to them certain tag-along and preemptive rights with respect to issuances of Apparel Holding Corp. capital stock by Apparel Holding Corp. to Sun Capital and its affiliates.
Sun Cardinal has the right, in its sole discretion, to terminate all or any portion of the stockholders’ agreement immediately prior to the effectiveness of the registration statement relating to this offering. Sun Cardinal has advised us that it intends to terminate such agreement in its entirety prior to the consummation of this offering. If such termination right is not exercised, the stockholders’ agreement will otherwise terminate automatically on the later of (a) the date on which Sun Cardinal, SCSF Cardinal and their respective affiliates no longer own or control at least 25% of our common stock on a fully-diluted basis and (b) the date on which Sun Cardinal, SCSF Cardinal and their respective affiliates no longer control our board of directors.
Securityholders’ Agreement
Apparel Holding Corp. and Kellwood Company entered into a securityholders’ agreement with certain minority stockholders of Kellwood Company on June 30, 2010. Under the terms of this agreement, each minority stockholder has agreed to vote all their debt and equity securities of Kellwood Company and, where applicable, of Apparel Holding Corp. in the manner specified by Apparel Holding Corp. in connection with certain transactions (including this offering), in the election of Kellwood Company directors and on any other matter on which the stockholders of Delaware corporations generally have a right to vote or which is submitted to a vote of the Kellwood Company stockholders, and to grant an irrevocable proxy to us with respect to such securities. This agreement also subjects such minority stockholders to certain transfer restrictions and drag-along rights with respect to Kellwood Company capital stock. It grants to them certain tag-along rights with respect to any debt or equity Kellwood Company securities held by Apparel Holding Corp.
Under the securityholders’ agreement, Kellwood Company has the option, but not the obligation, to repurchase the debt and equity securities of Kellwood Company and, where applicable, of Apparel Holding Corp., held by minority stockholders immediately prior to the effective time of this offering. The
 
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securityholders’ agreement will automatically terminate on the later of (a) the date on which we no longer own or control at least 25% of Kellwood Company’s common stock on a fully-diluted basis and (b) the date on which we no longer control Kellwood Company’s board. As Apparel Holding Corp. will no longer own or control Kellwood Company, LLC after consummation of this offering, the securityholders’ agreement will automatically terminate upon the consummation of the IPO Restructuring Transactions, which will occur immediately prior to this offering.
Registration Agreement
Apparel Holding Corp. entered into a registration agreement with Sun Cardinal and SCSF Cardinal and certain other investors in connection with the February 2008 acquisition of Kellwood Company by affiliates of Sun Capital. Pursuant to the terms of this agreement, holders of at least a majority of “Sun Registrable Securities” (which include (i) shares of Apparel Holding Corp. common stock originally issued to Sun Capital and its affiliates; (ii) all shares of common stock or other securities of Apparel Holding Corp. issuable upon the conversion, exercise or exchange of Apparel Holding Corp. common stock in connection with certain reorganization transactions; and (iii) any other shares of common stock or other securities of Apparel Holding Corp. held by persons holding the securities described in clauses (i) and (ii)) are entitled to request that Apparel Holding Corp. register its shares on a registration statement on one or more occasions in the future. Sun Capital and its affiliates and the other investors party to the registration agreement are also eligible to participate in certain registered offerings by Apparel Holding Corp., subject to the restrictions in the registration rights agreement. The Pre-IPO Stockholders have been deemed to waive, or have affirmatively waived, their piggy back registration rights to participate in this offering in accordance with the terms of the registration agreement. We are obligated, within 30 days of receiving a request for registration, to file with the SEC a registration statement with respect to such registrable securities. In addition, we are obligated to use our best efforts to make short-form registrations on Form S-3 available for the sale of registrable securities after the consummation of this offering. Apparel Holding Corp. will pay the expenses of the investors party to the registration agreement in connection with their exercise of the rights described in this paragraph, other than underwriting commissions or selling commissions attributable to the registrable securities sold by the holders thereof, as well reimburse the holders of registrable securities included in any registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the registrable securities included in such registration. Our obligation to bear all registration expenses is absolute and does not depend on whether any contemplated offering is completed or whether any registration statement is declared effective.
Employment Agreements
See “Additional Information Related to Vince—Vince Executive Compensation—Employment Agreements” for a description of our employment agreements with certain of our executive officers.
Statement of Policy Regarding Transactions with Related Persons
In connection with this offering, we will adopt a written statement of policy with respect to related party transactions, which is administered by our Nominating and Corporate Governance Committee. Under our related party transaction policy, a “Related Party Transaction” is any transaction, arrangement or relationship between us or any of our subsidiaries and a Related Person not including any transactions involving less than $120,000 when aggregated with all similar transactions, or transactions that have received pre-approval of our Nominating and Corporate Governance Committee. A “Related Person” is any of our executive officers, directors or director nominees, any stockholder beneficially owning in excess of 5% of our stock or securities exchangeable for our stock,
 
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any immediate family member of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is an executive officer, a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest in such entity.
Pursuant to our related party transaction policy, a Related Party Transaction may only be consummated or may only continue if:
 
 	Ÿ 	 	our Nominating and Corporate Governance Committee approves or ratifies such transaction in accordance with the terms of the policy; or	
 
 	Ÿ 	 	the chair of our Nominating and Corporate Governance Committee pre-approves or ratifies such transaction and the amount involved in the transaction is less than $120,000, provided that for the Related Party Transaction to continue it must be approved by our Audit Committee at its next regularly scheduled meeting.	
If advance approval of a Related Party Transaction is not feasible, then that Related Party Transaction will be considered and, if our Nominating and Corporate Governance Committee determines it to be appropriate, ratified, at its next regularly scheduled meeting. If we decide to proceed with a Related Party Transaction without advance approval, then the terms of such Related Party Transaction must permit termination by us without further material obligation in the event our ratification is not forthcoming at our next regularly scheduled meeting.
Transactions with Related Persons, though not classified as Related Party Transactions by our related party transaction policy and thus not subject to its review and approval requirements, may still need to be disclosed if required by the applicable securities laws, rules and regulations.
 
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 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF AHC
The following table contains information about the beneficial ownership of our common stock as of                 , 2013 and as adjusted to give effect to this offering by:
 
 	Ÿ 	 	each person, or group of persons, who beneficially owns more than 5% of our capital stock;	
 
 	Ÿ 	 	each of our named executive officers;	
 
 	Ÿ 	 	each of our directors as of the consummation of this offering; and	
 
 	Ÿ 	 	all directors and executive officers as a group.	
For further information regarding material transactions between us and certain of our stockholders, see “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC.”
Beneficial ownership and percentage ownership are determined in accordance with the rules and regulations of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to restrictions, options or warrants held by that person that are currently exercisable or exercisable within 60 days of                 , 2013 are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table or pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name.
Our calculation of the percentage of beneficial ownership prior to the offering is based on              shares of our common stock outstanding on                 , 2013. Our calculation of the percentage of beneficial ownership after the offering is based on              shares of our common stock outstanding immediately after consummation of the offering. We have granted the underwriters an option to purchase              additional shares of our common stock and the table below assumes no exercise of such option.
Unless otherwise indicated in the footnotes, the address of each of the individuals named below is: c/o Vince Holding Corp., 1441 Broadway, 6th Floor, New York, New York 10018.

Name of Beneficial Owner	  	Shares
Beneficially
Owned Prior
to the
Offering	 	  	Percentage of
Shares
Beneficially
Owned Prior to
the Offering	 	 	Shares
Beneficially
Owned After
the Offering	 	  	Percentage
of Shares
Beneficially
Owned
After the
Offering	 	
5% Stockholder:	  				  				 				  				
Sun Capital(1)	  				  	 	        	% 	 				  	 	    	% 	
Named Executive Officers & Directors:	  				  				 				  				
Jill Granoff	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Lisa Klinger	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Arthur Gordon(2)	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Michael Saunders(2)	  				  				 				  				
Rea Laccone	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Christopher T. Metz(3)	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Mark E. Brody(3)	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
Jason H. Neimark(3)	  	 	—	  	  	 	—	  	 	 	—	  	  	 	—	  	
All Executive Officers and Directors as a Group (18 Persons):	  				  				 				  				
 
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*	Less than 1%	
(1)	Includes              shares owned by Sun Cardinal,              shares owned by H.I.G. Sun Partners, Inc. (“H.I.G.”) and              shares owned by SCSF Cardinal, LLC (“SCSF Cardinal”). Sun Cardinal is a wholly owned subsidiary of Sun Capital Partners V, L.P. SCSF Cardinal is jointly owned by Sun Capital Securities Offshore Fund, Ltd. (“SCSF Offshore”) and Sun Capital Securities Fund, L.P. (“SCSF LP”). Indirectly through their respective revocable trusts, Messrs. Marc J. Leder and Rodger Krouse each control 50% of the shares in Sun Capital V., Ltd. (“Sun Partners V Ltd”), which in turn is the general partner of Sun Capital Advisors V, L.P. (“Sun Advisors V”), which in turn is the general partner of Sun Capital Partners V, L.P. (“Sun Partners V LP”). Pursuant to that certain stockholders agreement (as described under “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC”), H.I.G. has agreed to vote its shares in connection with the election of directors and certain other matters in the manner specified by Sun Cardinal. Apparel Holding Corp. intends to terminate the stockholders agreement in connection with the consummation of this offering. As a result, Messrs. Leder and Krouse (and/or their respective revocable trusts), Sun Partners V Ltd, Sun Advisors V and Sun Partners V LP may be deemed to have indirect beneficial ownership of the securities owned directly by Sun Cardinal or H.I.G. (prior to the consummation of this offering). Messrs. Leder and Krouse also control, indirectly through their respective irrevocable trusts, 50% of the membership interests in Sun Capital Securities, LLC (“SCSF LLC”), which in turn is the general partner of Sun Capital Securities Advisors, LP (“SCSF Advisors”), which in turn is the general partner of SCSF LP. As a result, Messrs. Leder and Krouse (and their respective revocable trusts), SCSF LLC, SCSF Advisors, SCSF LP and SCSF Offshore may be deemed to have indirect beneficial ownership of the securities directly owned by SCSF Cardinal. Each of Messrs. Leder and Krouse (and their respective revocable trusts), Sun Partners V Ltd, Sun Advisors V, Sun Partners V LP, SCSF LLC, SCSF Advisors, SCSF LP and SCSF Offshore expressly disclaims beneficial ownership of any securities in which they do not have a pecuniary interest.	
The business address for Messrs. Leder and Krouse, Sun Partners V Ltd, Sun Advisors V, Sun Partners V LP, SCSF LLC, SCSF Advisors, SCSF LP and SCSF Offshore is c/o Sun Capital Partners, Inc., 5200 Town Center Circle, Suite 600, Boca Raton, FL 33486.
 
(2)	The address for each of Mr. Gordon and Mr. Saunders is: c/o Kellwood Company, 600 Kellwood Pkwy, Chesterfield, MO 63107.	
(3)	The address for each of Messrs. Metz, Neimark and Brody is c/o Sun Capital Partners, Inc., 5200 Town Center Circle, Suite 600, Boca Raton, FL 33486.	
 
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 DESCRIPTION OF CAPITAL STOCK OF AHC
The following is a description of the material terms of our amended and restated certificate of incorporation and amended and restated bylaws as they will be in effect upon consummation of this offering. The following description may not contain all of the information that is important to you. To understand them fully, you should read our amended and restated certificate of incorporation and amended and restated bylaws, copies of which are or will be filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
Authorized Capitalization
Our currently authorized capital stock consists of 1,200,000 shares of voting common stock, par value $0.001 per share, 1,700,000 shares of non-voting common stock and 100,000 shares of preferred stock, par value $0.001 per share. In connection with this offering, we will be amending and restating our certificate of incorporation and pursuant to which we will be converting all of our issued and outstanding non-voting common stock into common stock on a one-for-one basis and consummating a subsequent stock split of our common stock on a              for              basis, thereby increasing our authorized capital stock to consist of              shares of common stock, par value $0.01 per share and              shares of preferred stock, par value 0.01 per share. On June 30, 2013, there were 919,118 shares of our voting and non-voting common stock outstanding in the aggregate, held of record by three stockholders and no shares of preferred stock outstanding. Following consummation of this offering, there will be             shares of our common stock outstanding (assuming no exercise of the underwriters’ option to purchase additional shares).
Common Stock
Voting Rights
Each share of common stock entitles the holder to one vote with respect to each matter presented to our stockholders on which the holders of common stock are entitled to vote. Our common stock will vote as a single class on all matters relating to the election and removal of directors on our board of directors and as provided by law. Holders of our common stock will not have cumulative voting rights. Except in respect of matters relating to the election of directors, or as otherwise provided in our amended and restated certificate of incorporation or required by law, all matters to be voted on by our stockholders must be approved by a majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter. In the case of the election of directors, all matters to be voted on by our stockholders must be approved by a plurality of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors.
Dividend Rights
The holders of our outstanding shares of common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. Because we are a holding company, our ability to pay dividends on our common stock is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. See “Additional Information Related to AHC—Description of Certain Indebtedness of AHC.” See also “Dividend Policy of AHC.”
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of our common stock would be entitled to share ratably in our assets that are legally available
 
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for distribution to stockholders after payment of our debts and other liabilities. If we have any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences. In either such case, we must pay the applicable distribution to the holders of our preferred stock before we may pay distributions to the holders of our common stock.
Other Rights
Our stockholders will have no preemptive, conversion or other rights to subscribe for additional shares. All outstanding shares are, and all shares offered by this prospectus will be, when sold, validly issued, fully paid and nonassessable. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Listing
We intend to apply to have our common stock approved for listing on the NYSE under the symbol “VNCE”.
Preferred Stock
Our amended and restated certificate of incorporation will authorize our board of directors to provide for the issuance of shares of preferred stock in one or more series and to fix the preferences, powers and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including the dividend rate, conversion rights, voting rights, redemption rights and liquidation preference and to fix the number of shares to be included in any such series without any further vote or action by our stockholders. Any preferred stock so issued may rank senior to our common stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up, or both. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others. At present, we have no plans to issue any preferred stock.
Board Composition
Following the consummation of this offering, we will be deemed to be a “controlled company” under the rules of the NYSE because more than 50% of our outstanding voting power will be held by affiliates of Sun Capital. See “Other Information Related to this Offering—Security Ownership of Certain Beneficial Owners of AHC” and “Additional Information Related to Vince—Vince Management —Corporate Governance—Controlled Company.” We intend to rely upon the “controlled company” exception to the NYSE board of directors and committee independence requirements. Pursuant to this exception, we will be exempt from the rules that would otherwise require that our board of directors consist of a majority of independent directors and that our Compensation Committee and Nominating and Corporate Governance Committee be composed entirely of independent directors. The “controlled company” exception does not modify the independence requirements for the Audit Committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and the stock exchange rules, which require that our Audit Committee consist exclusively of independent directors within one year of our initial public offering, after the expiration of the initial public offering phase in rule.
 
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Our amended and restated certificate of incorporation will provide that for so long as affiliates of Sun Capital own 30% or more of our outstanding shares of common stock, Sun Cardinal will have the right to designate a majority of our board of directors. For so long as Sun Cardinal has the right to designate a majority of our board of directors, the directors designated by affiliates of Sun Cardinal are expected to constitute a majority of each committee of our board of directors (other than the Audit Committee) and the chairman of each of the committees (other than the Audit Committee) is expected to be a director serving on such committee who is selected by Sun Cardinal. At such time as we are not a “controlled company” under the NYSE corporate governance standards, our committee membership will comply with all applicable requirements of those standards and a majority of our board of directors will be “independent directors,” as defined under the rules of NYSE.
Corporate Opportunity
Messrs. Christopher T. Metz, Mark E. Brody and Jason H. Neimark, who are officers or employees of Sun Capital, currently serve on our board of directors and will continue to serve as directors following consummation of this offering. In addition, Sun Cardinal, an affiliate of Sun Capital, will have the right to designate an additional              directors upon consummation of this offering, assuming no exercise of the underwriters’ option to purchase additional shares and that the board size remains the same. Affiliates of Sun Capital are our ultimate principal equityholders and our majority stockholders (after giving effect to the IPO Restructuring Transactions and the consummation of this offering). Sun Capital and affiliates controlled by them may hold equity interests in entities that directly or indirectly compete with us, and companies in which they currently invest may begin competing with us. As a result of these relationships, when conflicts between the interests of Sun Capital and its affiliates, on the one hand, and of other stockholders, on the other hand, arise, these directors may not be disinterested. Although our directors and officers have a duty of loyalty to us under Delaware law and our amended and restated certificate of incorporation, transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as (1) the material facts relating to the director’s or officer’s relationship or interest as to the transaction are disclosed to our board of directors and a majority of our disinterested directors approved the transactions, (2) the material facts relating to the director’s or officer’s relationship or interest are disclosed to our stockholders and a majority of our disinterested stockholders approve the transaction or (3) the transaction is otherwise fair to us.
Our amended and restated certificate of incorporation will provide that the doctrine of “corporate opportunity” will not apply against Sun Capital and its affiliates, or any of our directors who are associates of, or affiliated with, Sun Capital, in a manner that would prohibit them from investing in competing businesses or doing business with our clients or guests. Our amended and restated certificate of incorporation will also provide that any principal, officer, member, manager and/or employee of Sun Capital and its affiliates or any entity that controls, is controlled by or under common control with Sun Capital or any investment funds advised by Sun Capital will not be required to offer any transaction opportunity of which they become aware to us and could take any such opportunity for themselves or offer it to other companies in which they have an investment. See “Risk Factors—Risks Related to this Offering and Our Common Stock—We are a ‘controlled company,’ controlled by investment funds advised by affiliates of Sun Capital, whose interests in our business may be different from yours.”
 
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Antitakeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation and Our Amended and Restated Bylaws
Our amended and restated certificate of incorporation and our amended and restated bylaws will also contain provisions that may delay, defer or discourage another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they also give our board of directors the power to discourage acquisitions that some stockholders may favor.
Undesignated Preferred Stock
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. These and other provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our company.
Classified board of directors
Our amended and restated certificate of incorporation will provide that our board of directors will be divided into three classes, with each class serving three-year staggered terms. In addition, (i) prior to the first date on which Sun Capital and its affiliates cease to beneficially own at least 30% of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors, our directors may be removed with or without cause upon the affirmative vote of Sun Capital and its affiliates which beneficially own our outstanding voting stock and (ii) on and after such date, directors may only be removed for cause and only upon the affirmative vote of the majority of our outstanding voting stock, at a meeting of our stockholders called for that purpose. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our company.
Requirements for Advance Notification of Stockholder Meetings
Our amended and restated certificate of incorporation will provide that special meetings of the stockholders may be called only upon a resolution approved by a majority of the total number of directors that we would have if there were no vacancies or, prior to the date that Sun Capital and its affiliates cease to beneficially own a majority of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors (the “Trigger Date”) at the request of the holders of a majority of the voting power of our then outstanding shares of voting capital stock.
Requirements for Nominations and Proposals at Stockholder Meetings
Our amended and restated bylaws will prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. Our amended and restated bylaws will also provide that nominations of persons for election to our board of directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the notice of meeting (1) by or at the direction of our board of directors or (2) provided that our board of directors has determined that directors shall be elected at such meeting, by any stockholder who (i) is a stockholder of record both at the time the notice is delivered and on the record date for the determination of stockholders entitled to vote at the special meeting, (ii) is entitled to vote at the meeting and upon such election and
 
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(iii) complies with the notice procedures set forth in our amended and restated bylaws. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management, of our company. These provisions will not apply to nominations by Sun Cardinal.
Stockholder Action by Written Consent
Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will provide that, prior to the Trigger Date, any action required or permitted to be taken by our stockholders may be effected by written consent. From and after the Trigger Date, any action required or permitted to be taken by our stockholders may be effected only at a duly called annual or special meeting of our stockholders.
Business Combinations with Interested Stockholders
We will elect in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we will not be subject to any anti-takeover effects of Section 203. However, our amended and restated certificate of incorporation will contain provisions that have the same effect as Section 203, except that they will provide that both Sun Capital and its affiliates and any persons to whom such persons sell their common stock will be deemed to have been approved by our board of directors, and thereby not subject to the restrictions set forth in our amended and restated certificate of incorporation that have the same effect as Section 203.
Requirements for Amendments to our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
Prior to the Trigger Date, our amended and restated certificate of incorporation will provide that our bylaws may be adopted, amended, altered or repealed by the vote of a majority of the voting power of our then outstanding voting stock, voting together as a single class. After the Trigger Date, our bylaws may be adopted, amended, altered or repealed by either (i) a vote of a majority of the total number of directors that the company would have if there were no vacancies or (ii) in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least 66 2/3% of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class.
Following the Trigger Date, our amended and restated certificate of incorporation will provide that the provisions of our certificate of incorporation relating to the size and composition of our board of directors, limitation on liabilities of directors, stockholder action by written consent, the ability of stockholders to call special meetings, business combinations with interested persons, amendment of our bylaws or certificate of incorporation and the Court of Chancery as the exclusive forum for certain disputes, may only be amended, altered, changed or repealed by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of our outstanding shares of capital stock entitled to vote
 
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generally in the election of directors, voting together as a single class. Prior to the Trigger Date, our amended and restated certificate of incorporation will provide that such provisions may be amended, altered, changed or repealed by the affirmative vote of the holders of a majority of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class. Our amended and restated certificate of incorporation will also provide that the provision of our certificate of incorporation that deals with corporate opportunity may only be amended, altered or repealed by a vote of 80% of the voting power of our then outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class. See “—Corporate Opportunity.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock will be            .
 
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 SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions lapse. This may put downward pressure on the market price of our common stock and our ability to raise capital through a future sale of our securities.
Upon the consummation of this offering,              shares of common stock will be outstanding. The number of shares outstanding after this offering is based on the number of shares outstanding as of February 2, 2013. The              shares sold in this offering and shares sold by certain stockholders pursuant to Rules 144 and 701 under the Securities Act will be freely tradable without restriction under the Securities Act, unless those shares are purchased by affiliates as that term is defined in Rule 144. Persons who may be deemed to be affiliates generally include individuals or entities that control, are controlled by, or are under common control with, us and may include our directors and officers. The remaining              shares of common stock held by existing stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as Rule 701 under the Securities Act, or meet the safe harbor requirements of Rule 144 under the Securities Act, which are summarized below. The remaining shares of common stock held by our existing stockholders upon the consummation of this offering will be available for sale in the public market after the expiration of the lock-up agreements described below and under “Other Information Related to this Offering—Underwriting,” taking into account the provisions of Rules 144 and 701 of the Securities Act.
Sales of Restricted Shares and Shares Held by Our Affiliates
Rule 144
In general, under Rule 144, an affiliate who beneficially owns shares that were purchased from us, or any affiliate, at least six months previously, is entitled to sell, upon the expiration of the lock-up agreement described below and in “Other Information Related to this Offering—Underwriting” and within any three month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of 1% of our then-outstanding shares of common stock, which will equal approximately              shares immediately after this offering, or the average weekly trading volume of our common stock on NYSE during the four calendar weeks preceding the filing of a notice of the sale with the SEC. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.
Under Rule 144(b)(1), a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months (including the holding period of any prior owner other than an affiliate), is entitled to sell its shares without complying with the volume limitation or the manner of sale or notice provisions of Rule 144 beginning 90 days after the date of this prospectus, provided current public information about us is available. A person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year (including the holding period of any prior owner other than an affiliate), is entitled to freely sell such shares under Rule 144 without restrictions.
 
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Rule 701
Subject to certain limitations on the aggregate offering price of a transaction and other conditions, Rule 701 may be relied upon with respect to the resale of securities originally purchased from us by our employees, directors, officers, consultants or advisors prior to the date we become subject to the reporting requirements of the Exchange Act. To be eligible for resale under Rule 701, shares must have been issued in connection with written compensatory benefit plans or written contracts relating to the compensation of such persons. In addition, the SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this offering. Securities issued in reliance on Rule 701 are restricted securities and, subject to the contractual restrictions described below, beginning 90 days after the date of this prospectus, may be sold by persons other than “affiliates,” as defined in Rule 144, subject only to the manner of sale provisions of Rule 144 and by “affiliates” under Rule 144 without compliance with its one-year minimum holding period requirement. Subject to the 180 day lock-up period described below and in “Other Information Related to this Offering—Underwriting,” approximately              shares of our common stock will be eligible for sale in accordance with Rule 701.
Sales under Rules 144 and 701
No precise prediction can be made as to the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. We are unable to estimate the number of our shares that may be sold in the public market pursuant to Rule 144 or Rule 701 (or pursuant to Form S-8, if applicable) because this will depend on the market price of our common stock, the personal circumstances of the sellers and other factors. Nevertheless, sales of significant amounts of our common stock in the public market could adversely affect the market price of our common stock.
Stock Plan
We intend to file registration statements on Form S-8 under the Securities Act to register all shares of our common stock reserved for issuance under the 2013 Incentive Plan we intend to adopt in connection with this offering. We expect to file this registration statement as soon as practicable after this offering and adoption of the 2013 Incentive Plan. Accordingly, shares registered under the registration statement on Form S-8 will be available for sale in the open market following its effective date, subject to compliance with the resale provisions of Rule 144 applicable to affiliates. Our 2013 Incentive Plan is described in more detail under “Additional Information Related to Vince—Vince Executive Compensation—Employee Stock Plans—Vince 2013 Incentive Plan.”
Lock-Up Agreements
We and certain holders of substantially all of our common stock outstanding on the date of this prospectus, including each of our executive officers and directors, have entered into lock-up agreements with the underwriters providing that we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or hedge any of our shares of common stock, any options or warrants to purchase shares of our common stock, or any securities convertible into, or exchangeable for or that represent the right to receive shares of our common stock, without the prior written consent of Goldman, Sachs & Co. and Robert W. Baird & Co. Incorporated for a period of 180 days from the date of this prospectus. The lock-up agreements are subject to customary exceptions, including transfers of shares (i) as a bona fide gift of shares, provided that the done agrees to be bound in writing by the restrictions described above; (ii) to
 
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any trust for the benefit of the lock-up party or the immediate family of the lock-up party, provided that the trustee agrees to be bound in writing by the restrictions described above, and provided further that any such transfer shall not involve a disposition for value; (iii) to the underwriters pursuant to the underwriting agreement; (iv) to the Company to satisfy tax withholding obligations in connection with the exercise of stock options or the vesting of restricted stock outstanding as of the date of the lock-up agreement; (v) in transactions relating to shares of stock acquired in open market transactions after the consummation of this offering; and (vi) by will or intestate succession, provided the beneficiary or beneficiaries thereof agree to be bound in writing by the restrictions described above, and provided further that any such transfer shall not involve a disposition for value; provided further that, in the cases of (iv), (v) and (vi), no filing under the Exchange Act shall be required or voluntarily made. The 180-day lock-up period may be extended under certain circumstances where we release, or pre-announce a release of, our earnings shortly before or after the termination of the 180-day period, or we announce material news or a material event shortly before the termination of the 180-day period, unless Goldman, Sachs & Co. and Robert W. Baird & Co. Incorporated waive, in writing, such extension. For a description of the lock-up agreements that we, all of our directors and executive officers and certain holders of our outstanding shares of common stock have entered into in connection with this offering, see “Other Information Related to this Offering—Underwriting.”
Registration Rights
Our Registration Agreement also provides that shares of our common stock held by Sun Cardinal, SCSF Cardinal or any of their affiliates may be registered on demand and also on registration statements relating to our securities, subject to various conditions and limitations. The right to include shares in an underwritten registration is subject to the ability of the underwriters to limit the number of shares included in the offering. By exercising their registration rights and causing a large number of shares to be registered and sold in the public market, these holders could cause the price of our common stock to fall. In addition, any demand to include such shares in our registration statements could have a material adverse effect on our ability to raise needed capital. For more information, see “Other Information Related to this Offering—Certain Relationships and Related Party Transactions of AHC—Registration Agreement.”
 
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 MATERIAL U.S. TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
This section summarizes the material U.S. federal income and estate tax considerations relating to the acquisition, ownership and disposition of our common stock by “non-U.S. holders” (defined below) pursuant to this offering. This summary does not provide a complete analysis of all potential U.S. federal income tax and estate tax considerations relating thereto. The information provided below is based upon provisions of the Code, U.S. Treasury regulations promulgated thereunder, rulings and other administrative pronouncements and judicial decisions, all as in effect as of the date hereof. These authorities are subject to different interpretations and may change at any time, possibly retroactively, so as to result in U.S. federal income and estate tax consequences different from those summarized below. We have not sought and do not expect to seek any rulings from the IRS regarding the matters discussed herein. There can be no assurance that the IRS will not take positions concerning the tax consequences of the ownership or disposition of shares of our common stock that differ from those discussed below, in which case, the tax considerations of owning or disposing of our common stock could differ from those described below. We cannot assure you that a change in law will not alter significantly the tax considerations described in this summary. For purposes of this summary, a “non-U.S. holder” is any beneficial owner of our common stock, for U.S. federal income tax purposes, that is an individual, corporation, estate or trust, but is not any of the following:
 
 	Ÿ 	 	an individual who is a citizen or resident of the U.S.;	
 
 	Ÿ 	 	a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the U.S., any state therein or the District of Columbia;	
 
 	Ÿ 	 	a trust if it (1) is subject to the primary supervision of a U.S. court and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or	
 
 	Ÿ 	 	an estate whose income is subject to U.S. income tax regardless of source.	
If you are an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the U.S. for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Such an individual is urged to consult his or her own tax advisor regarding his or her status as a resident alien for U.S. federal income tax purposes under these rules and the U.S. federal income tax consequences of the ownership or disposition of our common stock. If a partnership or other pass-through entity is a beneficial owner of our common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Any partner in a partnership or owner of a pass-through entity holding shares of our common stock should consult its own tax advisor. A partnership that is not formed under the laws of the U.S. or a state or the District of Columbia is a non-U.S. holder for purposes of the Additional Withholding Rules described below.
This discussion assumes that a non-U.S. holder will hold our common stock as a capital asset (generally, property held for investment). The summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances, or because they are subject to special rules, including, without limitation, if the investor is a former citizen or long-term resident of the U.S., a financial institution, an insurance company, a tax-exempt organization, a trader, broker or dealer in securities or currencies, traders that elect to mark–to–market their securities, a “controlled foreign corporation,” a “passive foreign investment company,” an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes (or a partner in a partnership or a beneficial owner of a pass-through entity that holds our common stock), a person who
 
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acquired shares of our common stock as compensation or otherwise in connection with the performance of services, or a person who has acquired shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment. Finally, the summary does not describe the effects of the alternative minimum tax, any applicable non-U.S., state or local laws, considerations under the unearned income Medicare contribution tax, or, except to the extent discussed below, the effects of any applicable gift or estate tax laws.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES FOR NON-U.S. HOLDERS RELATING TO THE OWNERSHIP AND DISPOSITION OF SHARES OF OUR COMMON STOCK. INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF NON-U.S., STATE OR LOCAL LAWS, AND TAX TREATIES.
Dividends
We do not expect to declare or pay any dividends on our common stock in the foreseeable future. If we do pay dividends on shares of our common stock, however, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a non-taxable return of capital that is applied against and reduces, but not below zero, a non-U.S. holder’s adjusted tax basis in shares of our common stock on a share by share basis. Any remaining excess will be treated as gain realized on the sale or other disposition of our common stock. See “—Sale of Common Stock.”
Any distribution to the extent treated for U.S. federal income tax purposes as a dividend paid to a non-U.S. holder on our common stock will generally be subject to U.S. withholding tax at a 30% rate. The withholding tax might not apply, however, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the U.S. and the non-U.S. holder’s country of residence. You should consult your tax advisors regarding your entitlement to benefits under a relevant income tax treaty. Dividends that are effectively connected with the conduct of a trade or business within the U.S. by a non-U.S. holder (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder) generally will not be subject to such withholding tax, provided certain certification and disclosure requirements are satisfied (including the provision of a properly completed IRS Form W-8 ECI or other applicable form). Instead, unless an applicable income tax treaty provides otherwise, such dividends will generally be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code. A corporate non-U.S. holder may be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on its earnings and profits that are effectively connected with its conduct of a U.S. trade or business, unless an applicable income tax treaty provides otherwise.
A non-U.S. holder of shares of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to complete IRS Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is not a U.S. person as defined under the Code and is eligible for treaty benefits or (b) if shares of our common stock are held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations
 
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or individuals. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.
If you are a non-U.S. holder (including for this purpose, a partnership) and not an individual, you may be subject to a 30% withholding even if you are eligible to claim the benefits of a tax treaty if you do not comply with certain information reporting rules, described below under “—Additional Withholding Rules.”
Sale of Common Stock
Subject to the discussions below of the backup withholding tax and FATCA withholding, non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of our common stock unless:
 
 	Ÿ 	 	the gain (1) is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business and (2) if required by an applicable income tax treaty between the U.S. and the non-U.S. holder’s country of residence, is attributable to a permanent establishment (or, in certain cases, a fixed base) maintained by the non-U.S. holder in the U.S. (in which case the special rules described below apply);	
 
 	Ÿ 	 	the non-U.S. holder is an individual who is present in the U.S. for 183 days or more in the taxable year of the sale, exchange or other disposition of our common stock, and certain other requirements are met; or	
 
 	Ÿ 	 	the rules of the Foreign Investment in Real Property Tax Act (“FIRPTA”), treat the gain as effectively connected with a U.S. trade or business.	
In the case of a non-U.S. holder described in the first bullet point above, any gain will be subject to U.S. federal income tax on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code (unless an applicable income tax treaty provides otherwise), and a corporate non-U.S. holder may also be subject to the “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on its earnings and profits that are effectively connected with its conduct of a U.S. trade or business, unless an applicable income tax treaty provides otherwise. Except as otherwise provided by an applicable income tax treaty, an individual non-U.S. holder described in the second bullet point above will be subject to a 30% tax on any gain derived from the sale, which may be offset by certain U.S. source capital losses.
The FIRPTA rules may apply to a sale, exchange or other disposition of our common stock if we are, or were within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period, a “U.S. real property holding corporation” (“USRPHC”). In general, we would be a USRPHC if interests in U.S. real estate comprised at least half of our business assets. We do not believe that we are a USRPHC and we do not anticipate becoming one in the future. Even if we become a USRPHC, as long as our common stock is “regularly traded on an established securities market” (as defined in the Code and applicable U.S. Treasury regulations), such common stock will be treated as U.S. real property interests only if beneficially owned by a non-U.S. holder that actually or constructively owned more than 5% of our outstanding common stock at some time within the five-year period preceding the disposition. If we are or become a USRPHC and you actually or constructively owned more than 5% of our common stock at any time during the specified testing period, you will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. You should consult your own tax advisor about the consequences that could result if we are, or become, a USRPHC.
 
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Backup Withholding and Information Reporting
We must report annually to the IRS and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty or agreement.
A non-U.S. holder will be subject to backup withholding (currently at a rate of 28%) for dividends paid to such holder unless such holder certifies under penalty of perjury that it is not a U.S. person as defined under the Code (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code), or such holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition by a non-U.S. holder of shares of our common stock within the U.S. or conducted through certain U.S.-related financial intermediaries unless such non-U.S. holder certifies under penalty of perjury that it is not a U.S. person (as defined under the Code), and the payor does not have actual knowledge or reason to know that the non-U.S. holder is a U.S. person, or such non-U.S. holder otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.
Additional Withholding Rules
In addition to withholding described above, under legislation enacted in 2010 and related administrative guidance, known as the “FATCA” legislation, a non-U.S. holder that is an entity (including, for this purpose, a partnership) may be subject to a U.S. withholding tax at a rate of 30% on payments of dividends, if any, that we declare, and on the gross proceeds on the disposition of our common stock, unless the foreign entity has complied with various U.S. information reporting, due diligence and certification requirements that are generally designed to identify U.S. owners or account holders in the foreign entity. Recently finalized Treasury Regulations delay the implementation of withholding under FATCA with respect to dividends until after June 30, 2014, and with respect to payments of gross proceeds until after December 31, 2016.
The withholding under FATCA may be avoided if (i) the foreign entity is a “foreign financial institution” (as defined in this legislation) and such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or (ii) the foreign entity is not a “foreign financial institution” and makes a certification identifying its substantial U.S. owners (as defined for this purpose) or makes a certification that such foreign entity does not have any substantial U.S. owners. In certain cases, the relevant foreign financial institution or non-financial foreign entity may qualify for an exemption from, or be deemed to be in compliance with, these rules, or may additionally be required to meet certain other specified requirements. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.
Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.
 
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U.S. Federal Estate Tax
Shares of our common stock that are owned (or treated as owned) by an individual who is not a citizen or resident of the U.S. (as specially defined for U.S. federal estate tax purposes) at the time of death will be included in such individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate or other tax treaty provides otherwise, and, therefore, may be subject to U.S. federal estate tax.
THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
 
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 UNDERWRITING
Goldman, Sachs & Co. and Robert W. Baird & Co. Incorporated are acting as lead joint book-running managers of the offering, and Goldman, Sachs & Co. and Robert W. Baird & Co. Incorporated are the representatives of the underwriters. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., J.P. Morgan Securities LLC and UBS Securities LLC are joint book-running managers in the offering. We and the underwriters have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table.

Underwriters	  	Number of Shares	
Goldman, Sachs & Co.	  		  		
Robert W. Baird & Co. Incorporated	  		  		
Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated	  		  		
Barclays Capital Inc.	  		  		
J.P. Morgan Securities LLC	  		  		
UBS Securities LLC	  		  		
KeyBanc Capital Markets Inc.
Stifel, Nicolaus & Company, Incorporated	  		  		
William Blair & Company, L.L.C.	  		  		
	  	 	  	 	
Total	  		  		
	  	 	  	 	
The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised. The obligations of the underwriters under the underwriting agreement may be terminated upon the occurrence of certain stated events.
The underwriters have an option to buy up to an additional              shares from us to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase              additional shares.

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	            	  	  	$	            	  	
Total	  	$	 	  	  	$	 	  	
We have agreed to reimburse the underwriters for certain expenses relating to clearing this offering with the Financial Industry Regulatory Authority in an amount up to $            .
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $         per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. 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.
We and holders of substantially all of our common stock on the date of this prospectus, including each of our executive officers and directors, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date that is 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing employee benefit plans. See “Other Information Related to this Offering—Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.
 
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Prior to this offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses. We offer no assurances that the initial public offering price will correspond to the price at which the shares will trade in the public market subsequent to this offering or that an active trading market for the shares will develop and continue after the offering.
We intend to list the common stock on the NYSE under the symbol “VNCE”. In order to meet one of the requirements for listing the common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 400 beneficial owners.
We have agreed to indemnify the underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act.
In connection with this offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. 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 after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares made by the underwriters in the open market prior to the consummation of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
 
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We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $         million.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b) 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 for any such offer; or
(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares 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 the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and 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 each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Each underwriter has represented and agreed that:
(a) 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 the shares in circumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorized person, apply to us; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.
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
 
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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 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 6 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 shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the “Financial Instruments and Exchange Law”), and each underwriter has agreed that it will not offer or sell any shares, 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
This document as well as any other material relating to the shares which are the subject of the offering contemplated by this prospectus (the “Shares”), does not constitute an issue prospectus pursuant to Articles 652a and/or 1156 of the Swiss Code of Obligations. The Shares will not be listed on the SIX Swiss Exchange and, therefore, the documents relating to the Shares, including, but not limited to, this document, do not claim to comply with the disclosure standards of the listing rules of the
 
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SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange. The Shares are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase the Shares with the intention to distribute them to the public. The investors will be individually approached by us from time to time. This document as well as any other material relating to the Shares is personal and confidential and does not constitute an offer to any other person. This document may only be used by those investors to whom it has been handed out in connection with the offering described herein and may neither directly nor indirectly be distributed or made available to other persons without our express consent. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in (or from) Switzerland.
Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“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 this 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.
 
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 VALIDITY OF COMMON STOCK
The validity of the common stock being offered hereby will be passed upon for the company by Kirkland & Ellis LLP, Chicago, Illinois. Certain partners of Kirkland & Ellis LLP are members of a limited partnership that is an investor in one or more investment funds affiliated with Sun Capital. Kirkland & Ellis LLP represents entities affiliated with Sun Capital and its affiliates in connection with legal matters. Certain legal matters will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP, Palo Alto, California.
 EXPERTS
The financial statements of Apparel Holding Corp. and Vince, LLC as of February 2, 2013 and January 28, 2012 and for each of the three years in the period ended February 2, 2013 included in this registration statement have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
 WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and its exhibits, certain portions of which are omitted as permitted by the rules and regulations of the SEC. For further information pertaining to us and our common stock to be sold in this offering, we refer you to the registration statement, including its exhibits and the financial statements, notes and schedules filed as a part of that registration statement. Statements contained in this prospectus regarding the contents of any contract or other document referred to in those documents are not necessarily complete, and in each instance we refer you to the copy of the contract or other document filed as an exhibit to the registration statement or other document. Each of these statements is qualified in all respects by this reference.
You may read and copy the registration statement and its exhibits and schedules at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You also may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, such as Vince Holding Corp., that file electronically with the SEC.
Upon consummation of this offering, we will become subject to the reporting and information requirements of the Exchange Act, and as a result will file reports, 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 public reference room and website of the SEC referred to above. We also maintain a website at www.vince.com , at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.
 
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 INDEX TO THE AUDITED FINANCIAL STATEMENTS FOR AHC

Consolidated Financial Statements	  				
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm on Consolidated Financial Statements	  	 	F-2	  	
Consolidated Statements of Operations	  	 	F-3	  	
Consolidated Statements of Comprehensive Loss	  	 	F-4	  	
Consolidated Balance Sheets	  	 	F-5	  	
Consolidated Statements of Cash Flows	  	 	F-6	  	
Consolidated Statements of Stockholders’ Deficit	  	 	F-7	  	
Notes to Consolidated Financial Statements	  	 	F-8	  	
		
Financial Statement Schedules	  				
Schedule I—Condensed Financial Information of Registrant	  	 	F-51	  	
Schedule II—Valuation and Qualifying Accounts	  	 	F-59	  	
 
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 Report of Independent Registered Public Accounting Firm
To the Board of Directors of Apparel Holding Corp.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows present fairly, in all material respects, the financial position of Apparel Holding Corp. and its subsidiaries at February 2, 2013 and January 28, 2012, and the results of their operations and their cash flows for each of the three years in the period ended February 2, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
/s/ PricewaterhouseCoopers LLP
St. Louis, Missouri
July 11, 2013, except for the effects of the discontinued operations discussed in Note 4 to the consolidated financial statements, as to which the date is September 24, 2013
 
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 APPAREL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data and share amounts)

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net sales	 	$	586,574	  	 	$	662,846	 	 	$	707,995	  	 	$	319,445	  	 	$	363,967	  	
Cost of products sold	 	 	430,801	  	 	 	490,110	  	 	 	507,905	  	 	 	235,293	  	 	 	256,031	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	155,773	  	 	 	172,736	  	 	 	200,090	  	 	 	84,152	  	 	 	107,936	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 				 				 				 				 				
Selling, general and administrative expenses	 	 	140,567	  	 	 	155,220	  	 	 	177,755	  	 	 	83,526	  	 	 	93,503	  	
Amortization of intangible assets	 	 	954	  	 	 	1,941	  	 	 	1,899	  	 	 	950	  	 	 	950	  	
Restructuring, environmental remediation and other charges	 	 	9,729	  	 	 	2,651	  	 	 	5,091	  	 	 	2,264	  	 	 	827	  	
Impairment of long-lived assets (excluding goodwill)	 	 	438	  	 	 	2,504	  	 	 	2,349	  	 	 	717	  	 	 	—	  	
Impairment of goodwill	 	 	—	  	 	 	10,821	  	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration	 	 	—	  	 	 	(1,578	) 	 	 	(7,162	) 	 	 	(4,507	) 	 	 	(54	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	151,688	  	 	 	171,559	  	 	 	179,932	  	 	 	82,950	  	 	 	95,226	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	4,085	  	 	 	1,177	  	 	 	20,158	  	 	 	1,202	  	 	 	12,710	  	
Interest expense, net	 	 	103,074	  	 	 	127,148	  	 	 	122,383	  	 	 	74,151	  	 	 	43,671	  	
Gain on acquisition, net of tax	 	 	(939	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	 	 	(15,912	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Other expense, net	 	 	2,442	  	 	 	1,914	  	 	 	2,723	  	 	 	1,215	  	 	 	1,233	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	 	 	(84,580	) 	 	 	(127,885	) 	 	 	(104,948	) 	 	 	(74,164	) 	 	 	(32,194	) 	
Provision for income taxes	 	 	3,507	  	 	 	3,401	 	 	 	708	  	 	 	2,245	  	 	 	2,679	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss from continuing operations	 	 	(88,087	) 	 	 	(131,286	) 	 	 	(105,656	) 	 	 	(76,409	) 	 	 	(34,873	) 	
Net (loss) income from discontinued operations, net of tax	 	 	(16,391	) 	 	 	(16,580	) 	 	 	(2,053	) 	 	 	(4,798	) 	 	 	9,230	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted earnings per share	 				 				 				 				 				
Net loss from continuing operations	 	$	(0.10	) 	 	$	(0.14	) 	 	$	(0.12	) 	 	$	(0.08	) 	 	$	(0.04	) 	
Net (loss) income from discontinued operations	 	 	(0.01	) 	 	 	(0.02	) 	 	 	—	  	 	 	(0.01	) 	 	 	0.01	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(0.11	) 	 	$	(0.16	) 	 	$	(0.12	) 	 	$	(0.09	) 	 	$	(0.03	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding, basic and diluted	 	 	919,118	  	 	 	919,118	  	 	 	919,118	  	 	 	919,118	  	 	 	919,118	  	
See accompanying notes to Consolidated Financial Statements.
 
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 APPAREL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net loss	 	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
Foreign currency translation adjustment	 	 	100	 	 	 	(1	) 	 	 	(3	) 	 	 	4	  	 	 	(42	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	$	(104,378	) 	 	$	(147,867	) 	 	$	(107,712	) 	 	$	(81,203	) 	 	$	(25,685	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to Consolidated Financial Statements.
 
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 APPAREL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

 	 	January 28,
2012	 	 	February 2,
2013	 	 	August 3,
2013	 	
 	 	 	 	 	 	 	 	(unaudited)	 	
Assets	 				 				 				
				
Current assets:	 				 				 				
Cash and cash equivalents	 	$	1,839	  	 	$	1,881	  	 	$	2,178	  	
Trade receivables, net	 	 	99,155	  	 	 	108,343	  	 	 	115,248	  	
Other receivables	 	 	973	  	 	 	961	  	 	 	470	  	
Inventories, net	 	 	73,441	  	 	 	74,056	  	 	 	93,858	  	
Prepaid expenses and other current assets	 	 	8,060	  	 	 	9,861	  	 	 	17,001	  	
Current assets of discontinued operations	 	 	27,786	  	 	 	4,690	  	 	 	136	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	211,254	  	 	 	199,792	  	 	 	228,891	  	
Property, plant and equipment:	 				 				 				
Land	 	 	62	  	 	 	62	  	 	 	62	  	
Building and improvements	 	 	18,084	  	 	 	19,132	  	 	 	20,341	  	
Machinery and equipment	 	 	8,062	  	 	 	9,778	  	 	 	10,013	  	
Capitalized software	 	 	24,010	  	 	 	24,775	  	 	 	24,457	  	
Construction in process	 	 	1,740	  	 	 	758	  	 	 	3,579	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total property, plant and equipment	 	 	51,958	  	 	 	54,505	  	 	 	58,452	  	
Less accumulated depreciation and amortization	 	 	(33,332	) 	 	 	(36,668	) 	 	 	(38,191	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	18,626	  	 	 	17,837	  	 	 	20,261	  	
Intangible assets, net	 	 	149,386	  	 	 	146,287	  	 	 	145,331	  	
Goodwill	 	 	65,876	  	 	 	65,876	  	 	 	65,876	  	
Other assets	 	 	11,159	  	 	 	8,636	  	 	 	7,405	  	
Long-term assets of discontinued operations	 	 	12,144	  	 	 	3,696	  	 	 	27	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total assets	 	$	468,445	  	 	$	442,124	  	 	$	467,791	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Deficit	 				 				 				
				
Current liabilities:	 				 				 				
Short-term borrowings	 	$	88,222	  	 	$	79,783	  	 	$	115,601	  	
Accounts payable	 	 	74,542	  	 	 	71,257	  	 	 	73,510	  	
Accrued salaries and employee benefits	 	 	8,855	  	 	 	20,290	  	 	 	13,886	  	
Other accrued expenses	 	 	14,580	  	 	 	14,979	  	 	 	16,535	  	
Current liabilities of discontinued operations	 	 	27,204	  	 	 	3,737	  	 	 	1,698	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	213,403	  	 	 	190,046	  	 	 	221,230	  	
Long-term debt	 	 	934,354	  	 	 	761,752	  	 	 	386,842	  	
Deferred income taxes and other	 	 	60,593	  	 	 	49,175	  	 	 	36,409	  	
Long-term liabilities of discontinued operations	 	 	3,116	  	 	 	2,416	  	 	 	2,412	  	
				
Commitments and contingencies (Note 15)	 				 				 				
				
Stockholders’ deficit:	 				 				 				
Voting Common Stock at $0.001 par value (1,200,000 shares authorized, 918,924.91 issued and outstanding)	 	 	1	  	 	 	1	  	 	 	1	  	
Non-voting Common Stock at $0.001 par value (1,700,000 shares authorized, 193.09 issued and outstanding)	 	 	—	  	 	 	—	  	 	 	—	  	
Additional paid in capital	 	 	97,212	  	 	 	386,680	  	 	 	794,528	  	
Accumulated deficit	 	 	(840,171	) 	 	 	(947,880	) 	 	 	(973,523	) 	
Accumulated other comprehensive loss	 	 	(63	) 	 	 	(66	) 	 	 	(108	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ deficit	 	 	(743,021	) 	 	 	(561,265	) 	 	 	(179,102	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and stockholders’ deficit	 	$	468,445	  	 	$	442,124	  	 	$	467,791	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to Consolidated Financial Statements.
 
F-5

Table of Contents
 APPAREL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Operating activities	 				 				 				 				 				
Net loss	 	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
Add (deduct) items not affecting operating cash flows:	 				 				 				 				 				
Depreciation	 	 	9,256	  	 	 	9,024	  	 	 	6,198	  	 	 	3,355	  	 	 	2,765	  	
Amortization of intangible assets	 	 	1,037	  	 	 	2,049	  	 	 	2,192	  	 	 	1,211	  	 	 	950	  	
Amortization of bond discounts and debt issuance costs	 	 	6,753	  	 	 	6,395	  	 	 	7,199	  	 	 	3,635	  	 	 	3,470	  	
Deferred income taxes	 	 	4,091	  	 	 	2,734	  	 	 	1,410	  	 	 	1,653	  	 	 	(9,699	) 	
Share-based compensation expense	 	 	248	  	 	 	65	  	 	 	367	  	 	 	13	  	 	 	321	  	
Capitalized PIK Interest	 	 	75,108	  	 	 	92,100	  	 	 	86,460	  	 	 	55,174	  	 	 	23,341	  	
Other charges (gains):	 				 				 				 				 				
Restructuring, environmental remediation and other charges	 	 	13,304	  	 	 	3,140	  	 	 	5,500	  	 	 	2,485	  	 	 	1,335	  	
Impairment of long-lived assets	 	 	24,567	  	 	 	19,463	  	 	 	6,729	  	 	 	717	  	 	 	434	  	
Deferred debt issuance cost write-off	 	 	738	  	 	 	1,747	  	 	 	397	  	 	 	—	  	 	 	—	  	
(Gain) loss on disposition of property, plant and equipment	 	 	(19	) 	 	 	463	  	 	 	483	  	 	 	164	  	 	 	262	  	
Gain on dispositions of trademarks, net	 	 	—	  	 	 	—	  	 	 	(4,226	) 	 	 	(4,228	) 	 	 	(1,298	) 	
(Gain) loss on dispositions of businesses, net	 	 	—	  	 	 	—	  	 	 	(7,262	) 	 	 	1,866	  	 	 	—	  	
Gain on dispositions of other assets	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(292	) 	
Change in fair value of contingent consideration	 	 	—	  	 	 	(1,578	) 	 	 	(7,162	) 	 	 	(4,507	) 	 	 	(54	) 	
Gain on acquisition, net of tax	 	 	(939	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	 	 	(15,912	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Changes in assets and liabilities, net of acquisitions:	 				 				 				 				 				
Receivables, net	 	 	(5,823	) 	 	 	(20,851	) 	 	 	(3,612	) 	 	 	(7,537	) 	 	 	(4,184	) 	
Inventories, net	 	 	(28,540	) 	 	 	(5,863	) 	 	 	2,053	  	 	 	(8,284	) 	 	 	(18,776	) 	
Prepaid expenses and other current assets	 	 	(2,752	) 	 	 	(228	) 	 	 	(1,007	) 	 	 	(2,330	) 	 	 	(7,265	) 	
Accounts payable and accrued expenses	 	 	(6,027	) 	 	 	12,599	  	 	 	7,791	  	 	 	1,631	  	 	 	(4,215	) 	
Other assets and liabilities	 	 	3,243	  	 	 	1,302	  	 	 	(5,711	) 	 	 	2,563	  	 	 	205	  	
Payment of liabilities associated with restructuring and environmental remediation activities	 	 	(18,595	) 	 	 	(12,949	) 	 	 	(16,124	) 	 	 	(7,417	) 	 	 	(2,659	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by operating activities	 	 	(44,740	) 	 	 	(38,254	) 	 	 	(26,034	) 	 	 	(41,043	) 	 	 	(41,002	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investing activities	 				 				 				 				 				
Payments for capital expenditures	 	 	(5,327	) 	 	 	(10,275	) 	 	 	(10,138	) 	 	 	(6,084	) 	 	 	(5,489	) 	
Payments for intangible assets	 	 	—	  	 	 	(132	) 	 	 	—	  	 	 	—	  	 	 	(60	) 	
Payments for acquisitions, net of cash acquired	 	 	(28,719	) 	 	 	(59,154	) 	 	 	(806	) 	 	 	(806	) 	 	 	—	  	
Proceeds from dispositions of property, plant and equipment, net	 	 	25	  	 	 	9	  	 	 	1,978	  	 	 	—	  	 	 	—	  	
Proceeds from dispositions of trademarks, net	 	 	—	  	 	 	—	  	 	 	4,617	  	 	 	4,619	  	 	 	4,800	  	
Proceeds from dispositions of businesses, net	 	 	—	  	 	 	—	  	 	 	22,310	  	 	 	1,749	  	 	 	150	  	
Proceeds from dispositions of other assets	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	608	  	
Deposits to restricted accounts	 	 	—	  	 	 	—	  	 	 	(2,466	) 	 	 	(1,966	) 	 	 	—	  	
Deposits released from restricted accounts	 	 	—	  	 	 	—	  	 	 	1,966	  	 	 	—	  	 	 	500	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by investing activities	 	 	(34,021	) 	 	 	(69,552	) 	 	 	17,461	  	 	 	(2,488	) 	 	 	509	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financing activities	 				 				 				 				 				
Borrowings of short-term debt obligations	 	 	—	  	 	 	14,900	  	 	 	—	  	 	 	—	  	 	 	—	  	
Payments for short-term debt obligations	 	 	—	  	 	 	(14,900	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Borrowings of long-term loan obligations	 	 	22,393	  	 	 	79,900	  	 	 	30,000	  	 	 	30,000	  	 	 	5,000	  	
Payments for debt extinguishment	 	 	(9,060	) 	 	 	—	  	 	 	(15,000	) 	 	 	—	  	 	 	—	  	
Borrowings of revolving credit facilities	 	 	185,172	  	 	 	399,621	  	 	 	620,367	  	 	 	221,940	  	 	 	392,635	  	
Payments for revolving credit facilities	 	 	(127,576	) 	 	 	(368,995	) 	 	 	(623,806	) 	 	 	(205,404	) 	 	 	(356,817	) 	
Fees paid for amendments to credit facility	 	 	(3,644	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Fees paid for short-term debt obligations	 	 	—	  	 	 	(101	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Fees paid for revolving credit facilities	 	 	—	  	 	 	(2,147	) 	 	 	(114	) 	 	 	(114	) 	 	 	—	  	
Fees paid for long-term loan obligations	 	 	—	  	 	 	(2,675	) 	 	 	(643	) 	 	 	(643	) 	 	 	(28	) 	
Payments to settle contingent consideration recognized at acquisition	 	 	—	  	 	 	—	  	 	 	(1,928	) 	 	 	(1,928	) 	 	 	—	  	
Change in bank overdraft	 	 	34	  	 	 	(1,144	) 	 	 	(261	) 	 	 	(261	) 	 	 	—	  	
Other	 	 	(14	) 	 	 	(8	) 	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by financing activities	 	 	67,305	  	 	 	104,451	  	 	 	8,615	  	 	 	43,590	  	 	 	40,790	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Decrease) increase in cash and cash equivalents	 	 	(11,456	) 	 	 	(3,355	) 	 	 	42	  	 	 	59	  	 	 	297	  	
Cash and cash equivalents, beginning of period	 	 	16,650	  	 	 	5,194	  	 	 	1,839	  	 	 	1,839	  	 	 	1,881	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	 	$	5,194	  	 	$	1,839	  	 	$	1,881	  	 	$	1,898	  	 	$	2,178	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Supplemental Disclosures of Cash Flow Information	 				 				 				 				 				
Cash payments for interest	 	$	20,910	  	 	$	23,665	  	 	$	30,454	  	 	$	14,828	  	 	$	14,295	  	
Cash payments for income taxes, net of refunds	 	 	336	  	 	 	1,065	  	 	 	910	  	 	 	182	  	 	 	436	  	
Supplemental Disclosures of Non-Cash Investing and Financing Activities	 				 				 				 				 				
Capital expenditures in accounts payable	 	 	—	  	 	 	451	  	 	 	424	  	 	 	545	  	 	 	807	  	
Accrued purchase consideration for acquisitions	 	 	8,137	  	 	 	806	  	 	 	—	  	 	 	—	  	 	 	—	  	
Accrued adjustment to sale proceeds from disposed business	 	 	—	  	 	 	—	  	 	 	221	  	 	 	—	  	 	 	—	  	
Equity interest retained in disposed business	 	 	—	  	 	 	—	  	 	 	—	  	 	 	424	  	 	 	—	  	
Forgiveness of capitalized and accrued interest on related-party debt	 	 	—	  	 	 	—	  	 	 	(289,101	) 	 	 	—	  	 	 	(407,527	) 	
Capital contribution from stockholder	 	 	—	  	 	 	—	  	 	 	289,101	  	 	 	—	  	 	 	407,527	  	
See accompanying notes to Consolidated Financial Statements.
 
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Table of Contents
 APPAREL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands, except share amounts)

 	 	Common Stock	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of
Shares
Outstanding	 	 	Par
Value	 	 	Additional
Paid in
Capital	 	 	Accumulated
Deficit	 	 	Accumulated
Other
Comprehensive
Income	 	 	Total
Stockholders’
Deficit	 	
Balance as of January 30, 2010	 	 	919,118	  	 	$	1	  	 	$	96,899	  	 	$	(587,827	) 	 	$	           (162	) 	 	$	(491,089	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(104,478	) 	 	 	—	  	 	 	(104,478	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	100	  	 	 	100	  	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	248	  	 	 	—	  	 	 	—	  	 	 	248	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of January 29, 2011	 	 	919,118	  	 	 	1	  	 	 	97,147	  	 	 	(692,305	) 	 	 	(62	) 	 	 	(595,219	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(147,866	) 	 	 	—	  	 	 	(147,866	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(1	) 	 	 	(1	) 	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	65	  	 	 	—	  	 	 	—	  	 	 	65	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of January 28, 2012	 	 	919,118	  	 	 	1	  	 	 	97,212	  	 	 	(840,171	) 	 	 	(63	) 	 	 	(743,021	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(107,709	) 	 	 	—	  	 	 	(107,709	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(3	) 	 	 	(3	) 	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	367	  	 	 	—	  	 	 	—	  	 	 	367	  	
Capital contribution from stockholder	 	 	—	  	 	 	—	  	 	 	289,101	  	 	 	—	  	 	 	—	  	 	 	289,101	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of February 2, 2013	 	 	919,118	  	 	 	1	  	 	 	386,680	  	 	 	(947,880	) 	 	 	(66	) 	 	 	(561,265	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(25,643	)  	 	 	—	  	 	 	(25,643	) 	
Foreign currency translation adjustment (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(42	) 	 	 	(42	) 	
Share-based compensation expense (unaudited)	 	 	—	  	 	 	—	  	 	 	321	  	 	 	—	  	 	 	—	  	 	 	321	  	
Capital contribution from stockholder (unaudited)	 	 	—	  	 	 	—	  	 	 	407,527	  	 	 	—	  	 	 	—	  	 	 	407,527	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of August 3, 2013 (unaudited)	 	 	919,118	  	 	$	1	  	 	$	794,528	  	 	$	(973,523	) 	 	$	(108	) 	 	$	(179,102	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to Consolidated Financial Statements.
 
F-7

Table of Contents
 APPAREL HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data and share amounts)
Note 1. Summary of Significant Accounting Policies
(A) Description of Business :    Apparel Holding Corp. (“AHC”), together with its wholly—owned subsidiaries, design, merchandise and sell a growing collection of premier fashion brands across a broad range of consumer lifestyles, and recreational apparel and products aimed to improve the consumer outdoor experience. We market branded as well as private label products and market to all channels of distribution with product specific to the particular channel. We market products under many brands, some of which we own, and others that are under licensing agreements. The majority of our products are sourced from contract manufacturers, primarily in the Eastern Hemisphere. Products are manufactured to meet our product specifications and labor standards.
(B) Basis of Presentation :    The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. The amounts and disclosures included in the notes to the consolidated financial statements, unless otherwise indicated, are presented on a continuing operations basis. In the opinion of management, the financial statements contain all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary to make the information presented therein not misleading. As used in this report, unless the context requires otherwise, “our,” “us” and “we” refer to AHC and its consolidated subsidiaries.
Under the terms of the agreements governing the Wells Fargo Facility, Cerberus Term Loan, and 12.785% Notes (as defined in Notes 7 and 8 of the Consolidated Financial Statements), Kellwood Company, a wholly-owned subsidiary of AHC and substantially all of its existing and future 100%-owned U.S. subsidiaries are significantly restricted, under certain circumstances, from making dividend payments, loans or advances to AHC. Additionally, our cash is under the control of a third party agent until certain minimum cash thresholds are met for a specified minimum period of time. These restrictions have resulted in the restricted net assets (as defined in Rule 4-08(e)(3) of Regulation S-X) of our subsidiaries exceeding 25% of the consolidated net assets of AHC. The condensed financial statements presented in Schedule I should be read in conjunction with the consolidated financial statements and related notes thereto included in this filing.
(C) Fiscal Year and Fiscal Quarter :    AHC operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period ending on the Saturday closest to January 31 of the following year.
 
 	Ÿ 	 	References to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011;	
 
 	Ÿ 	 	References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012;	
 
 	Ÿ 	 	References to “fiscal year 2012” or “fiscal 2012” refer to the fiscal year ended February 2, 2013;	
 
 	Ÿ 	 	References to “first six months of fiscal 2012” refer to the six months ended July 28, 2012; and	
 
 	Ÿ 	 	References to “first six months of fiscal 2013” refer to the six months ended August 3, 2013.	
 
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Table of Contents
Fiscal year 2012 consisted of a 53-week period and each of fiscal years 2011 and 2010 consisted of a 52-week period. The first six months of fiscal 2013 and the first six months of fiscal 2012 each consisted of 26 weeks.
(D) Unaudited Interim Financial Statements :    The accompanying consolidated balance sheet as of August 3, 2013, the consolidated statements of operations and cash flows for the six months ended July 28, 2012 and August 3, 2013 and the consolidated statement of stockholders’ deficit for the six months ended August 3, 2013 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position as of August 3, 2013 and our results of operations and cash flows for the six months ended July 28, 2012 and August 3, 2013. The financial data and other financial information disclosed in these notes to the consolidated financial statements related to the interim periods are unaudited. The results of operations for the six months ended August 3, 2013 are not necessarily indicative of the results to be expected for the fiscal year ending February 1, 2014 or for any other future year or interim period.
(E) Use of Estimates :    The preparation of consolidated financial statements in conformity with GAAP requires that management 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 which affect revenues and expenses during the period reported. Estimates are adjusted when necessary to reflect actual experience. Significant estimates and assumptions may affect many items in the financial statements. These include restructuring and environmental remediation reserves, accounts receivable allowances, valuations of goodwill and other identified intangible assets, valuation of contingent consideration, income tax liabilities and assets and related valuation allowances, inventory obsolescence, asset impairments, valuation of share-based compensation, and other contingencies. Actual results may differ from those estimates and assumptions.
(F) Financial Condition and Liquidity :    We have substantial indebtedness after giving effect to our February 2008 acquisition of Kellwood Company by affiliates of Sun Capital Partners, Inc. (the “Acquisition”). Since the Acquisition, we have incurred additional debt in order to fund negative cash flows, principally due to significant cash outflows resulting from numerous restructuring activities, the significant level of interest expense arising from substantial indebtedness and significant cash outflows related to payments for acquisitions. As of February 2, 2013, total debt (including short-term borrowings) was $841,535, a decrease of $181,041 since January 28, 2012. The decrease is primarily related to a debt extinguishment of capitalized and accrued interest related to our Sun Promissory Notes and Sun Capital Loan Agreement as defined and further discussed in Note 8. As of August 3, 2013 (unaudited), total debt was $502,443. Our net losses for fiscal 2010, fiscal 2011, and fiscal 2012 were $104,478, $147,866, and $107,709, respectively, and our net loss for the first six months of fiscal 2013 (unaudited) was $25,643. The retail and apparel industry and economy as a whole have suffered recessionary conditions, a decline in employment levels and declines in consumer confidence since the Acquisition, which have negatively impacted our operating results. As a result, we have been, and continue to be, challenged by our heavily leveraged capital structure, negative cash flows, and significant level of interest expense. We expect that cash on hand, cash flows from operating activities, and available credit under the Wells Fargo Facility (as defined in Note 7) will be adequate to meet our liquidity needs for the next 12 months. As of August 31, 2013 (unaudited), availability under the Wells Fargo Facility was $12,252.
The Credit Agreement and Term Loan Agreement (as defined in Notes 7 and 8) contain certain financial covenants related to the fixed charge coverage ratio and leverage ratio, as those terms are defined in those agreements. On May 3, 2013, the Term Loan Agreement was amended in anticipation of not being in compliance with the fixed charge coverage ratio covenant during the 2013 fiscal year. Kellwood Company was in compliance with all covenants under its debt agreements for fiscal year 2012 and expects to be in compliance with all covenants, as amended, during fiscal year 2013, as further detailed in Notes 7 and 8.
 
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If Kellwood Company, our wholly-owned subsidiary, experiences an event of default under its Credit Agreement or Term Loan Agreement, including but not limited to a failure to pay cash interest obligations under said agreements or under the indentures, or a failure to maintain, or a failure to cure a default of, the applicable fixed charge or leverage ratios under such instruments, or other lack of liquidity caused by substantial leverage and the adverse conditions in the retail and apparel market or other factors, such an event would materially and adversely affect our financial condition and our operating results.
We will continue to evaluate potential financing transactions, including refinancing certain tranches of our subsidiaries’ indebtedness, issuing incremental debt, obtaining incremental letter of credit facilities and extending maturities of our existing debt, as well as evaluate other potential transactions which may provide us with additional liquidity. In addition, our capital and selling, general and administrative spending, restructuring plans, and growth initiatives contain discretionary elements. The discretionary elements can be deferred or otherwise eliminated in the near term to provide additional flexibility to manage our liquidity requirements. There can be no assurance as to which, if any, of these alternatives we may pursue as the choice of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our existing financing agreements and the consents we may need to obtain under the relevant documents. There also can be no assurance that financing or refinancing will be available to us on acceptable terms or at all.
(G) Cash and cash equivalents.     All demand deposits and highly liquid short-term deposits with original maturities of three months or less maintained under cash management activities are considered cash equivalents. The effect of foreign currency exchange rate fluctuations on cash and cash equivalents was not significant for fiscal 2010, fiscal 2011, or fiscal 2012.
(H) Accounts Receivable and Concentration of Credit Risk :    We maintain an allowance for trade accounts receivable estimated to be uncollectible. The activity in this allowance for continuing operations is summarized as follows (in thousands):

 	  	Fiscal Year
2010	 	 	Fiscal Year
2011	 	 	Fiscal Year
2012	 	
Balance, beginning of year	  	$	1,376	  	 	$	926	  	 	$	1,004	  	
(Reversals) provisions for bad debt expense	  	 	(473	) 	 	 	464	  	 	 	779	  	
Bad debts recovered (written off)	  	 	23	  	 	 	(386	) 	 	 	(922	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, end of year	  	$	926	  	 	$	1,004	  	 	$	861	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The provision for bad debts is included in selling, general and administrative expense. Substantially all of our trade receivables are derived from sales to retailers and are recorded at the invoiced amount and do not bear interest. We perform ongoing credit evaluations of our customers’ financial condition and require collateral as deemed necessary. Account balances are charged off against the allowance when we believe the receivable will not be collected.
Trade accounts receivable are recorded net of allowances for expected future chargebacks from customers. It is the nature of the apparel and recreational products industry that suppliers like us face significant pressure from customers in the retail industry to provide allowances to compensate for customer margin shortfalls. This pressure often takes the form of customers requiring us to provide price concessions on prior shipments as a prerequisite for obtaining future orders. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of our products at retail. To the extent our customers have more of our goods on hand at the end of the season, there will be greater pressure for us to grant markdown concessions on prior shipments. Our trade accounts receivable balances are reported net of expected allowances for these
 
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matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season in order to collect the receivables. We evaluate the allowance balances on a continual basis and adjust them as necessary to reflect changes in anticipated allowance activity. We also provide an allowance for sales returns based on historical return rates, which is addressed further in our discussion of revenue recognition below.
In fiscal 2012, no customer accounted for more than 10% of net sales. In fiscal 2011, sales to one customer accounted for more than 10% of our consolidated net sales of continuing operations. These sales represented 14% of fiscal 2011 net sales. In fiscal 2010, sales to two customers accounted for more than 10% of our consolidated net sales from continuing operations. These sales represented 15% and 12% of fiscal 2010 net sales, respectively. For fiscal 2010 and fiscal 2011, we generated sales from these two major customers within our Vince, Juniors, and Moderate segments.
No individual customer represented more than 10% of trade accounts receivable in fiscal 2012, however in fiscal 2011 accounts receivable from one customer accounted for more than 10% of gross accounts receivable in continuing operations. These receivables represented 13% of fiscal 2011 gross accounts receivable in continuing operations.
(I) Inventories and Cost of Products Sold :    Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out basis. The cost of inventory includes manufacturing or purchase cost as well as sourcing, pre-production, transportation, duty, overhead costs, and other processing costs associated with acquiring, importing and preparing inventory for sale. Inventory costs are included in cost of products sold at the time of their sale. In addition to inventory costs, other costs included in cost of products sold are royalties for licensed brand names and distribution costs. Product development costs are expensed in selling, general and administrative expense when incurred. Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost. Inventories of continuing operations consist of the following (in thousands):

 	  	January 28,
2012	 	  	February 2,
2013	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Finished goods	  	$	70,442	  	  	$	71,588	  	  	$	92,107	  	
Work in process	  	 	1,096	  	  	 	1,085	  	  	 	663	  	
Raw materials	  	 	1,903	  	  	 	1,383	  	  	 	1,088	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total inventories	  	$	73,441	  	  	$	74,056	  	  	$	93,858	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net of reserves of:	  	$	7,889	  	  	$	6,722	  	  	$	8,029	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
(J) Property, Plant and Equipment :    Property, plant and equipment are stated at cost. Depreciation is computed generally on the straight-line method over estimated useful lives of 15 years for buildings and of 3 to 10 years for machinery and equipment. Leasehold improvements are amortized principally on the straight-line basis over the shorter of their estimated useful lives or the remaining lease term, excluding renewal terms. Capitalized software is amortized on the straight-line basis over the estimated economic useful life of the software, generally 3 to 5 years. Depreciation expense related to continuing operations was $9,068, $8,373 and $5,129 for fiscal 2010, fiscal 2011, and fiscal 2012, respectively.
(K) Impairment of Long-lived Assets :    We review long-lived assets with a finite life for existence of facts and circumstances which indicate that the asset useful life is shorter than previously estimated or the carrying amount may not be recoverable from future operations based on undiscounted expected future cash flows. Impairment losses are then recognized in operating results to the extent discounted expected future cash flows are less than the carrying value of the asset. See Note 3 to the Consolidated Financial Statements for discussion of impairment of long-lived assets related to certain restructuring activities.
 
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(L) Goodwill and Other Intangible Assets:     Goodwill and other indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if it appears more likely than not that the carrying amount of an asset exceeds its fair value. We completed our annual impairment testing on our goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2012.
Goodwill represents the excess of the cost of acquired businesses over the fair market value of the identifiable net assets. As the acquisition by Kellwood Company of the net assets of Vince occurred prior to the current requirements of ASC Topic 805 Business Combinations , the additional purchase consideration paid to the former owners of Vince subsequent to the acquisition date was recorded as an addition to the purchase price, and therefore goodwill, once determined. Indefinite-lived intangible assets are primarily company-owned trademarks.
In September 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to the Intangibles-Goodwill and Other topic of Accounting Standards Codification (“ASC”). Under this amendment, an entity may elect to perform a qualitative impairment assessment for goodwill. If adverse qualitative trends are identified during the qualitative assessment that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is required. “Step one” of this quantitative impairment test requires that the fair value of the reporting unit be estimated and compared to its carrying amount. If the carrying amount exceeds the estimated fair value, “step two” of the impairment test is performed to calculate the impairment loss. An impairment loss is recognized to the extent the carrying amount of the reporting unit exceeds the implied fair value.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. This amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We early adopted this amendment during fiscal year 2011 for goodwill related to our reporting units, with the exception of Vince, as there was significant related purchase consideration capitalized in fiscal 2011. We performed a qualitative assessment on the Vince reporting unit during fiscal 2012.
In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite Lived Assets for Impairment . Under this amendment, an entity may elect to perform a qualitative impairment assessment for indefinite-lived intangible assets similar to the goodwill impairment testing guidance discussed above.
This amendment is effective for annual and interim impairment tests for indefinite-lived intangible assets performed for fiscal years beginning after September 15, 2012. We early adopted this amendment during fiscal 2012 and performed a quantitative assessment of impairment in fiscal 2012 for trademarks associated with certain brands.
For trademarks that we directly proceeded to “step one” during fiscal 2012, and for impairment tests performed in prior years, we primarily use the relief from royalty method to calculate the fair value of the intangible assets, which uses revenue projections, royalty rates and discount rates in the calculation.
Determining the fair value of goodwill and other intangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. It is possible that estimates of future operating results could change adversely and impact the evaluation of the recoverability of the carrying value of goodwill and intangible assets and that the effect of such changes could be material.
 
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Definite-lived intangible assets are primarily compromised of customer relationships. These are amortized on a straight-line basis over their useful lives of 10 to 20 years.
See Note 3 and Note 5 to the Consolidated Financial Statements for more information on the details surrounding the goodwill and intangible assets as well as any impairment charges.
(M) Deferred Financing Costs :    Deferred financing costs, such as underwriting, financial advisory, professional fees, and other similar fees are capitalized and recognized in interest expense over the contractual life of the related debt instrument using the straight-line method, as this method results in recognition of interest expense that is materially consistent with that of the effective interest method.
(N) Deferred Rent and Deferred Lease Incentives:     Certain of our operating leases contain predetermined fixed escalations of the minimum rentals during the original term of the lease. For these leases, we recognize the related rental expense on a straight-line basis over the life of the lease and record the difference between the amount charged to operations and amounts paid as deferred rent. Certain of our retail store leases contain provisions for contingent rent, typically a percentage of retail sales once a predetermined threshold has been met. These amounts are expensed as incurred. Additionally, we received lease incentives in certain leases. These allowances have been deferred and are amortized on a straight-line basis over the life of the lease as a reduction of rent expense.
(O) Environmental Remediation Reserves and Expenses :    We recognized, and will continue to recognize, an environmental liability when it is probable, the liability exists, and the amount is reasonably estimable. We estimated the duration and extent of our remediation obligations based upon internal analyses of clean-up costs, ongoing monitoring costs, estimated legal fees, communications with regulatory agencies, and changes in environmental law. If we were to determine that our estimates of the duration or extent of our environmental obligations were no longer accurate, we would adjust our environmental liabilities accordingly in the period that such determination is made. Estimated future expenditures for environmental remediation are discounted to their present value. See Note 15 for additional information.
(P) Foreign Currency Translation :    The financial statements of foreign subsidiaries are translated into United States dollars. Where the functional currency of a foreign subsidiary is its local currency, income statement items are translated at the average exchange rate for the period and balance sheet accounts are translated using period-end exchange rates. Gains and losses resulting from translation are reported as a separate component of other comprehensive loss within stockholders’ deficit and the Consolidated Statements of Comprehensive Loss.
Where the local currency of a foreign subsidiary is not its functional currency, financial statements are translated at either current or historical exchange rates as appropriate. These adjustments, together with gains and losses on foreign currency transactions, are recognized in the income statement as incurred.
(Q) Revenue Recognition :    Sales are recognized when goods are shipped in accordance with customer orders for our wholesale business and ecommerce business, and at the time of register receipt for our retail business. The estimated amounts of sales discounts, returns and allowances are accounted for as reductions of sales when the associated sale occurs. These estimated amounts are adjusted periodically based on changes in facts and circumstances when the changes become known to us. Accrued discounts, returns and allowances are included as an offset to accounts receivable in the balance sheet for our wholesale businesses. The activity in the accrued discounts, returns, and allowances account is summarized as follows (in thousands).
 
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 	  	Fiscal Year
2010	 	 	Fiscal Year
2011	 	 	Fiscal Year
2012	 	
Balance, beginning of year	  	$	25,767	  	 	$	20,309	  	 	$	21,709	  	
Provision	  	 	74,211	  	 	 	79,780	  	 	 	94,524	  	
Utilization	  	 	(79,669	) 	 	 	(78,380	) 	 	 	(92,073	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, end of year	  	$	20,309	  	 	$	21,709	  	 	$	24,160	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
For our wholesale businesses, amounts billed to customers for shipping and handling costs are recorded as a reduction to our cost of products sold. These costs are not significant. Our stated terms are FOB shipping point. There is no stated obligation to customers after shipment, other than specifically set forth allowances or discounts that are accrued at the time of sale. The rights of inspection or acceptance contained in certain sales agreements are limited to whether the goods received by our customers are in conformance with the order specifications.
(R) License Agreements :    We have exclusive license agreements to market apparel and recreational products under trademarks owned by other parties. These agreements contain provisions for minimum guaranteed royalty and advertising payments based on anticipated sales. In any year, if we do not anticipate meeting the minimum sales amounts to satisfy the guaranteed minimum royalty and advertising amounts, the guaranteed minimum royalty and advertising amounts are accrued. In fiscal 2010, fiscal 2011, and fiscal 2012, sales of licensed products were approximately $70,373, $58,030, and $62,485, respectively. See Note 15 to the Consolidated Financial Statements for additional discussion regarding license agreement commitments.
(S) Marketing and Advertising :    We provide cooperative advertising allowances to certain of our customers. These allowances are accounted for as reductions in sales as discussed in “Revenue Recognition” above. Advertising expense includes contractually set forth amounts paid to licensors that are specifically identified as advertising payments and advertising we conduct for products we sell. Production expense related to company-directed advertising is deferred until the first time at which the advertisement runs. Communication expense related to company-directed advertising is expensed as incurred. Marketing and advertising expense recorded within selling, general and administrative expenses was $4,821, $7,164, and $9,630, for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. There were not significant amounts of deferred production expenses associated with company-directed advertising at January 28, 2012 and February 2, 2013.
(T) Income Taxes :    We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria. We recognize tax positions in the Consolidated Balance Sheets as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts. Accrued interest and penalties related to unrecognized tax benefits are included in income taxes in the Consolidated Statements of Operations.
(U) Earnings Per Share :    We calculate basic earnings per share in accordance with ASC Topic 260, Earnings Per Share. This requires the income per share for common stock to be calculated assuming 100% of our earnings are distributed as dividends to common stock, even though we do not anticipate distributing 100% of our earnings as dividends.
Basic earnings per share applicable to common shareholders is computed by dividing earnings applicable to common shareholders by the weighted-average number of common shares. Since there are no dilutive securities for all periods presented, basic EPS and diluted EPS are the same.
 
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(V) New Accounting Standards:
Presentation of comprehensive income
In June 2011, the FASB issued an accounting standards update regarding the presentation of comprehensive income in financial statements. The provisions of this standard provide an option to present the components of net income and other comprehensive income either as one continuous statement of comprehensive income or as two separate but consecutive statements. The provisions of this new disclosure standard were effective January 1, 2012. We have provided a separate Consolidated Statement of Other Comprehensive Loss during the current year.
In February 2013, the FASB issued another accounting standards update that requires an entity to present the effects of significant reclassifications out of each component of accumulated other comprehensive income on the respective line items of the entity’s statement of operations. This presentation can be made either on the face of the statement of operations or within a note to the financial statements. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. This requirement will only impact the presentation of our financial statements to the extent we have instances of these transactions in the future.
Testing Goodwill for Impairment
In September 2011 and July 2012, the FASB issued amendments to the Intangibles-Goodwill and Other topic of ASC. Under these amendments, an entity may elect to perform a qualitative impairment assessment for goodwill and indefinite-lived intangible assets. We adopted the provisions of these new standards, as discussed above.
Fair Value Measurements
In May 2011, the FASB issued an accounting standards update that resulted in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP. The new guidance did not extend the use of fair value accounting, but provided guidance on how it should be applied where its use is already required or permitted by other standards within GAAP. This update was effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance in fiscal 2011 did not have a material impact on our consolidated financial position, results of operations, or cash flows.
Note 2. Business Combinations
Zobha
On July 26, 2011, Kellwood Company, our wholly-owned subsidiary, acquired 100% of the issued and outstanding equity interests of Zobha, LLC and 100% of the issued and outstanding shares of Zobha Limited (together, “Zobha”). Zobha designs and sells women’s athletic apparel, primarily focused on the yoga market, which combines superior performance fabric with a high-fashion inspired design aesthetic.
The total consideration transferred was $1,845, including estimated contingent consideration of $945 that was expected be paid to the seller based on an estimated applicable percentage and the fair market value of Zobha at the trigger date of the contingent payment, as defined in the Contingent Payment Agreement. The applicable percentage was originally established at 49% and could increase or decrease based on our subsequent capital contributions to the business and future capital contributions by the seller. The contingent payment could have been triggered by us or the seller at any time after January 1, 2016.
 
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The estimated contingent consideration was revised during the fourth quarter of fiscal 2012 based on the most recent forecasted results of operations of Zobha, Zobha contributions to date, and assumed future contributions to Zobha. This resulted in a gain of $531 that was recorded within change in fair value of contingent consideration in the Consolidated Statement of Operations. As of February 2, 2013, we estimated the range of total undiscounted contingent consideration to be between $0 and $215, and we recorded the estimated discounted value of $54 within deferred income taxes and other on the Consolidated Balance Sheet. The amount was subsequently written off during the second quarter of fiscal 2013 when we divested the Zobha business (See Note 4 to our Consolidated Financial Statements) as the estimated discounted value of the contingent consideration was $0 at that time. The contingent consideration was estimated based on a weighted probability EBITDA forecast, the terms of the purchase agreement, assumed capital contributions to Zobha and a trigger date of January 1, 2016. This is considered to be a Level 3 fair value measure as it is measured utilizing significant unobservable inputs.
The Zobha acquisition was accounted for as a business combination, and accordingly, the assets and liabilities of the acquired entities were recorded at their estimated fair value. The following table summarizes the fair value of the assets acquired and the liabilities assumed (in thousands).

 	  	Zobha	 	
 	  	July 26, 2011	 	
ASSETS	  				
Cash	  	$	211	  	
Trade receivables	  	 	25	  	
Inventory	  	 	1,008	  	
Other current assets	  	 	59	  	
Furniture and equipment	  	 	23	  	
Intangible assets:	  				
Trademark	  	 	475	  	
Customer relationships	  	 	103	  	
Goodwill	  	 	225	  	
Other assets	  	 	27	  	
	  	 	 	 	
Total assets acquired	  	$	2,156	  	
	  	 	 	 	
LIABILITIES	  				
Accounts payable	  	 	250	  	
Other accrued expenses	  	 	61	  	
	  	 	 	 	
Total liabilities assumed	  	$	311	  	
	  	 	 	 	
Goodwill consisted of expected growth synergies through expansion of distribution channels and cost synergies resulting from economies of scale and supply chain process improvements. Intangible assets consisted of customer relationships with an estimated average life of 10 years and a trademark with an indefinite life. The goodwill and intangible assets were impaired during fiscal 2011 primarily due to delays in expected growth and cost synergies as further described in Note 3 to the Consolidated Financial Statements. We incurred $586 of acquisition expenses related to the Zobha acquisition and these amounts were recorded in selling, general and administrative expenses in the Consolidated Statement of Operations. Zobha was divested during the second quarter of fiscal 2013 as further described in Note 4 to the Consolidated Financial Statements.
 
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Rebecca Taylor
On January 4, 2011, Kellwood Company acquired (a) 100% of the capital stock of Meow Inc.; (b) 100% of the capital stock, share capital, interests, units and equivalent interests of each of RT Licensing, Inc., Beth’s Boutique LLC, and MeowHK Limited; and (c) the related intellectual property (together “Rebecca Taylor”). The purchase agreement includes a provision for contingent consideration that will be paid to the sellers if Rebecca Taylor meets certain EBITDA performance targets. If the performance targets are met, annual payments will be due approximately 120 days following the end of our 2011 through 2015 fiscal years (the “Earn-Out Amounts”) with an additional payment approximately 120 days following the end of our 2015 fiscal year based on the cumulative EBITDA results of Rebecca Taylor from 2011 through 2015 fiscal years (the “Earn-Up Amount”). The maximum contingent consideration is not limited; however the Earn-Up Amount is limited to $10,000. At the time of the acquisition, we recorded $9,356 within deferred income taxes and other on the Consolidated Balance Sheet for the fair value of our expected consideration payment.
The estimated contingent consideration was revised during the second and fourth quarters of fiscal 2012 based on the most recent forecasted results of operations of Rebecca Taylor and 2012 financial results. This resulted in a total gain of $6,631 that was recorded in change in fair value of contingent consideration in the Consolidated Statement of Operations. We have estimated the range of total undiscounted contingent consideration payments to be between $7,500 and $9,000.
As of February 2, 2013, we have recorded $4,209 for the fair value of our contingent consideration in deferred income taxes and other on the Consolidated Balance Sheet. The fair value of our total obligation was estimated based on a weighted probability EBITDA forecast and the terms of the purchase agreement, using a discount factor of 22.8%. This is considered to be a Level 3 fair value measure as it is measured utilizing significant unobservable inputs. As of August 3, 2013 (unaudited), we have recorded contingent consideration of $1,413 in other accrued expenses and $3,252 in deferred income taxes and other on the Consolidated Balance Sheet. The Earn-Out Amount for fiscal year 2011 was $1,928 and was paid in May 2012. There was no Earn-Out Amount earned in fiscal year 2012.
On a quarterly basis, management reviews internal EBITDA forecasts and other relevant factors for Rebecca Taylor to assess the appropriateness of the recorded contingent consideration. No adjustments to the estimated fair value of this liability were deemed necessary for the first six months of fiscal 2013.
Goodwill largely consists of expected growth synergies through expansion of distribution channels and cost synergies resulting from economies of scale and supply chain process improvements. Intangible assets consist of customer relationships with an estimated average life of 10 years and a trademark with an indefinite life.
Adam
On August 25, 2010, Kellwood Company acquired certain assets of Adampluseve, Inc. (“Adam”) for the consideration of one dollar and forgiveness of a receivable due to Kellwood Company of $133, and the assumption of certain liabilities. The receivable was a result of inventory payments made by Kellwood Company on the behalf of Adam immediately prior to the acquisition. Adam is a full contemporary sportswear collection for men and women available at its retail stores, online, and luxury retailers under the ADAM ® brand. The acquisition supported our growth strategy of contemporary brands.
The fair value of the identifiable assets acquired less liabilities assumed of $1,637 exceeded the fair value of the consideration of $133. Accordingly, the acquisition has been accounted for as a bargain purchase and, as a result, we recognized a gain of $939 (net of deferred tax of $565) associated with the acquisition in the third quarter of fiscal year 2010 as a gain on acquisition, net of tax on our Consolidated Statement of Operations. Intangible assets recognized as a result of the transaction consisted of customer relationships with an estimated average life of 10 years and a trademark with an indefinite life.
 
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We incurred $271 of acquisition expense during fiscal 2010 related to the Adam acquisition and these amounts were recorded in selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended January 29, 2011. Adam was discontinued during the fourth quarter of fiscal 2011 as further described in Note 4 to the Consolidated Financial Statements.
The Rebecca Taylor and Adam acquisitions were accounted for as business combinations, and accordingly, the assets and liabilities of the acquired entities were recorded at the estimated fair value. The following table summarizes the fair value of the assets acquired and liabilities assumed (in thousands).

 	  	Rebecca Taylor	 	  	Adam	 	
 	  	January 4, 2011	 	  	August 25, 2010	 	
ASSETS	  				  				
Cash	  	$	—	  	  	$	11	  	
Trade receivables	  	 	2,003	  	  	 	696	  	
Inventory	  	 	1,299	  	  	 	1,066	  	
Other current assets	  	 	194	  	  	 	90	  	
Leasehold improvements and equipment	  	 	839	  	  	 	412	  	
Intangible assets:	  				  				
Trademark	  	 	8,509	  	  	 	730	  	
Customer relationships	  	 	9,985	  	  	 	207	  	
Goodwill	  	 	12,951	  	  	 	—	  	
Other assets	  	 	315	  	  	 	106	  	
	  	 	 	 	  	 	 	 	
Total assets acquired	  	$	36,095	  	  	$	3,318	  	
	  	 	 	 	  	 	 	 	
LIABILITIES	  				  				
Capital lease obligation	  	$	5	  	  	$	—	  	
Accounts payable	  	 	1,029	  	  	 	1,284	  	
Other accrued expenses	  	 	1,594	  	  	 	397	  	
	  	 	 	 	  	 	 	 	
Total liabilities assumed	  	$	2,628	  	  	$	1,681	  	
	  	 	 	 	  	 	 	 	
The Zobha, Rebecca Taylor and Adam acquisitions were accounted for under the acquisition method of accounting. Accordingly, their results have been included in the Consolidated Financial Statements from the acquisition dates. Unaudited consolidated results of operations on a pro-forma basis, assuming these acquisitions had occurred at the beginning of the year in which they occurred, are not included as the acquisitions were not significant to our consolidated results of operations.
Vince
In connection with our acquisition of certain net assets from CRL Group, LLC in 2006, owner of the Vince ® brand and trademark, additional cash purchase consideration was paid based upon achievement of certain specified financial performance targets for each of the five full years after the acquisition (2007 through 2011), and the cumulative performance from 2007 to 2011. The additional consideration for fiscal 2010 and fiscal 2011 was $8,137 and $51,134, respectively. We paid $50,328 of the fiscal 2011 consideration during the fourth quarter of fiscal 2011 and paid the remaining consideration during the second quarter of fiscal 2012. The fiscal 2010 additional cash consideration was paid during first quarter of fiscal 2011.
 
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Note 3. Impairment, restructuring, environmental remediation and other charges
For fiscal 2010, fiscal 2011, and fiscal 2012 and the six months ended July 28, 2012 and August 3, 2013, the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges recorded in continuing and discontinued operations were as follows (in thousands):

 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Fiscal Year 2010	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Fiscal Year 2011	  	$	15,976	  	  	$	6,627	  	  	$	22,603	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Fiscal Year 2012	  	$	7,440	  	  	$	4,789	  	  	$	12,229	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
First Six months Fiscal 2012 (unaudited)	  	$	2,981	  	  	$	221	  	  	$	3,202	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
First Six months Fiscal 2013 (unaudited)	  	$	827	  	  	$	942	  	  	$	1,769	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
For fiscal 2010, fiscal 2011, and fiscal 2012, the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges were recorded as follows (in thousands):

 	  	Fiscal Year 2010	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Restructuring, environmental remediation and other charges	  	$	9,729	  	  	$	3,575	  	  	$	13,304	  	
Impairment of long-lived assets	  	 	438	  	  	 	24,129	  	  	 	24,567	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	10,167	  	  	$	27,704	  	  	$	37,871	  	

													
 	  	Fiscal Year 2011	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Restructuring, environmental remediation and other charges	  	$	2,651	  	  	$	489	  	  	$	3,140	  	
Impairment of long-lived assets (excluding goodwill)	  	 	2,504	  	  	 	5,913	  	  	 	8,417	  	
Impairment of goodwill	  	 	10,821	  	  	 	225	  	  	 	11,046	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	15,976	  	  	$	6,627	  	  	$	22,603	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	15,124	  	  	$	6,333	  	  	$	21,457	  	

													
 	  	Fiscal Year 2012	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Restructuring, environmental remediation and other charges	  	$	5,091	  	  	$	409	  	  	$	5,500	  	
Impairment of long-lived assets	  	 	2,349	  	  	 	4,380	  	  	 	6,729	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	7,440	  	  	$	4,789	  	  	$	12,229	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	7,440	  	  	$	4,789	  	  	$	12,229	  	

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For the first six months of fiscal 2012 and fiscal 2013, the costs related to impairment of long-lived assets and restructuring, environmental remediation and other charges were recorded as follows (in thousands):

 	  	First Six Months of Fiscal 2012
(unaudited)	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Restructuring, environmental remediation and other charges	  	$	2,264	  	  	$	221	  	  	$	2,485	  	
Impairment of long-lived assets	  	 	717	  	  	 	—	  	  	 	717	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	2,981	  	  	$	221	  	  	$	3,202	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	2,981	  	  	$	221	  	  	$	3,202	  	

													
 	  	First Six Months of Fiscal 2013
(unaudited)	 	
 	  	Continuing
Operations	 	  	Discontinued
Operations	 	  	Total	 	
Restructuring, environmental remediation and other charges	  	$	827	  	  	$	508	  	  	$	1,335	  	
Impairment of long-lived assets	  	 	—	  	  	 	434	  	  	 	434	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total pretax cost	  	$	827	  	  	$	942	  	  	$	1,769	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
After tax cost	  	$	827	  	  	$	942	  	  	$	1,769	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
The results of operations, impairment of long-lived assets, and restructuring, environmental remediation and other charges for businesses sold and shut down are reported within net (loss) income from discontinued operations, net of tax, on the Consolidated Statements of Operations. The gains and losses on consummated transactions involving the sale of operations are also reported within net (loss) income from discontinued operations, net of tax on the Consolidated Statements of Operations.
We completed our annual impairment testing of goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal 2012. We recorded no goodwill impairment charges in fiscal 2012 or fiscal 2010, but our impairment charges for fiscal 2011 amounted to $10,821 and $225 for continuing and discontinued operations, respectively. Our impairment charges for identifiable intangible assets for continuing operations amounted to $438, $2,504, and $1,200, in fiscal 2010, fiscal 2011, and fiscal 2012, respectively, which represent write downs of our intangible assets to their fair values. See Note 5 to the Consolidated Financial Statements for further discussion. Impairment charges for identifiable assets of discontinued operations amounted to $24,129 and $5,672 for fiscal 2010 and fiscal 2011, respectively. These charges primarily relate to the Phat Licensing trademarks due to declining results at our licensees.
During the fourth quarter of 2012, we determined that our equity investment in the purchaser of BLK DNM was fully impaired due to continued poor operating performance and negative cash flows. This investment was acquired through the sale of our BLK DNM business during the second quarter of fiscal 2012. See Note 4 to the Consolidated Financial Statements for further discussion of this transaction. We also recognized impairment charges of $725 related to our exited facility in Trenton, Tennessee due to a decline in market value, which was recorded during fiscal 2012 at the time the facility was sold to a third party.
Restructuring charges are comprised of expenses associated with our efforts to continuously improve operational and organizational efficiency. These expenses result from numerous individual actions implemented across the company on an ongoing basis. Restructuring charges include costs for moving facilities, exiting businesses, curtailing/downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions.
 
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Impairment, restructuring, environmental remediation and other charges during fiscal 2010 included:
 
 	1)	charges that related to closing Koret outlet stores and other costs associated with vacant spaces;	
 
 	2)	charges to accrue future lease payments due to early exit of leased spaces;	
 
 	3)	charges related to an environmental liability at a former manufacturing facility;	
 
 	4)	impairment charges of $24,567 primarily related to intangible assets of our discontinued Phat Licensing business; and	
 
 	5)	severance charges and related costs for various restructuring projects to create a more efficient operational and organizational structure in our support operations and apparel businesses.	
Impairment, restructuring, environmental remediation and other charges during fiscal 2011 included:
 
 	1)	charges to accrue future lease payments and other contractual obligations associated with exited businesses, as further described in Note 4 to the Consolidated Financial Statements;	
 
 	2)	charges related to an environmental liability at a former manufacturing facility;	
 
 	3)	costs to maintain closed facilities, partially offset by the recovery of charges through the sublease and other use of vacant spaces;	
 
 	4)	impairment charges of $19,463 related to goodwill, intangible assets and other long-lived assets, of which $2,504 and $10,821 was allocated to the Juniors and Other operating segments, respectively, with the remainder relating to discontinued business; and	
 
 	5)	severance charges and related costs for various restructuring projects to create a more efficient operational and organizational structure in our support operations and apparel businesses.	
Impairment, restructuring, environmental remediation and other charges during fiscal 2012 included:
 
 	1)	charges to accrue future lease payments and other contractual obligations associated with exited businesses, as further described in Note 4 to the Consolidated Financial Statements;	
 
 	2)	charges to record settlement obligations related to escheat liability;	
 
 	3)	charges to adjust our environmental remediation obligations related to a former manufacturing facility;	
 
 	4)	costs to maintain closed facilities, partially offset by the recovery of charges through subleases and other use of vacant spaces;	
 
 	5)	impairment charges of $6,729 related to intangible assets and other long-lived assets, of which $1,200 was allocated to our Juniors Segment, $1,149 was allocated to Corporate expenses for the write-down of an exited facility and our equity investment, and the remainder related to our discontinued Lamb & Flag business; and	
 
 	6)	severance charges and related costs for exited businesses and various restructuring projects to create a more efficient operational and organizational structure in our support operations and apparel businesses.	
During the first six months of fiscal 2012, we recognized an impairment charge of $717 related to the decline in market value of our exited facility in Trenton, Tennessee. Other noteworthy restructuring activities in continuing operations for the first six months of fiscal 2012 and fiscal 2013 included various efforts to create a more efficient operational and organizational structure in our support operations and womenswear businesses.
 
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As of August 3, 2013 (unaudited), we expect actions to be taken that will result in additional restructuring charges for continuing operations in fiscal 2013 of less than $500. We expect additional cash outflows related to restructuring activities of continuing operations in fiscal 2013 of approximately $1,200.
The following table presents a rollforward of impairment of long-lived assets and restructuring, environmental remediation and other charges recorded in continuing operations for fiscal 2011, fiscal 2012, and the first six months of fiscal 2013 (in thousands).

 	 	Contractual
obligations	 	 	Employee
severance and
termination
benefits	 	 	Impairment
of long-lived
assets	 	 	Restructuring,
Environmental
remediation
and other
charges	 	 	Total	 	
Accrual as of January 29, 2011	 	$	894	  	 	$	384	  	 	$	—	  	 	$	10,349	  	 	$	11,627	  	
Provision	 	 	342	  	 	 	1,093	  	 	 	13,325	  	 	 	1,216	  	 	 	15,976	  	
Non-cash utilization	 	 	—	  	 	 	—	  	 	 	(13,325	) 	 	 	—	  	 	 	(13,325	) 	
Utilization	 	 	(763	) 	 	 	(1,236	) 	 	 	—	  	 	 	(2,007	) 	 	 	(4,006	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of January 28, 2012	 	$	473	  	 	$	241	  	 	$	—	  	 	$	9,558	  	 	$	10,272	  	
Provision	 	 	142	  	 	 	1,974	  	 	 	2,349	  	 	 	2,975	  	 	 	7,440	  	
Non-cash utilization	 	 	—	  	 	 	—	  	 	 	(2,349	) 	 	 	—	  	 	 	(2,349	) 	
Utilization	 	 	(467	) 	 	 	(1,777	) 	 	 	—	  	 	 	(464	) 	 	 	(2,708	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of February 2, 2013	 	$	148	  	 	$	438	  	 	$	—	  	 	$	12,069	  	 	$	12,655	  	
Provision (unaudited)	 	 	24	  	 	 	511	  	 	 	—	  	 	 	292	  	 	 	827	  	
Non-cash utilization (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Utilization (unaudited)	 	 	(93	) 	 	 	(856	) 	 	 	—	  	 	 	(363	) 	 	 	(1,312	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of August 3, 2013 (unaudited)	 	$	79	  	 	$	93	  	 	$	—	  	 	$	11,998	  	 	$	12,170	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The following table presents a rollforward of impairment of long-lived assets and restructuring, environmental remediation and other charges recorded in discontinued operations for fiscal 2011, fiscal 2012, and the first six months of fiscal 2013 (in thousands).

 	 	Contractual
obligations	 	 	Employee
severance and
termination
benefits	 	 	Impairment
of long-lived
assets	 	 	Restructuring,
Environmental
remediation
and other
charges	 	 	Total	 	
Accrual as of January 29, 2011	 	$	22,047	  	 	$	791	  	 	$	—	  	 	$	188	  	 	$	23,026	  	
Provision (reversal)	 	 	(90	) 	 	 	554	  	 	 	6,138	  	 	 	25	  	 	 	6,627	  	
Non-cash utilization	 	 	—	  	 	 	—	  	 	 	(6,138	) 	 	 	—	  	 	 	(6,138	) 	
Utilization	 	 	(7,925	) 	 	 	(805	) 	 	 	—	  	 	 	(213	) 	 	 	(8,943	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of January 28, 2012	 	$	14,032	  	 	$	540	  	 	$	—	  	 	$	—	  	 	$	14,572	  	
Provision	 	 	(599	) 	 	 	551	  	 	 	4,380	  	 	 	457	  	 	 	4,789	  	
Non-cash utilization	 	 	—	  	 	 	—	  	 	 	(4,380	) 	 	 	—	  	 	 	(4,380	) 	
Utilization	 	 	(12,215	) 	 	 	(1,031	) 	 	 	—	  	 	 	(170	) 	 	 	(13,416	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of February 2, 2013	 	$	1,218	  	 	$	60	  	 	$	—	  	 	$	287	  	 	$	1,565	  	
Provision (unaudited)	 	 	230	  	 	 	269	  	 	 	434	  	 	 	9	  	 	 	942	  	
Non-cash utilization (unaudited)	 	 	—	  	 	 	—	  	 	 	(434	) 	 	 	—	  	 	 	(434	) 	
Utilization (unaudited)	 	 	(1,211	) 	 	 	(100	) 	 	 	—	  	 	 	(36	) 	 	 	(1,347	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrual as of August 3, 2013 (unaudited)	 	$	237	  	 	$	229	  	 	$	—	  	 	$	260	  	 	$	726	  	

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Contractual obligations are adverse contractual arrangements under which losses are probable and estimable and where there is no future economic benefit. These include make-whole payments to PVH Corp. (“PVH”) as a result of the termination of the Calvin Klein license agreement and minimum lease payments, as well as costs related to vacated leased spaces for the exited Lamb & Flag business (as discussed further in Note 4 to the Consolidated Financial Statements).
In continuing and discontinued operations, contractual obligations and employee severance and termination benefits will largely be settled through the first quarter of fiscal 2015 in accordance with the related agreements.
Note 4. Discontinued Operations
During the second quarter of 2013, we divested our Zobha business in order to focus resources on larger contemporary and Juniors brands. As a result of the divestiture, we realized a total loss of $1,239 within net (loss) income from discontinued operations on the Consolidated Statements of Operations for the six months ended August 3, 2013 (unaudited). The total loss includes charges to adjust inventory values to the lower of cost or market, impairment charges to write down obsolete assets, employee termination costs, and accrued rent commitments and other costs associated with the exit of our leased office and retail spaces. We anticipate future cash outflows related to employee termination and non-cancellable lease payments for Zobha of approximately $560, which are primarily payable through fiscal year 2014.
In fiscal 2004, we acquired Phat Fashions, LLC and Phat Licensing, LLC (together referred to as “Phat Fashions”), a licensor of apparel, athletic shoes and accessories through the Phat Farm and Baby Phat trademarks. In fiscal 2011, we began producing and selling Baby Phat junior’s apparel after assuming the license for this portion of the Phat Fashions business (referred to as the “Baby Phat wholesale operations”). Due to diminishing prospects in the urban market, we decided to exit our businesses in this market during fiscal 2012. We sold the Phat Farm trademark to a licensee during the second quarter of fiscal 2012, recognizing a gain on the sale of these assets of $3,673, net of disposal costs. We subsequently sold the Baby Phat trademark to the same party on March 20, 2013. We recognized $447 during the fourth quarter of fiscal 2012 for a nonrefundable deposit received from the buyer, net of disposal costs incurred to date. We recognized the remaining $902 gain on the sale of the asset during the first quarter of fiscal 2013, after the closing of the Baby Phat trademark sale, at which time the Phat Fashions licensing business was reported as discontinued operations. We anticipate net cash outflows in fiscal 2013 related to this business of less than $1,000, primarily consisting of accounts payable and other current liabilities, net of accounts receivable due from licensees.
On December 31, 2012, we sold the equity interests of Royal Robbins, LLC, and certain assets and liabilities of our Royal Robbins Canada operations to an unrelated third party. As a result of the sale, we realized a gain of $9,124 included within net (loss) income from discontinued operations on the Consolidated Statement of Operations for the fiscal year ended February 2, 2013. The gain was recorded net of disposal costs primarily related to broker fees, legal fees, and one-time employee benefit arrangements. As of February 2, 2013, we anticipated future cash outflows of $359 for unpaid seller costs, which were primarily paid through the first quarter of fiscal 2013. Proceeds from the sale were utilized to pay our selling costs and portions of our outstanding debt under the Wells Fargo Facility and Term Loan Facility, as defined and further discussed in Notes 7 and 8 to the Consolidated Financial Statements. Accordingly, our gain on the sale of Royal Robbins was reduced by $397 to write off unamortized debt issuance costs related to the portion of our debt that was required to be repaid upon completion of the sale.
During the second quarter of fiscal 2012, we decided to exit our BLK DNM business. This decision resulted from the determination that our greenfield startup brands are not aligned with our current strategic initiatives, as they require significant cash outlays and only offer long-term payback.
 
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On May 31, 2012, we sold substantially all the assets and liabilities of our BLK DNM operations. As a result of the sale, we recognized a loss of $1,862 included within net (loss) income from discontinued operations on the Consolidated Statement of Operations for the current fiscal year. The loss was recorded net of disposal costs for legal fees and non-cancellable contract obligations, of which $49 remained outstanding as of February 2, 2013 and was paid in the first quarter of fiscal year 2013.
In a continued effort to exit our startup concept brands, the e-commerce site and retail stores of our Lamb & Flag business were closed during the third quarter of fiscal 2012. All runoff operations of the business were substantially complete at that time. Additionally, we exited our Baby Phat wholesale business during the fourth quarter of fiscal 2012 as a result of our decision to exit the urban wear market. As a result of abandoning these operations, we recognized total losses in fiscal year 2012 of $7,638 and $1,992 for Lamb & Flag and Baby Phat, respectively. Costs to exit these businesses include sales allowances provided to customers, inventory adjustments to reduce inventory to the lower of cost or market during the inventory liquidation process, and charges for non-cancellable fabric and trim obligations to our vendors. In connection with the exit of these businesses, we also recorded impairment charges to write-down obsolete assets, charges for employee termination benefits, and contract termination costs to exit our leased spaces and website service agreements. As of February 2, 2013, we expected to have $568 and $461 of future cash outflows related to the Baby Phat wholesale and Lamb & Flag businesses, respectively, to settle our non-cancellable contract obligations. These obligations are primarily payable through fiscal 2013.
The following table summarizes the costs incurred to exit the Zobha, Lamb & Flag and Baby Phat wholesale operations by type (in thousands). All disposal costs related to the sales of our other discontinued businesses are recorded as a reduction (increase) to the gain (loss) recognized on these sales within net (loss) income from discontinued operations on the Consolidated Statement of Operations.

 	  	Fiscal Year	 	
 	  	2012	 	  	2013	 	
 	  	Lamb & Flag	 	  	Baby Phat	 	  	Zobha	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Sales allowances	  	$	—	  	  	$	1,011	  	  	$	—	  	
Inventory adjustment to lower of cost or market	  	 	1,528	  	  	 	610	  	  	 	342	  	
Impairment of long-lived assets	  	 	4,349	  	  	 	31	  	  	 	434	  	
Contract termination costs	  	 	1,290	  	  	 	146	  	  	 	203	  	
Employee termination benefits	  	 	361	  	  	 	194	  	  	 	254	  	
Other	  	 	110	  	  	 	—	  	  	 	6	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total exit costs	  	$	7,638	  	  	$	1,992	  	  	$	1,239	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
The Lamb & Flag and Baby Phat wholesale exit costs are recorded in the Consolidated Statement of Operations for fiscal year 2012 as illustrated below (in thousands):

 	  	Lamb & Flag	 	 	Baby Phat	 	
Net sales	  	$	—	  	 	$	(1,011	) 	
Cost of products sold	  	 	1,528	  	 	 	610	  	
	  	 	 	 	 	 	 	 	
Gross profit	  	 	(1,528	) 	 	 	(1,621	) 	
Restructuring and other charges	  	 	1,761	  	 	 	340	  	
Impairment of long-lived assets	  	 	4,349	  	 	 	31	  	
	  	 	 	 	 	 	 	 	
Loss before provision for income taxes	  	 	(7,638	) 	 	 	(1,992	) 	
Provision for income taxes	  	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	
Net loss	  	$	(7,638	) 	 	$	(1,992	) 	

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The Zobha exit costs are recorded in the Consolidated Statement of Operations for the six months ended August 3, 2013 as illustrated below (in thousands):

 	  	Zobha	 	
 	  	(unaudited)	 	
Net sales	  	$	—	  	
Cost of products sold	  	 	342	  	
	  	 	 	 	
Gross profit	  	 	(342	) 	
Restructuring and other charges	  	 	463	  	
Impairment of long-lived assets	  	 	434	  	
	  	 	 	 	
Loss before provision for income taxes	  	 	(1,239	) 	
Provision for income taxes	  	 	—	  	
	  	 	 	 	
Net loss	  	$	(1,239	) 	
	  	 	 	 	
During the fourth quarter of fiscal 2011, we abandoned our Adam operations and Koret wholesale operations due to poor operating performance. Costs to exit these operations included sales allowances to customers, inventory liquidation costs, and impairment charges of $614 on related intangible assets.
During the second quarter of fiscal 2008, our Calvin Klein women’s better sportswear division and ck Calvin Klein women’s bridge sportswear division were discontinued due to our decision to exit the related license agreements. As a result of terminating the license agreements early, we have a contractual obligation to provide make-whole payments to PVH. We have recorded $485 for our final make-whole payment within other accrued expenses of discontinued operations as of February 2, 2013. This payment was settled in the first quarter of fiscal 2013.
Operating results for the discontinued operations, including all charges incurred during the periods presented for impairment of long-lived assets and restructuring and other charges as described in Note 3 to the Consolidated Financial Statements, are as follows (in thousands):

 	  	Fiscal Year Ended	 	 	Six Months Ended	 	
 	  	January 29,
2011	 	 	January 28,
2012	 	 	February 2,
2013	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net sales	  	$	52,454	  	 	$	63,199	  	 	$	47,163	  	 	$	28,583	  	 	$	1,097	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Restructuring and other charges	  	$	3,575	  	 	$	489	  	 	$	409	  	 	$	221	  	 	$	508	  	
Impairment of long-lived assets (excluding goodwill)	  	 	24,129	  	 	 	5,913	  	 	 	4,380	  	 	 	—	  	 	 	434	  	
Impairment of goodwill	  	 	—	  	 	 	225	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income before provision for income taxes	  	$	(15,980	) 	 	$	(16,721	) 	 	$	(2,004	) 	 	$	(4,590	) 	 	$	(2,683	) 	
Provision for income taxes	  	 	411	  	 	 	(141	) 	 	 	49	  	 	 	208	  	 	 	(11,913	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	  	$	(16,391	) 	 	$	(16,580	) 	 	$	(2,053	) 	 	$	(4,798	) 	 	$	9,230	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	  	 	(2.6%	) 	 	 	0.8%	  	 	 	(2.4%	) 	 	 	(4.5%	) 	 	 	N.M.	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The fiscal 2010, fiscal 2011, and fiscal 2012 effective tax rates for discontinued operations differs from the U.S. statutory rate of 35% primarily due to a full valuation allowance on current year deferred tax assets offset in part by state taxes. The rate for the first six months of fiscal 2013 differs from the U.S. statutory rate of 35% primarily due to a release of valuation allowance. The release in valuation
 
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allowance is primarily due to the allocation of the disallowed tax loss on the sale of the Baby Phat trademark to intangible assets with indefinite lives resulting in fewer deferred tax liabilities that cannot be offset against deferred tax assets for valuation allowance purposes. The effective tax rate for discontinued operations for the first six months of fiscal 2012 differs from the U.S. statutory rate of 35% primarily due to an increase in the valuation allowance offset in part by state taxes.
Summarized assets and liabilities of discontinued operations are as follows (in thousands):

 	  	January 28, 2012	 	  	February 2, 2013	 	  	August 3, 2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Receivables, net	  	$	11,752	  	  	$	2,535	  	  	$	96	  	
Other receivables	  	 	—	  	  	 	12	  	  	 	—	  	
Inventories	  	 	14,713	  	  	 	1,529	  	  	 	—	  	
Prepaid expenses and other current assets	  	 	1,321	  	  	 	614	  	  	 	40	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Current assets of discontinued operations	  	$	27,786	  	  	$	4,690	  	  	$	136	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Property, plant and equipment, net	  	$	3,613	  	  	$	167	  	  	$	—	  	
Intangible assets, net	  	 	8,073	  	  	 	3,450	  	  	 	—	  	
Other assets	  	 	458	  	  	 	79	  	  	 	27	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Long-term assets of discontinued operations	  	$	12,144	  	  	$	3,696	  	  	$	27	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Accounts payable	  	$	10,938	  	  	$	903	  	  	$	142	  	
Accrued salaries and employee benefits	  	 	642	  	  	 	233	  	  	 	44	  	
Other accrued expenses	  	 	15,624	  	  	 	2,601	  	  	 	1,512	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Current liabilities of discontinued operations	  	$	27,204	  	  	$	3,737	  	  	$	1,698	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Deferred income taxes and other	  	$	3,116	  	  	$	2,416	  	  	$	2,412	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Long-term liabilities of discontinued operations	  	$	3,116	  	  	$	2,416	  	  	$	2,412	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Current assets as of February 2, 2013 primarily consist of the outstanding sale proceeds for Royal Robbins, net receivables from our Baby Phat wholesale operations prior to completion of its shutdown in the fourth quarter of fiscal 2012, net receivables from our Phat Fashions business prior to the sale of our Baby Phat trademark in the first quarter of fiscal 2013 and net receivables and inventory of our Zobha operations. Current liabilities as of February 2, 2013 are primarily related to unpaid disposal costs related to the sale of Royal Robbins, non-cancellable contract termination costs to exit our Lamb & Flag business and Baby Phat wholesale operations, accrued liabilities associated with our Phat Fashions business, and our final make-whole payment of $485 to PVH related to the early termination of our Calvin Klein license agreements. Current liabilities as of August 3, 2013 is primarily related to amounts owed for non-cancellable contract payments for our Zobha business.
Cash flows from discontinued operations are combined with cash flows from continuing operations under Operating Activities, Investing Activities and Financing Activities in the Consolidated Statements of Cash Flows. As of August 3, 2013 (unaudited), we expect to have future net cash outflows related to our discontinued operations of approximately $1,500, which is primarily payable through fiscal 2014.
 
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Note 5. Goodwill and Intangible Assets
Goodwill balances by segment and changes therein subsequent to the January 29, 2011 Consolidated Balance Sheet are as follows (in thousands):

 	  	Vince	 	 	ARP	 	  	Juniors	 	 	Moderate	 	 	Other	 	  	Total	 	
Balance as of January 29, 2011	  				 				  				 				 				  				
Goodwill	  	$	59,554	  	 	 	        —	  	  	$	6,395	  	 	$	8,859	  	 	$	13,478	  	  	$	88,286	  	
Accumulated impairment losses	  	 	(46,942	) 	 	 	—	  	  	 	(6,395	) 	 	 	(8,859	) 	 	 	(527	) 	  	 	(62,723	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net goodwill	  	 	12,612	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	12,951	  	  	 	25,563	  	
Additional contingent purchase price	  	 	51,134	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	—	  	  	 	51,134	  	
Impairment loss	  	 	—	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	(10,821	) 	  	 	(10,821	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Balance as of January 28, 2012	  				 				  				 				 				  				
Goodwill	  	 	110,688	  	 	 	—	  	  	 	6,395	  	 	 	8,859	  	 	 	13,478	  	  	 	139,420	  	
Accumulated impairment losses	  	 	(46,942	) 	 	 	—	  	  	 	(6,395	) 	 	 	(8,859	) 	 	 	(11,348	) 	  	 	(73,544	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net goodwill	  	 	63,746	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	2,130	  	  	 	65,876	  	
Impairment loss	  	 	—	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	—	  	  	 	—	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Balance as of February 2, 2013	  				 				  				 				 				  				
Goodwill	  	 	110,688	  	 	 	—	  	  	 	6,395	  	 	 	8,859	  	 	 	13,478	  	  	 	139,420	  	
Accumulated impairment losses	  	 	(46,942	) 	 	 	—	  	  	 	(6,395	) 	 	 	(8,859	) 	 	 	(11,348	) 	  	 	(73,544	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net goodwill	  	 	63,746	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	2,130	  	  	 	65,876	  	
Impairment loss	  	 	—	  	 	 	—	  	  	 	—	  	 	 	—	  	 	 	—	  	  	 	—	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Balance as of August 3, 2013 (unaudited)	  				 				  				 				 				  				
Goodwill	  	 	110,688	  	 	 	—	  	  	 	6,395	  	 	 	8,859	  	 	 	13,478	  	  	 	139,420	  	
Accumulated impairment losses	  	 	(46,942	) 	 	 	—	  	  	 	(6,395	) 	 	 	(8,859	) 	 	 	(11,348	) 	  	 	(73,544	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net goodwill	  	$	63,746	  	 	$	—	  	  	$	—	  	 	$	—	  	 	$	2,130	  	  	$	65,876	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Identifiable intangible assets of continuing operations are as follows (in thousands):

 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of January 28, 2012:	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	28,363	  	  	$	(4,978	) 	 	$	23,385	  	
Indefinite-lived intangible assets:	  				  				 				
Trademarks	  	 	125,935	  	  	 	—	  	 	 	125,935	  	
Domain name	  	 	66	  	  	 	—	  	 	 	66	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	154,364	  	  	$	(4,978	) 	 	$	149,386	  	

 
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 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of February 2, 2013:	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	28,363	  	  	$	(6,877	) 	 	$	21,486	  	
Indefinite-lived intangible assets:	  				  				 				
Trademarks	  	 	124,735	  	  	 	—	  	 	 	124,735	  	
Domain Name	  	 	66	  	  	 	—	  	 	 	66	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	153,164	  	  	$	(6,877	) 	 	$	146,287	  	

													
 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of August 3, 2013 (unaudited):	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	28,363	  	  	$	(7,827	) 	 	$	20,536	  	
Indefinite-lived intangible assets:	  				  				 				
Trademarks	  	 	124,795	  	  	 	—	  	 	 	124,795	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	153,158	  	  	$	(7,827	) 	 	$	145,331	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Amortization of identifiable intangible assets for continuing operations was $954, $1,941, and $1,899 for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. Amortization expense for each of the first six months of fiscal 2012 and fiscal 2013 (unaudited) was $950. Amortization expense for each of the fiscal years 2013 to 2017 is expected to be as follows (in thousands):

 	  	Future
Amortization	 	
2013	  	$	1,899	  	
2014	  	 	1,899	  	
2015	  	 	1,899	  	
2016	  	 	1,899	  	
2017	  	 	1,899	  	
	  	 	 	 	
Total next 5 years	  	$	9,495	  	
	  	 	 	 	
Goodwill consists of the additional purchase consideration paid to the previous owners of Vince, as well as goodwill resulting from our acquisition of Rebecca Taylor. We recognized $10,821 of goodwill impairment in fiscal 2011 due to a decrease in the near-term forecasted EBITDA of Rebecca Taylor. This was primarily due to a delay in expected growth and cost synergies. We utilized a combination of income and market approaches to estimate the fair value of the reporting unit and determine the amount of the impairment. This is considered a Level 3 fair value measure as management forecasts are a significant unobservable input utilized in these approaches. No goodwill impairment charges were recognized as a result of our annual impairment test for fiscal year 2012, and no events occurred in the first six months of fiscal 2013 that would trigger an impairment test to be performed.
Identifiable indefinite-lived intangible assets consist of company owned trademarks and one domain name. Our fiscal 2011 and fiscal 2012 indefinite-lived intangible asset impairment tests resulted in $2,504 and $1,200 of impairment charges, respectively, due to declining results at one of our Juniors wholesale businesses. The fair value of this trademark was determined using the relief from royalty method for both fiscal years. The relief from royalty method calculates fair value using a royalty savings method, which measures the value by estimating cost savings. Key assumptions include
 
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revenue projections, royalty rates and discount rates for each trademark being valued. This method utilizes significant unobservable inputs and is therefore considered a Level 3 fair value measure.
During the second quarter of fiscal 2010, we ended our relationship with one of our customers and at the time did not expect any future sales to this customer and therefore recognized an impairment loss of $438.
All impairment charges disclosed above (excluding goodwill) have been recorded in impairment of long-lived assets (excluding goodwill) in the Consolidated Statements of Operations. Definite-lived intangible assets are amortized and tested for impairment if a triggering event occurs during the year. Indefinite-lived intangible assets are not amortized but are tested for impairment annually during the fourth quarter of our fiscal year and in an interim period if a triggering event were to occur during the year. No events occurred in the first six months of fiscal 2013 that would have triggered an impairment test to be performed for our definite-lived and indefinite-lived intangible assets.
It is possible that our estimates of future operating results for certain of our divisions could change adversely and impact the evaluation of the recoverability of the carrying value of intangible assets and that the effect of such changes on our Consolidated Financial Statements could be material. While we believe that the current recorded carrying value of our intangible assets at February 2, 2013 is not impaired, there can be no assurance that a significant non-cash write down or write-off will not be required in the future.
Note 6. Fair Value
ASC Subtopic 820-10 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. This guidance outlines a valuation framework, creates a fair value hierarchy to increase the consistency and comparability of fair value measurements, and details the disclosures that are required for items measured at fair value. Financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy as follows:

Level 1—	 	quoted market prices in active markets for identical assets or liabilities	
		
Level 2—	 	observable market-based inputs (quoted prices for similar assets and liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active) or inputs that are corroborated by observable market data	
		
Level 3—	 	significant unobservable inputs that reflect our assumptions and are not substantially supported by market data	
 
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The following table presents our liabilities measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands). We do not measure any assets at fair value on a recurring basis.

 	 	Fair Value Measurements as of January 28, 2012	 	
 	 	Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)	 	 	Other
Observable
Inputs
(Level 2)	 	 	Significant
Unobservable
Inputs
(Level 3)	 	 	Total	 	
Liabilities at fair value:	 				 				 				 				
Contingent consideration for acquisition—Rebecca Taylor	 	$	            —	  	 	$	            —	  	 	$	10,881	  	 	$	10,881	  	
Contingent consideration for acquisition—Zobha	 	 	—	  	 	 	—	  	 	 	585	  	 	 	585	  	
Environmental Remediation obligations	 	 	—	  	 	 	—	  	 	 	8,747	  	 	 	8,747	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities at fair value	 	$	—	  	 	$	—	  	 	$	20,213	  	 	$	20,213	  	

																	
 	 	Fair Value Measurements as of February 2, 2013	 	
 	 	Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)	 	 	Other
Observable
Inputs
(Level 2)	 	 	Significant
Unobservable
Inputs
(Level 3)	 	 	Total	 	
Liabilities at fair value:	 				 				 				 				
Contingent consideration for acquisition—Rebecca Taylor	 	$	            —	  	 	$	            —	  	 	$	4,209	  	 	$	4,209	  	
Contingent consideration for acquisition—Zobha	 	 	—	  	 	 	—	  	 	 	54	  	 	 	54	  	
Environmental Remediation obligations	 	 	—	  	 	 	—	  	 	 	9,604	  	 	 	9,604	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities at fair value	 	$	—	  	 	$	—	  	 	$	13,867	  	 	$	13,867	  	

																	
 	 	Fair Value Measurements as of August 3, 2013	 	
 	 	(unaudited)	 	
 	 	Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)	 	 	Other
Observable
Inputs
(Level 2)	 	 	Significant
Unobservable
Inputs
(Level 3)	 	 	Total	 	
Liabilities at fair value:	 				 				 				 				
Contingent consideration for acquisition—Rebecca Taylor	 	$	            —	  	 	$	            —	  	 	$	4,665	  	 	$	4,665	  	
Environmental Remediation obligations	 	 	—	  	 	 	—	  	 	 	9,702	  	 	 	9,702	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities at fair value	 	$	—	  	 	$	—	  	 	$	14,367	  	 	$	14,367	  	

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The following table presents changes in Level 3 liabilities for fiscal years 2011 and 2012 (in thousands).

 	  	Rebecca Taylor
Contingent
Consideration
(2)	 	 	Zobha
Contingent
Consideration
(2)	 	 	Environmental
Remediation
Obligations
(3)	 	 	Total	 	
Balance as of January 29, 2011	  	$	9,356	  	 	$	—	  	 	$	9,054	  	 	$	18,410	  	
Acquisition of Zobha	  	 	—	  	 	 	945	  	 	 	—	  	 	 	945	  	
Payments	  	 	—	  	 	 	—	  	 	 	(220	) 	 	 	(220	) 	
Losses (gains) recognized in earnings(1)	  	 	1,525	  	 	 	(360	) 	 	 	(87	) 	 	 	1,078	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of January 28, 2012	  	 	10,881	  	 	 	585	  	 	 	8,747	  	 	 	20,213	  	
Payments	  	 	(1,928	) 	 	 	—	  	 	 	(311	) 	 	 	(2,239	) 	
(Gains) losses recognized in earnings(1)	  	 	(4,744	) 	 	 	(531	) 	 	 	1,168	  	 	 	(4,107	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of February 2, 2013	  	 	4,209	  	 	 	54	  	 	 	9,604	  	 	 	13,867	  	
Payments (unaudited)	  	 	—	  	 	 	—	  	 	 	(71	) 	 	 	(71	) 	
(Gains) losses recognized in earnings (unaudited)(1)	  	 	456	  	 	 	(54	) 	 	 	169	  	 	 	571	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of August 3, 2013 (unaudited)	  	$	4,665	  	 	$	—	  	 	$	9,702	  	 	$	14,367	  	

(1)	In fiscal years 2011 and 2012, gains of ($1,578) and ($7,162), respectively, were recognized within change in fair value of contingent consideration on our Statement of Operations. We recorded offsetting charges to interest expense of $2,743 and $1,887 in fiscal 2011 and fiscal 2012, respectively, for the accretion of our contingent consideration obligations. We recorded additional interest expense of $456 in the six months ended August 3, 2013 (unaudited) for the accretion of our contingent consideration obligations. We also recorded an additional gain of ($54) within change in fair value of contingent consideration for the six months ended August 3, 2013 (unaudited) due to a decrease in the fair value of our Zobha C ontingent C onsideration. All adjustments to our environmental remediation obligations were recognized within restructuring, environmental remediation and other charges on our Consolidated Statement of Operations for fiscal 2011, fiscal 2012 and for the first six months of fiscal 2013.	
(2)	See Note 2, Business Combinations, for additional discussion pertaining to the valuation of our contingent consideration obligations.	
(3)	See Note 15, Commitments and Contingencies, for additional discussion pertaining to the valuation of our environmental remediation obligations.	
The recorded amounts of cash, receivables, accounts payable and short-term debt approximate their fair values at January 28, 2012, February 2, 2013, and August 3, 2013 (unaudited) due to the short maturity of these instruments. The estimated fair value of our long-term debt, including both variable-rate and fixed-rate debt, at February 2, 2013 is $737,365, compared to the recorded amount of $761,752. The estimated fair value of our long-term debt, at August 3, 2013 (unaudited) is $398,618, compared to the recorded amount of $386,842. These estimated fair values utilize quoted prices obtained through independent pricing sources for the same or similar types of borrowing arrangements.
Note 7. Short-Term Borrowings
Credit Agreement
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as agent, and lenders from time to time. The Credit Agreement provides the Borrowers with a non-amortizing senior revolving credit facility with aggregate lending commitments of $160,000 (the “Wells Fargo Facility”), reduced to $155,000 by the December 31, 2012 Amendment
 
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described below. The Wells Fargo Facility terminates at the earliest to occur of (a) October 19, 2016, (b) 90 days prior to the scheduled December 31, 2014, maturity date of the 12.875% Notes (as defined below) (including any extension effective on or prior to such 90th day prior to such scheduled maturity date) or (c) 90 days prior to the scheduled maturity date of the Cerberus Term Loan (as defined below) (including any extension effective on or prior to such 90th day prior to such scheduled maturity date). The amount which the Borrowers may borrow from time to time under the Wells Fargo Facility is determined on the basis of a borrowing base formula that is a percentage of Kellwood Company and subsidiaries accounts receivable and inventory that meet eligibility criteria specified in the Credit Agreement, but in no case more than the aggregate lending commitments of the participating lenders. All borrowings under the Wells Fargo Facility bear interest at a rate per annum equal to an applicable margin (ranging from 2.5%-3.0% per annum for LIBOR Revolver Loans (as defined in the Credit Agreement) and 1.25%-1.75% for Base Rate Loans (as defined in the Credit Agreement) based on average availability under the Credit Agreement) plus, at the Borrowers’ election, LIBOR or a Base Rate as defined in the Credit Agreement. In addition to paying interest, the Borrowers will pay a periodic commitment fee to the lenders under the Credit Agreement based on the amount of unused availability under the borrowing base formula. The Wells Fargo Facility is secured by a first-priority security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory, and intellectual property. The Credit Agreement contains certain customary representations, warranties, provisions and restrictions. The Credit Agreement requires that the Borrowers maintain a fixed charge coverage ratio of at least 1:1 during any Covenant Testing Period (as defined in the Credit Agreement) which is triggered when excess availability is below 12.5% of the aggregate commitments under the Wells Fargo Facility (the “Covenant Testing Trigger Date”). The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the Credit Agreement) (with certain addbacks as defined in the Credit Agreement for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, management fees, as well as certain other costs and charges) minus capital expenditures and certain distributions; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash up to a certain amount, calculated over the trailing four fiscal quarters. If the covenants are not met, a cash dominion period will go into effect whereby the agent has the ability to direct the disposition of the balances in controlled deposit accounts. The cash dominion period will expire when availability is over 12.5% of the aggregate commitments under the Wells Fargo Facility for a period of 90 consecutive days.
On March 23, 2012, the Credit Agreement was amended to modify the Covenant Testing Period such that it is now triggered when excess availability is below $5,000 and triggered the cash dominion period, as defined in the Credit Agreement. This amendment was entered into in consideration for a guaranty of payment of obligations under the Credit Agreement and a $20,000 letter of credit to the benefit of Wells Fargo Bank, National Association, as agent, issued by an affiliate of Sun Capital Partners, Inc.
On April 20, 2012, the Credit Agreement was amended to extend the modification to the Covenant Testing Period to be in effect until March 21, 2014 unless the guaranty described above is no longer in effect or the full face amount of the letter of credit described above is no longer available to be drawn. The guaranty will be released, the letter of credit returned and the trigger for the Covenant Testing Period will return to the pre-amendment level when availability is above $35,000 for 90 consecutive days and is projected to remain above $25,000 through the remaining term of the Credit Agreement. This amendment also provided for the consent of the Wells Fargo Facility lenders to the additional loans under the Sun Term Loan Agreements (as defined in Note 8).
On December 31, 2012, the Credit Agreement was amended to obtain consent to the sale of the Royal Robbins business, to release Royal Robbins as a Borrower and/or Obligor under the Credit Agreement, and to release the agent’s lien on the assets of Royal Robbins. Additionally, the first $10,000 of the net cash proceeds arising from the cash purchase price paid at closing (excluding any
 
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escrow amount) were to be applied to the Cerberus Term Loan (Note 8) and the remaining portion to be remitted to the Wells Fargo Facility. This amendment also resulted in a permanent reduction to availability of $5,000.
At February 2, 2013, the maximum capacity on the Wells Fargo Facility was $110,838 and there were borrowings outstanding and letters of credit outstanding of $79,783 and $13,304, respectively. At August 3, 2013, the maximum capacity on the Wells Fargo Facility was $146,646 and there were borrowings outstanding and letters of credit outstanding of $115,601 and $12,569, respectively. At February 2, 2013 and August 3, 2013 (unaudited) availability under the Wells Fargo Facility was $17,751 and $18,476, respectively. Kellwood Company was in compliance with all provisions as of all periods presented.
BMO Facility
On September 12, 2011 Kellwood Company, as borrower, and certain of its domestic subsidiaries, as guarantors, entered into a Loan Authorization Agreement with BMO Harris Financing, Inc. and Bank of Montreal, as lender, (the “BMO Facility”) for a revolving credit facility up to a maximum credit line of $14,900 (the “BMO Obligations”). The BMO Facility was guaranteed by an affiliate of Sun Capital Partners, Inc. and was subordinated in payment and security interest to the Amended and Restated Credit Facility, the 12.875% Notes, the Term A Obligations, the Term B Obligations, the Term C Obligations and the Term D Obligations (all as defined below). Interest accrued on the BMO Obligations at a rate equal to the greater of (i) the Reference Bank’s Prime Rate plus 2% per annum or (ii) LIBOR plus 4.75% per annum. Such interest was to be paid quarterly either in cash or with PIK Interest, at our option. The BMO Obligations were payable on demand with a 10-day grace period and was used for liquidity, working capital and other general corporate purposes.
On October 19, 2011, Kellwood Company terminated the BMO Facility and the Amended and Restated Credit Facility and entered into certain debt agreements further described above. As a result of the termination, Kellwood Company incurred a $1,747 non-cash charge recorded in interest expense, net, related to the write-off of deferred debt issuance costs of the Amended and Restated Credit Facility.
Note 8. Long-Term Debt
Long-term debt, net of applicable discounts or premiums, consisted of the following at January 28, 2012, February 2, 2013 and August 3, 2013 (in thousands):

 	  	January 28,
2012	 	  	February 2,
2013	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Sun Promissory Notes	  	$	520,536	  	  	$	319,926	  	  	$	—	  	
Sun Capital Loan Agreement	  	 	84,756	  	  	 	71,508	  	  	 	—	  	
Cerberus Term Loan	  	 	55,000	  	  	 	45,431	  	  	 	45,660	  	
Term A Obligations	  	 	15,604	  	  	 	17,252	  	  	 	18,118	  	
Term B Obligations	  	 	24,884	  	  	 	27,507	  	  	 	28,889	  	
Term C Obligations	  	 	16,231	  	  	 	17,945	  	  	 	18,846	  	
Term D Obligations	  	 	10,488	  	  	 	11,595	  	  	 	12,177	  	
Term E Obligations	  	 	—	  	  	 	5,601	  	  	 	5,937	  	
Term F Obligations	  	 	—	  	  	 	27,344	  	  	 	28,989	  	
Term G Obligations	  	 	—	  	  	 	—	  	  	 	5,059	  	
12.875% 2009 Debentures due December 31, 2014	  	 	130,471	  	  	 	139,378	  	  	 	143,962	  	
7.625% 1997 Debentures due October 15, 2017	  	 	76,180	  	  	 	78,054	  	  	 	78,991	  	
3.5% 2004 Convertible Debentures due June 15, 2034	  	 	204	  	  	 	211	  	  	 	214	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	934,354	  	  	$	761,752	  	  	$	386,842	  	

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Sun Promissory Notes
On May 2, 2008, AHC entered into a $225,000 Senior Subordinated Promissory Note and a $75,000 Senior Subordinated Promissory Note with Sun Kellwood Finance, LLC (“Sun Kellwood Finance”), an affiliate of Sun Capital Partners, Inc.. We collectively refer to these notes as our “Sun Promissory Notes”. The unpaid principal balance of the notes accrue interest at 15% per annum until the maturity date of October 15, 2011, at which point any unpaid principal balance of the notes shall accrue interest at a rate of 17% per annum until the notes are paid in full. All interest which is not paid in cash on or before the last day of each calendar month are deemed paid in kind and added to the principal balance of the notes unless an election is made otherwise.
On July 19, 2012, AHC amended the Sun Promissory Notes to extend the maturity date to October 15, 2016 and reduce the interest rate to 12% per annum until maturity, at which point any unpaid principal balance of the notes shall accrue interest at a rate of 14% per annum until the notes are paid in full.
On December 28, 2012, Sun Kellwood Finance waived all interest capitalized and accrued under the notes prior to July 19, 2012. As both parties are under the common control of Sun Capital, this transaction resulted in a capital contribution of $270,852 which was recorded as an adjustment to additional paid in capital on our Consolidated Balance Sheet as of February 2, 2013.
On June 18, 2013, Sun Kellwood Finance assigned all title and interest in the Sun Promissory Notes to Sun Cardinal, LLC (“Sun Cardinal”). Immediately following the assignment, Sun Cardinal contributed all outstanding principal and interest due under these notes as of June 18, 2013 to the capital of AHC. As both parties are under common control of Sun Capital, this transaction resulted in a capital contribution of $334,595, which was recorded as an adjustment to AHC’s additional paid in capital on the Consolidated Balance Sheet at August 3, 2013 (unaudited).
Sun Capital Loan Agreement
AHC is party to a Loan Authorization Agreement, originally dated February 13, 2008, by and between AHC (as the successor entity to Cardinal Integrated, LLC), SCSF Kellwood Finance, LLC (“SCSF Finance”) and Sun Kellwood Finance (as successors to Bank of Montreal) for a $72,000 line of credit, and $69,485 principal balance, which we refer to as the “Sun Capital Loan Agreement”. Under the terms of this agreement, as amended from time to time, interest accrues at a rate equal to the rate per annum announced by the Bank of Montreal, Chicago, Illinois, from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the U.S. plus 2%. Interest on the loan is due by the last day of each fiscal quarter and is payable either in immediately available funds on each interest payment date or by adding such interest to the unpaid principal balance of the loan on each interest payment date. The original maturity date of the loan was August 6, 2009. On July 19, 2012, the maturity date of the loan was extended to August 6, 2014.
On December 28, 2012, Sun Kellwood Finance and SCSF Finance waived all interest capitalized and accrued under the loan authorization agreement prior to July 19, 2012. As all parties are under the common control of Sun Capital, this transaction resulted in a capital contribution of $18,249, which was recorded as an adjustment to additional paid in capital on our Consolidated Balance Sheet as of February 2, 2013.
On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in the note under the Sun Capital Loan Agreement. Immediately following the assignment, Sun Cardinal contributed all outstanding principal and interest due under this note as of June 18, 2013 to the capital of AHC. As all parties are under common control of Sun Capital, this transaction resulted in a capital contribution of $72,932, which was recorded as an adjustment to AHC’s additional paid in capital on the Consolidated Balance Sheet at August 3, 2013 (unaudited).
 
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Term Loan Agreement
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), entered into a Term Loan Agreement (the “Term Loan Agreement”) with Cerberus Business Finance, LLC (the “Agent”), as agent and the lenders from time to time party thereto. The Term Loan Agreement provides the Borrowers with a non-amortizing secured Cerberus Term Loan in an aggregate amount of $55,000 (the “Cerberus Term Loan”). The Cerberus Term Loan terminates at the earliest to occur of (a) October 19, 2015, (b) the date on which the Wells Fargo Facility (as defined above in Note 7 to the Consolidated Financial Statements) has been paid in full and all commitments thereunder have been terminated or (c) 60 days prior to the scheduled December 31, 2014, maturity date of our 12.875% Notes (as defined below) (including any extensions thereof agreed to after October 19, 2011). All borrowings under the Cerberus Term Loan bear interest, from the date of the agreement until the effective date of the amendment described below at a rate per annum equal to an applicable margin (10.25% per annum for LIBOR Rate Loans (as defined in the Term Loan Agreement) and 7.75% for Reference Rate Loans (as defined in the Term Loan Agreement)) plus, at the Borrowers’ election, LIBOR or a Reference Rate as defined in the Term Loan Agreement. The Cerberus Term Loan is secured by a security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory and intellectual property, which security interest is contractually subordinated to security interests of the lenders under the Credit Agreement. The Term Loan Agreement contains certain customary representations, warranties, provisions and restrictions. The Term Loan Agreement requires that the Borrowers maintain a fixed charge coverage ratio as of each fiscal quarter end prior to the effective date of the amendment described below of at least 1:1. The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the December 31 amendment to the Term Loan Agreement as described below ) (with certain addbacks as defined in the amended Term Loan Agreement for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, as well as certain other costs and charges) minus capital expenditures and certain distributions and management fees; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash, excluding earnout payments related to the Company’s Vince brand for the 2011 fiscal year, up to a certain amount, calculated over the trailing four fiscal quarters. The Term Loan Agreement also requires that the Borrowers maintain a leverage ratio as defined in the Term Loan Agreement and ranging from 2.85:1-4.25:1 during the life of the Cerberus Term Loan prior to the effective date of the amendment described below. The leverage ratio is defined as the ratio of indebtedness secured by a lien on any collateral (including the debt under the Credit Agreement and Cerberus Term Loan, but excluding the debt under the Sun Term Loan Agreements (as defined below) and the 12.875% Notes (as defined below)), divided by Consolidated EBITDA (as defined in the December 31 amendment to the Cerberus Term Loan described below) for the trailing four fiscal quarters.
On January 26, 2012, Kellwood Company obtained a waiver to the Cerberus Term Loan until the end of the first quarter of fiscal 2012 (the “Waiver Period”), as it anticipated not being in compliance with the fixed charge coverage ratio and the leverage ratio covenants as of January 28, 2012. In conjunction with this waiver, we paid the Agent a $75 waiver fee and an affiliate of Sun Capital Partners, Inc. provided the Agent with a $10,000 letter of credit. The waiver required the parties to the Cerberus Term Loan to work in good faith during the Waiver Period to amend the financial covenants set forth in the Cerberus Term Loan at levels mutually acceptable to all parties.
On April 20, 2012 Kellwood Company entered into Consent and Amendment No. 1 to the Cerberus Term Loan. This amendment provided for the consent of the Cerberus Term Loan lenders to the additional term loans under the Sun Term Loan Agreement (as defined below), the release of the $10,000 letter of credit noted above and the delivery of audited fiscal 2011 financial statements within 97 days of fiscal year-end. This amendment increased the applicable margins for borrowings under the Cerberus Term Loan which will bear interest from and after the effective date of the amendment at a
 
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rate per annum equal to an applicable margin (ranging from 10.75%-11.25% per annum for LIBOR Rate Loans (as defined in the Cerberus Term Loan) and 8.25%-8.75% for Reference Rate Loans (as defined in the Cerberus Term Loan) based on leverage and income tests under the Cerberus Term Loan) plus, at the Borrowers’ election, LIBOR or a Reference Rate as defined in the Cerberus Term Loan. The amendment also provided for a portion of such interest equal to 1% per annum to be paid-in-kind and added to the principal amount of such term loans. The amendment also modified the financial covenant levels required to be maintained by the Borrowers beginning with the second quarter of fiscal 2012 for each financial covenant. The Cerberus Term Loan, as amended, requires that the Borrowers maintain a fixed charge coverage ratio as of each fiscal quarter end (beginning with the second quarter of fiscal 2012) ranging from 0.14:1-1.28:1 during the life of the Cerberus Term Loan. The Cerberus Term Loan, as amended, also requires that the Borrowers maintain a leverage ratio as defined in the Cerberus Term Loan and ranging from 2.44:1-7.77:1 during the life of the Cerberus Term Loan (beginning with the second quarter of fiscal 2012). The minimum fixed charge coverage ratios for the second, third and fourth quarters of fiscal 2012 were 0.14:1, 0.41:1 and 0.67:1, respectively. The minimum fixed charge coverage ratios for 2013 are 0.89:1, 1.24:1, 1.28:1, and 1.22:1 for the first through fourth quarters, respectively. Subsequent to 2013, the minimum fixed charge coverage ratio remains at 1.22:1 as of the last day of each fiscal quarter. The maximum leverage ratios for the second, third and fourth quarters of fiscal 2012 were 7.77:1, 5.71:1 and 3.51:1, respectively. The maximum leverage ratios for 2013 are 3.47:1, 358:1, 3.08:1, and 2.44:1 for the first through fourth quarters, respectively. Subsequent to 2013, the maximum leverage ratio remains at 2.44:1 as of the last day of each fiscal quarter. At February 2, 2013 Kellwood Company was in compliance with all provisions of the amended Cerberus Term Loan.
On December 31, 2012, Kellwood Company amended the Cerberus Term Loan to obtain consent to the sale of the Royal Robbins business, to release Royal Robbins, LLC as a Borrower and/or Obligor under the Cerberus Term Loan, and to release the agent’s lien on the assets of Royal Robbins. This amendment required the prepayment of the obligations under the Cerberus Term Loan in an amount not less than $10,000 from a portion of the proceeds from the sale of Royal Robbins with the remaining funds to be remitted to the Wells Fargo Facility (as defined in Note 7 to the Consolidated Financial Statements). This amendment also redefined the definition Consolidated EBITDA to allow for certain additional addbacks.
On May 3, 2013, Kellwood Company amended the Cerberus Term Loan in anticipation of not being in compliance with the fixed charge coverage ratio covenant during the 2013 fiscal year. This amendment modified the definition of the fixed charge coverage ratio to allow us to exclude certain types of capital expenditures in the calculation of the minimum fixed charge coverage ratio for the second, third, and fourth quarters of fiscal 2013, not to exceed $7,500 in total. Additionally, this amendment modified the minimum fixed charge coverage ratios for the second, third, and fourth quarters of fiscal 2013 to be 1.10:1, 1.175:1, and 1.25:1, respectively. The minimum fixed charge coverage ratio for all fiscal quarters subsequent to 2013 was modified to be 1.25:1. On June 28, 2013 (unaudited), Cerberus and Kellwood Company entered into a consent to the Cerberus Term Loan with respect to AHC’s incurrence of the Term G Loan under the Sun Term Loan B/C/D/E/F/G Agreement. Kellwood Company anticipates that it will be in compliance with all provisions of the amended Cerberus Term Loan during fiscal 2013.
Term A/B/C/D/E/F/G Obligations
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), affiliates of Sun Capital Partners, Inc., as lenders, and Sun Kellwood Finance, LLC, as collateral agent, entered into (a) the Amended and Restated Term A Loan Agreement (the “Term A Loan Agreement”) and (b) the Third Amended and Restated Term Loan (the “Term B/C/D Loan Agreement”, and together with the Term A Loan Agreement, the “Sun Term Loan Agreements”).
 
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The Term A Loan Agreement serves to amend and restate in its entirety the Term Loan dated July 23, 2009, as previously amended (the “Prior Term A Agreement”) pursuant to which the lenders made certain Term A loans with an original principal amount of $12,168, the proceeds of which were used by the Borrowers to fund payment of the principal amounts outstanding, plus accrued and unpaid interest on the 7.875% 1999 Debentures due July 15, 2009 that were not tendered as part of the exchange offer for the 12.875% Notes.
The Term B/C/D Loan Agreement serves to amend and restate in its entirety the Second Amended and Restated Term Loan dated as of August 5, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Prior Term B/C/D Agreement”) pursuant to which the lenders made certain (i) Term B loans with an original principal amount of $22,393 issued on January 4, 2011, the proceeds of which were used by the Borrowers solely to finance the acquisition of Rebecca Taylor, (ii) Term C loans with an original principal amount of $14,900 issued on March 18, 2011, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers and (iii) Term D loans with an original principal amount of $10,000 issued on August 5, 2011, the proceeds of which were used to fund all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of such assets or the acquisition of capital stock of any person owning such assets) used in the business of the Borrowers.
The primary reason for entering into the Sun Term Loan Agreements was to conform the major non-economic terms of such agreements, including the representations, warranties and covenants, to those of the Credit Agreement and the Cerberus Term Loan. The Sun Term Loan Agreements were also amended to provide a termination date of the earlier of (i) January 19, 2017 or (ii) the date on which the Cerberus Term Loan has been terminated; provided that, if the Cerberus Term Loan is extended, the stated maturity date set forth in (i) above shall be extended by a period of the same duration. The Sun Term Loan Agreements were amended such that the Sun Term Loan Agreements bear interest at 10% per annum (or 12% per annum in the case of the Term E loans, the Term F loans and the Term G loans described below) that will be added to the principal amounts of the Sun Term Loans. If the availability under the Credit Agreement is not less than $45,000, Kellwood Company may pay interest at a rate of 5% per annum in cash with respect to the Term A, B, C and D Loans and at a rate of 6% per annum in cash with respect to the Term E, F, and G Loans. The Sun Term Loan Agreements are secured by a security interest in substantially all of the assets of the Borrowers, which security interest is contractually subordinated to the security interests of the lenders under the Credit Agreement and the Cerberus Term Loan. The Sun Term Loan Agreements contain certain customary representations, warranties, provisions and restrictions substantially similar to the Credit Agreement and Cerberus Term Loan.
On April 20, 2012, Kellwood Company entered into an amendment and restatement of each of the Sun Term Loan Agreements. The Term B/C/D Loan Agreement was amended and restated in order to (i) provide for new Term E loans with an original principal amount of $5,100, the proceeds of which were used to finance costs and expenses and earnout payments in respect of certain acquisitions consummated by the Borrowers prior to the date of the Term E loans, (ii) provide for new Term F loans with an original principal amount of $24,900, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers, and (iii) to conform to the changes made to the Credit Agreement and the Cerberus Term Loan. The primary reason for entering into the amendment and restatement of the Term A Loan Agreement was to conform to the changes made to the Credit Agreement, the Cerberus Term Loan and the Term B/C/D Loan Agreement. On June 28, 2013 (unaudited), Kellwood Company entered into an amendment and restatement of the Sun Term Loan B/C/D/E/F Agreement in order to (i) provide for new Term G loans with an original principal amount of $5,000, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers and (ii) to conform to the changes made to the Credit Agreement and the Cerberus Term Loan. The Term E loans, the Term F loans and the Term G loans
 
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bear interest at 12% per annum that will be added to the principal amounts of such loans. If the availability under the Credit Agreement is not less than $45,000, Kellwood Company may pay interest at a rate of 6% per annum in cash. No cash interest has been paid on the Sun Term Loan Agreements.
12.875% Notes
Interest on the 12.875% 2009 Debentures due December 31, 2014 (the “12.875% Notes”) is paid (a) in cash at a rate of 7.875% per annum payable in January and July; and (b) in the form of PIK interest at a rate of 5% per annum (“PIK Interest”) payable either by increasing the principal amount of the outstanding 12.875% Notes, or by issuing additional 12.875% Notes with a principal amount equal to the PIK Interest accrued for the interest period. The 12.875% Notes are guaranteed by various of Kellwood’s subsidiaries on a secured basis, which security interest is contractually subordinated to security interests of lenders under the Credit Agreement, the Cerberus Term Loan and the Sun Term Loan Agreements. The 12.875% Notes contain certain customary provisions that, among other things, limit the ability to incur additional indebtedness, make certain restricted payments, dispose of assets or redeem or repurchase capital stock or prepay subordinated indebtedness.
Retirement of 7.625% Notes
On April 15, 2010, Kellwood Company repurchased $29,704 in aggregate principal amount of the 7.625% 1997 Debentures due October 15, 2017 (the “7.625% Notes”) from an affiliate of Sun Capital Partners, Inc. for $9,060 in cash. The repurchased 7.625% Notes were then retired. Approximately $86,953 in aggregate principal amount of 7.625% Notes remain outstanding following the repurchase. Interest is payable in April and October. The extinguishment resulted in a gain of $15,912 during fiscal 2010.
Principal amounts of the notes payable and long-term debt outstanding at February 2, 2013 include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK Interest	 	  	Total	 	  	Less:
Discount	 	 	Amount per
Consolidated
Balance
Sheet	 	
Sun Promissory Notes	  	$	300,000	  	  	$	19,926	  	  	$	319,926	  	  	$	—	  	 	$	319,926	  	
Sun Capital Loan Agreement	  	 	69,485	  	  	 	2,023	  	  	 	71,508	  	  	 	—	  	 	 	71,508	  	
Cerberus Term Loan	  	 	45,000	  	  	 	431	  	  	 	45,431	  	  	 	—	  	 	 	45,431	  	
Term A Obligations	  	 	12,168	  	  	 	5,084	  	  	 	17,252	  	  	 	—	  	 	 	17,252	  	
Term B Obligations	  	 	22,393	  	  	 	5,114	  	  	 	27,507	  	  	 	—	  	 	 	27,507	  	
Term C Obligations	  	 	14,900	  	  	 	3,045	  	  	 	17,945	  	  	 	—	  	 	 	17,945	  	
Term D Obligations	  	 	10,000	  	  	 	1,595	  	  	 	11,595	  	  	 	—	  	 	 	11,595	  	
Term E Obligations	  	 	5,100	  	  	 	501	  	  	 	5,601	  	  	 	—	  	 	 	5,601	  	
Term F Obligations	  	 	24,900	  	  	 	2,444	  	  	 	27,344	  	  	 	—	  	 	 	27,344	  	
12.875% 2009 Debentures due December 31, 2014	  	 	120,590	  	  	 	22,598	  	  	 	143,188	  	  	 	(3,810	) 	 	 	139,378	  	
7.625% 1997 Debentures due October 15, 2017	  	 	86,953	  	  	 	—	  	  	 	86,953	  	  	 	(8,899	) 	 	 	78,054	  	
3.5% 2004 Convertible Debentures due June 15, 2034	  	 	200	  	  	 	11	  	  	 	211	  	  	 	—	  	 	 	211	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total long-term debt outstanding	  	$	711,689	  	  	$	62,772	  	  	$	774,461	  	  	$	(12,709	) 	 	$	761,752	  	

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Principal amounts of the notes payable and long-term debt outstanding at August 3, 2013 (unaudited) include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK Interest	 	  	Total	 	  	Less:
Discount	 	 	Amount per
Consolidated
Balance
Sheet	 	
Cerberus Term Loan	  	$	45,000	  	  	$	660	  	  	$	45,660	  	  	$	—	  	 	$	45,660	  	
Term A Obligations	  	 	12,168	  	  	 	5,950	  	  	 	18,118	  	  	 	—	  	 	 	18,118	  	
Term B Obligations	  	 	22,393	  	  	 	6,496	  	  	 	28,889	  	  	 	—	  	 	 	28,889	  	
Term C Obligations	  	 	14,900	  	  	 	3,946	  	  	 	18,846	  	  	 	—	  	 	 	18,846	  	
Term D Obligations	  	 	10,000	  	  	 	2,177	  	  	 	12,177	  	  	 	—	  	 	 	12,177	  	
Term E Obligations	  	 	5,100	  	  	 	837	  	  	 	5,937	  	  	 	—	  	 	 	5,937	  	
Term F Obligations	  	 	24,900	  	  	 	4,089	  	  	 	28,989	  	  	 	—	  	 	 	28,989	  	
Term G Obligations	  	 	5,000	  	  	 	59	  	  	 	5,059	  	  	 	—	  	 	 	5,059	  	
12.875% 2009 Debentures due December 31, 2014	  	 	120,590	  	  	 	26,178	  	  	 	146,768	  	  	 	(2,806	) 	 	 	143,962	  	
7.625% 1997 Debentures due October 15, 2017	  	 	86,953	  	  	 	—	  	  	 	86,953	  	  	 	(7,962	) 	 	 	78,991	  	
3.5% 2004 Convertible Debentures due June 15, 2034	  	 	200	  	  	 	14	  	  	 	214	  	  	 	—	  	 	 	214	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total long-term debt outstanding	  	$	347,204	  	  	$	50,406	  	  	$	397,610	  	  	$	(10,768	) 	 	$	386,842	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Note 9. Leases
We lease substantially all of our office space, distribution facilities, retail stores and certain machinery and equipment under operating leases having remaining terms up to twelve years, excluding renewal terms. Most of our real estate leases contain covenants that require us to pay real estate taxes, insurance, and other executory costs. Certain of these leases require contingent rent payments, kick-out clauses and/or opt-out clauses, based on the operating results of the retail operations utilizing the leased premises. Rent under leases with scheduled rent changes or lease concessions are recorded on a straight-line basis over the lease term. Rent expense under all operating leases of our continuing operations was $15,620, $15,004 and $18,040 for fiscal 2010, fiscal 2011, and fiscal 2012, respectively.
The future minimum lease payments under operating leases at February 2, 2013 were as follows (in thousands):

 	  	Operating	 	
2013	  	$	16,376	  	
2014	  	 	15,667	  	
2015	  	 	12,349	  	
2016	  	 	10,866	  	
2017	  	 	8,956	  	
Thereafter	  	 	30,081	  	
	  	 	 	 	
Total minimum lease payments	  	$	94,295	  	
	  	 	 	 	
Future minimum lease payments are not reduced for expected sublease rental income of approximately $275.
Note 10. Retirement Benefits
We sponsor or contribute to various defined contribution retirement benefit and savings plans covering substantially all employees. Total retirement benefits expense was $620, $258, and $168, for fiscal 2010, fiscal 2011, and fiscal 2012, respectively.
 
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Note 11. Share-Based Compensation
Apparel Holding Corp.
AHC does not have convertible equity or convertible debt securities, any of which could result in share-based compensation expense.
Kellwood Company
Kellwood Company has convertible equity securities that result in recognition of share-based compensation expense. On June 30, 2010, the Board of Directors approved the 2010 Stock Option Plan of Kellwood Company (the “Plan”). The Plan provides for the grant of options to acquire up to 100,000 shares of non-voting common stock (“Stock”) of Kellwood Company. The shares used may be newly issued shares or treasury shares. As of February 2, 2013, 24,500 shares from the Plan remain available for grants.
Kellwood Company granted options to purchase a total of 58,500 and 10,000 shares of Stock to key executives of Kellwood Company during the fiscal years ended February 2, 2013 and January 28, 2012, respectively. The options granted (i) vest in five equal installments on the first, second, third, fourth, and fifth anniversary of the grant date, subject to the employee’s continued employment, (ii) expire on the earlier of the tenth anniversary of the grant date or upon termination of employment by the company for cause, and (iii) become exercisable upon termination or a liquidity event, as defined by the Plan.
The fair value of stock options granted in fiscal 2012 was determined at the grant date using a Black-Scholes model, which requires us to make several significant assumptions including risk-free interest rate, volatility, expected term, and discount factors for shareholders in a privately-held company. The estimated term of 6.5 years for these options was developed using a simplified method permitted by SEC Staff Accounting Bulletin Topic 14: Share-Based Payment , available for companies with “plain-vanilla” options and have limited historical exercise data. Our selected volatility rate of 55.0% was estimated using both: (i) volatility reported by companies comparable to Kellwood Company with publicly-traded stock, and (ii) calculated volatility of companies comparable to Kellwood Company with publicly-traded stock using historical stock prices. We applied a cumulative discount factor to the price per share of 36.25% to adjust for the lack of marketability of the shares, as well as the impact of the shares representing a minority interest in a privately-held company. Our estimates were developed using market data for companies comparable to Kellwood Company and empirical studies regarding the impact on the value of private-company shares resulting from transfer restrictions. Finally, the risk-free rate of 0.85% is based upon the U.S. Treasury five year yield curve. At the grant date, the options granted in fiscal year 2012 had a weighted average fair value of $43.01 per share.
The fair value of stock options granted in fiscal 2011 was determined at the grant date using a probability-weighted expected return method model, which requires us to make several significant assumptions including long-term EBITDA growth rates, future enterprise value, discount rates, and timing and probability of a future liquidity event. This methodology was selected based on our capital structure and forecasted operational performance at the time of the valuation. At the grant date, the options granted in fiscal year 2011 had a weighted average fair value of $0.46 per share. Prior to 2012, our estimates of future enterprise value for Kellwood Company as compared to the value of Kellwood Company’s debt obligations precluded us from using a closed-form model (including a Black-Scholes formula) to estimate the fair value of our stock options. Due to more favorable operating results in the current year, which are expected to continue into future periods, we believe that the Black-Scholes formula provides a more refined estimate of the value of our stock options, in consideration of our current capital structure and estimates of future operating performance. A change in option-pricing model is not considered a change in accounting principle.
 
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A summary of stock option activity is as follows:

 	  	Options	 	 	Weighted
Average
Exercise Price	 	  	Weighted Average
Remaining
Contractual Term	 	
Outstanding at January 29, 2011	  	 	81,000	  	 	$	1.00	  	  				
Granted	  	 	10,000	  	 	$	1.00	  	  				
Exercised	  	 	—	  	 				  				
Forfeited or expired	  	 	(55,000	) 	 	$	1.00	  	  				
	  	 	 	 	 				  				
Outstanding at January 28, 2012	  	 	36,000	  	 	$	1.00	  	  	 	8.7	  	
	  	 	 	 	 				  				
Vested or expected to vest at January 28, 2012	  	 	36,000	  	 	$	1.00	  	  	 	8.7	  	
Exercisable at January 28, 2012	  	 	—	  	 	 	—	  	  				
Outstanding at January 28, 2012	  	 	36,000	  	 	$	1.00	  	  				
Granted	  	 	58,500	  	 	$	137.98	  	  				
Exercised	  	 	—	  	 				  				
Forfeited or expired	  	 	(19,000	) 	 	$	1.00	  	  				
	  	 	 	 	 				  				
Outstanding at February 2, 2013	  	 	75,500	  	 	$	107.14	  	  	 	7.0	  	
	  	 	 	 	 				  				
Vested or expected to vest at February 2, 2013	  	 	75,500	  	 	$	107.14	  	  	 	7.0	  	
Exercisable at February 2, 2013	  	 	—	  	 	 	—	  	  				
We recognized $65 and $367 of compensation expense in selling, general, and administrative expense in the Consolidated Statement of Operations for fiscal years ended January 28, 2012 and February 2, 2013, respectively. At February 2, 2013, there was $2,011 of unrecognized compensation costs that will be recognized over a remaining weighted average period of 3.3 years.
Note 12. Stockholders’ Equity
We currently have authorized for issuance 1,200,000 shares of our Voting Common Stock, par value of $0.001 per share. As of January 28, 2012 and February 2, 2013 we had 918,924.91 shares issued and outstanding. We currently have authorized for issuance 1,700,000 shares of our Non-Voting Common Stock, par value of $0.001 per share. As of January 28, 2012 and February 2, 2013 we had 193.09 shares issued and outstanding. All voting common shares issued and outstanding are held by affiliates of Sun Capital. All non-voting common shares issued and outstanding are owned by H.I.G. Sun Partners, Inc.
Both classes of common shares have identical terms and liquidation preferences, except for voting rights. Accordingly, they are treated as substantially identical for purposes of computing earnings per share.
We have not paid dividends, and our current ability to pay such dividends is restricted by the terms of our debt agreements. Our future dividend policy will be determined on a yearly basis and will depend on earnings, financial condition, capital requirements, and certain other factors. We do not expect to declare dividends with respect to our common stock in the foreseeable future.
Note 13. Earnings Per Share
The numerator for both basic and diluted earnings (loss) per share is Net loss. The denominator for basic and diluted earnings (loss) per share is the weighted-average number of common shares outstanding during the period. There are no dilutive equity securities issued or outstanding.
 
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The following is a reconciliation of basic shares to diluted shares:

 	  	January 29, 2011	 	  	January 28, 2012	 	  	February 2, 2013	 	
Weighted-average shares—basic	  	 	919,118	  	  	 	919,118	  	  	 	919,118	  	
Effect of dilutive equity securities—none	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Weighted-average shares—diluted	  	 	919,118	  	  	 	919,118	  	  	 	919,118	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
For fiscal 2010, fiscal 2011, and fiscal 2012, there were no potential common shares excluded from diluted earnings per share.
There are no differences in the dividend and liquidation preferences or participation rights of the Voting Common Stock and Non-Voting Common Stock shares.
Note 14. Income Taxes
The provision (benefit) for income taxes for continuing operations consists of the following (in thousands):

 	  	    2010    	 	 	    2011    	 	  	    2012    	 	
Current:	  				 				  				
Domestic:	  				 				  				
Federal	  	$	(1,045	) 	 	$	100	  	  	$	(1,568	) 	
State	  	 	754	  	 	 	7	  	  	 	927	  	
Foreign	  	 	318	  	 	 	247	  	  	 	394	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Total current	  	 	27	  	 	 	354	  	  	 	(247	) 	
Deferred:	  				 				  				
Domestic:	  				 				  				
Federal	  	 	2,094	  	 	 	2,120	  	  	 	1,228	  	
State	  	 	1,191	  	 	 	670	  	  	 	(275	) 	
Foreign	  	 	195	  	 	 	257	  	  	 	2	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Total deferred	  	 	3,480	  	 	 	3,047	  	  	 	955	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Total provision for income taxes	  	$	3,507	  	 	$	3,401	  	  	$	708	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
The sources of (loss) income before provision for income taxes are (in thousands):

 	  	    2010    	 	 	    2011    	 	 	    2012    	 	
United States	  	$	(85,780	) 	 	$	(129,208	) 	 	$	(105,824	) 	
Foreign	  	 	1,200	  	 	 	1,323	  	 	 	876	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	(84,580	) 	 	$	(127,885	) 	 	$	(104,948	) 	

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Current income taxes are the amounts payable under the respective tax laws and regulations on each year’s earnings and on foreign earnings remitted during the year. A reconciliation of the federal statutory income tax rate to the effective tax rate (including impairment of long-lived assets and restructuring, environmental remediation and other charges) is as follows:

 	  	    2010    	 	 	    2011    	 	 	    2012    	 	
Statutory rate	  	 	(35.0	%) 	 	 	(35.0	%) 	 	 	(35.0	%) 	
State taxes, net of federal benefit	  	 	(0.9	%) 	 	 	(1.7	%) 	 	 	(1.4	%) 	
Foreign tax rate differential	  	 	0.3	% 	 	 	0.7	% 	 	 	(0.3	%) 	
Tax reserve adjustment	  	 	(0.5	%) 	 	 	(0.2	)% 	 	 	(0.8	%) 	
Nondeductible interest	  	 	28.1	% 	 	 	22.3	% 	 	 	22.9	% 	
Valuation allowances	  	 	12.3	% 	 	 	16.5	% 	 	 	15.2	% 	
Other	  	 	(0.2	%) 	 	 	0.1	% 	 	 	0.1	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	4.1	% 	 	 	2.7	% 	 	 	0.7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred income tax assets and liabilities for continuing operations consisted of the following (in thousands):

 	  	January 28, 2012	 	 	February 2, 2013	 	
Deferred tax assets:	  				 				
Depreciation and amortization	  	$	26,416	  	 	$	29,948	  	
Employee related costs	  	 	2,803	  	 	 	5,781	  	
Allowance for asset valuations	  	 	2,212	  	 	 	2,718	  	
Accrued expenses	  	 	5,278	  	 	 	6,110	  	
Net operating losses	  	 	54,831	  	 	 	67,419	  	
Other	  	 	5,800	  	 	 	5,171	  	
	  	 	 	 	 	 	 	 	
Total deferred tax assets	  	 	97,340	  	 	 	117,147	  	
Less: Valuation allowances	  	 	(81,502	) 	 	 	(105,616	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax assets	  	 	15,838	  	 	 	11,531	  	
	  	 	 	 	 	 	 	 	
Deferred tax liabilities:	  				 				
Depreciation and amortization	  	 	(13,133	) 	 	 	(13,901	) 	
Long-term debt	  	 	(14,861	) 	 	 	(10,534	) 	
Other	  	 	(50	) 	 	 	(270	) 	
	  	 	 	 	 	 	 	 	
Total deferred tax liabilities	  	 	(28,044	) 	 	 	(24,705	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax liabilities	  	$	(12,206	) 	 	$	(13,174	) 	
	  	 	 	 	 	 	 	 	
Included in:	  				 				
Prepaid expenses and other current assets	  	$	170	  	 	$	114	  	
Other assets	  	 	93	  	 	 	146	  	
Deferred income taxes and other	  	 	(12,469	) 	 	 	(13,434	) 	
	  	 	 	 	 	 	 	 	
Net deferred income tax liabilities	  	$	(12,206	) 	 	$	(13,174	) 	
	  	 	 	 	 	 	 	 	
As of February 2, 2013, various federal, state and foreign net operating losses were available for carryforward to offset future taxable income. Substantially all of these net operating losses will expire between 2029 and 2033. A full valuation allowance was placed on the U.S. net deferred tax assets during fiscal 2009 due to the fact that there was not sufficient positive evidence to outweigh the existing negative evidence that we would be able to utilize these net operating loss carryforwards, primarily our historical pretax losses. In addition, a deemed change of ownership occurred under Section 382 of the U.S. tax code resulting in $112,258 of net operating losses, as well as certain built in losses, to be subject to an annual limitation of $0. Since the realization of these benefits is remote, the associated deferred tax assets have been written down to zero. The total valuation allowance on deferred tax assets for continuing operations increased by $27,550 and $24,114 in the years ended January 28, 2012 and February 2, 2013, respectively.
 
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Federal income taxes are provided on earnings of foreign subsidiaries except to the extent such earnings are currently expected to be permanently reinvested abroad. We do not currently consider any undistributed foreign earnings to be permanently reinvested abroad as of February 2, 2013.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):

 	  	2010	 	 	2011	 	 	2012	 	
Beginning balance	  	$	14,836	  	 	$	16,296	  	 	$	11,057	  	
Increases for tax positions in current year	  	 	2,113	  	 	 	1,098	  	 	 	2,199	  	
Increases for tax positions in prior years	  	 	1,174	  	 	 	159	  	 	 	52	  	
Decreases for tax positions in prior years	  	 	(298	) 	 	 	(5,500	) 	 	 	(102	) 	
Settlements	  	 	(417	) 	 	 	(937	) 	 	 	(2,105	) 	
Lapse in statute of limitations	  	 	(1,112	) 	 	 	(59	) 	 	 	(1,723	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	16,296	  	 	$	11,057	  	 	$	9,378	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
As of January 28, 2012 and February 2, 2013, unrecognized tax benefits in the amount of $8,817 and $5,305 (net of tax), respectively, would impact our effective tax rate if recognized. We reached a settlement with a local tax jurisdiction resulting in a reduction to our gross unrecognized tax benefits of $3,023 during the six months ended August 3, 2013 (unaudited). However, there was no impact to the tax provision. It is reasonably possible that within the next 12 months we could settle some ongoing audits with various taxing jurisdictions and/or we could have the statute of limitations expire in various jurisdictions. Should these events occur, our unrecognized tax benefits could be reduced by up to $2,500.
We include accrued interest and penalties on underpayments of income taxes in our income tax provision. As of January 28, 2012 and February 2, 2013, we had interest and penalties accrued on our Consolidated Balance Sheets in the amount of $5,929 and $3,898, respectively. Net interest and penalty provisions of $478, $1,401, and $600 were recognized in our Consolidated Statements of Operations for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. Interest is computed on the difference between the tax position recognized net of any unrecognized tax benefits and the amount previously taken or expected to be taken in our tax returns.
All amounts above related to unrecognized tax benefits include continuing and discontinued operations.
We are no longer subject to examination for U.S. federal income tax for 2007 and prior. With limited exceptions, we are no longer subject to state income tax examinations for 2006 and prior. Foreign income tax returns are principally no longer subject to examination for 2007 and prior.
Our effective tax rate for continuing operations for the first six months of fiscal 2012 and fiscal 2013 (unaudited) was 3.0% and 8.3%, respectively. The rate for these periods differs from the U.S. statutory rate of 35% primarily due to additional valuation allowance and nondeductible interest.
Note 15. Commitments and Contingencies
Environmental Considerations
We are subject to a variety of environmental laws and regulations governing discharges to air and water, the handling, storage and disposal of hazardous or solid waste materials and the remediation of contamination associated with releases of hazardous substances, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
 
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During the second quarter of fiscal 2012, Kellwood Company, our wholly-owned subsidiary, entered into a Consent Decree with the United States Environmental Protection Agency (“EPA”) and Missouri Department of Natural Resources (“MDNR”) to conduct cleanup initiatives for the decontamination of soil and groundwater located near a former metal fabrication plant in New Haven, MO. The agreement became effective August 24, 2012, and was entered into as settlement of a lawsuit filed against Kellwood Company by the EPA and MDNR. The lawsuit alleged that Kellwood Company inappropriately disposed of tetrachloroethylene (“PCE”) an industrial degreaser used to clean metal rods for tent poles, on the surrounding grounds and sewer system of a plant operated by American Recreation Products, a wholly owned subsidiary of Kellwood Company and AHC, between 1973 and 1985. Effective October 15, 2012, in accordance with the terms of the agreement, we posted a letter of credit payable to the EPA in the amount of $5,920 as a performance guarantee for the estimated cost of remediation work.
As of February 2, 2013 and August 3, 2013 (unaudited), we have recorded $9,604 and $9,702, respectively, for estimated capital costs and ongoing remedial activities at the New Haven site. This represents our best estimate of the discounted value of the total obligation using a discount rate of 3.0% for ongoing remediation activities, and rates ranging from 0.1% to 1.0% for activities expected to be completed during the next five years. We have projected undiscounted cash flows of $12,881, after adjusting for a 2.65% inflation rate. Our recorded liability differs from the performance guarantee required by the EPA primarily due to management’s use of a lower discount rate, as well as assumption of additional costs not reflected in the EPA’s estimate of remediation work. These additional costs include voluntary corrective actions implemented by Kellwood, as well as EPA oversight fees.
Although we believe we are currently in material compliance with all of the various regulations applicable to our business, there can be no assurance that requirements will not change in the future or that we will not incur significant costs to comply with such requirements. We are currently not aware of any environmental matters which may have a material impact on our financial position, results of operations, or liquidity.
Tax Settlements
During the fourth quarter of fiscal 2012, we settled an ongoing income tax case with a state jurisdiction for a total of $4,636 (including interest). The settlement amount will be paid over a three year period subject to interest of 7.5%. We have $1,805 and $1,256 of the settlement liability recorded within other accrued expenses for the short-term portion due as of February 2, 2013 and August 3, 2013 (unaudited), respectively. The remaining amount of our obligation is recorded within deferred income taxes and other for both periods.
During the six months ended August 3, 2013 (unaudited), we settled an ongoing income tax case with a local jurisdiction for a total of $6,616 (including interest). We began making payments on the settlement amount during the third quarter of 2013, which will be paid over a three year period and subject to interest of 7.5%. As of August 3, 2013, we had $2,563 of the settlement liability recorded within other accrued expenses for the short-term portion due. The remaining amount of our obligation is recorded within deferred income taxes and other.
Litigation
We are currently party to various legal proceedings. While management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse impact on our financial position or results of operations, litigation is subject to inherent uncertainties.
 
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License Agreements
We have exclusive license agreements to market apparel under trademarks owned by other parties. These include XOXO ® for juniors sportswear and dresses, as well as various others for recreational products and apparel. These agreements contain provisions for minimum royalty and advertising payments based on anticipated sales in future periods. Royalty and advertising expense for license agreements within continuing operations were $4,161 and $1,206, respectively in fiscal 2010 and $3,645 and $977, respectively in fiscal 2011. In fiscal year 2012, the royalty and advertising expense within continuing operations for all license agreements totaled $713 and $500, respectively.
Our future minimum payments for all license agreements within continuing operations are as follows (in thousands):

 	  	Royalties	 	  	Advertising	 	
2013	  	$	74	  	  	$	500	  	
2014	  	 	8	  	  	 	500	  	
2015	  	 	—	  	  	 	—	  	
2016	  	 	—	  	  	 	—	  	
2016	  	 	—	  	  	 	—	  	
Thereafter	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	
Total	  	$	82	  	  	$	1,000	  	
	  	 	 	 	  	 	 	 	
Contingent Consideration for Certain Acquisitions
As further described in Note 2 to the Consolidated Financial Statements, there is a deferred purchase price component to the Rebecca Taylor acquisition. The amount of this contingent consideration will be determined based on the operating results of this business and the others factors outlined in the related contingent consideration agreement.
Note 16. Segment and Geographical Financial Information
AHC designs, merchandises and sells a collection of brands across a broad range of consumer lifestyles, as well as recreational apparel and products aimed to improve the consumer outdoor experience. We operate and manage our business by brand and have identified four reportable segments, as further described below. These segments represent brand-based activities for which discrete financial information is readily available and utilized by our Chief Operating Decision Maker (“CODM”) to evaluate each brand’s performance on a regular basis. We considered both similar and dissimilar economic characteristics, internal reporting and management structures, as well as products, customers, and supply chain logistics to identify the following reportable segments:
 
 	Ÿ 	 	Vince segment—consists of the specialty retail, wholesale, e-commerce, and licensing operations of our high-growth contemporary Vince brand.	
 
 	Ÿ 	 	American Recreational Products (“ARP”) segment—consists of our outdoor recreational equipment and apparel operations.	
 
 	Ÿ 	 	Juniors segment—consists of a collection of denim, dresses, and sportswear labels sold through wholesale distribution to retailers.	
 
 	Ÿ 	 	Moderate segment—consists of our moderately priced career and casual lifestyle brands sold through wholesale distribution to retailers.	
Performance results of our remaining operating segments have been combined in Other, as none of these brands individually meet the quantitative thresholds for disclosure as a reportable segment.
 
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Segment performance is evaluated by the Company’s CODM based on Adjusted EBITDA, defined as net earnings from continuing operations before interest expense, provision for income taxes, depreciation, amortization, long-lived asset impairment losses, fair value adjustments to contingent consideration obligations, restructuring charges, environmental remediation costs, gain on acquisitions, gain on debt extinguishment, and other non-recurring charges. Although impairment losses and adjustments to contingent consideration liabilities relate to specific brands, they are excluded from the Adjusted EBITDA of our operating segments as these measures can fluctuate significantly year over year and are not considered to be primary measures of segment performance by our CODM.
Unallocated corporate expenses are comprised of selling, general, and administrative expenses attributable to corporate and administrative activities, and other charges that are not directly attributable to our operating segments. There were no inter-segment sales or transfers for the periods presented below. Summary information for our operating segments is presented below (in thousands).

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net Sales	  				 				 				 				 				
Vince	  	$	111,492	  	 	$	175,255	  	 	$	240,352	  	 	$	90,531	  	 	$	114,657	  	
ARP	  	 	98,203	  	 	 	94,606	  	 	 	98,830	  	 	 	52,295	  	 	 	51,272	  	
Juniors	  	 	177,629	  	 	 	190,613	  	 	 	181,582	  	 	 	89,850	  	 	 	110,575	  	
Moderate	  	 	141,895	  	 	 	103,817	  	 	 	78,103	  	 	 	38,509	  	 	 	32,182	  	
Other	  	 	57,355	  	 	 	98,555	  	 	 	109,128	  	 	 	48,260	  	 	 	55,281	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total net sales	  	$	586,574	  	 	$	662,846	  	 	$	707,995	  	 	$	319,445	  	 	$	363,967	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	  				 				 				 				 				
Vince	  	$	23,637	  	 	$	44,186	  	 	$	42,189	  	 	$	13,581	  	 	$	17,491	  	
ARP	  	 	(1,454	) 	 	 	(7,854	) 	 	 	(4,496	) 	 	 	(208	) 	 	 	(528	) 	
Juniors	  	 	13,557	  	 	 	9,411	  	 	 	9,426	  	 	 	3,113	  	 	 	9,384	  	
Moderate	  	 	18,672	  	 	 	250	  	 	 	1,924	  	 	 	(1,003	) 	 	 	832	  	
Other	  	 	(1,301	) 	 	 	10,296	  	 	 	6,916	  	 	 	2,747	  	 	 	3,792	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment adjusted EBITDA	  	 	53,111	  	 	 	56,289	  	 	 	55,959	  	 	 	18,230	  	 	 	30,971	  	
Unallocated corporate expense	  	 	(31,312	) 	 	 	(32,196	) 	 	 	(30,736	) 	 	 	(15,914	) 	 	 	(15,149	) 	
Interest expense, net	  	 	(103,074	) 	 	 	(127,148	) 	 	 	(122,383	) 	 	 	(74,151	) 	 	 	(43,671	) 	
Depreciation	  	 	(9,035	) 	 	 	(8,491	) 	 	 	(5,611	) 	 	 	(2,905	) 	 	 	(2,622	) 	
Amortization of intangible assets	  	 	(954	) 	 	 	(1,941	) 	 	 	(1,899	) 	 	 	(950	) 	 	 	(950	) 	
Restructuring, environmental and other charges	  	 	(9,729	) 	 	 	(2,651	) 	 	 	(5,091	) 	 	 	(2,264	) 	 	 	(827	) 	
Impairment of long-lived assets (excluding goodwill)	  	 	(438	) 	 	 	(2,504	) 	 	 	(2,349	) 	 	 	(717	) 	 	 	—	  	
Impairment of goodwill	  	 	—	  	 	 	(10,821	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Change in fair value of contingent consideration	  	 	—	  	 	 	1,578	  	 	 	7,162	  	 	 	4,507	  	 	 	54	  	
Gain on acquisition, net of tax	  	 	939	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Gain on debt extinguishment	  	 	15,912	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss of continuing operations before provision for income taxes	  	$	(84,580	) 	 	$	(127,885	) 	 	$	(104,948	) 	 	$	(74,164	) 	 	$	(32,194	) 	

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 	  	Fiscal Year	 	  	Six Months Ended	
 	  	2010	 	  	2011	 	  	2012	 	  	July 28,
2012	  	August 3,
2013	
 	  	 	 	  	 	 	  	 	 	  	(unaudited)	  	(unaudited)	
Capital Expenditures	  				  				  				  		  		
Vince	  	$	1,602	  	  	$	1,450	  	  	$	1,821	  	  		  		
ARP	  	 	104	  	  	 	159	  	  	 	727	  	  		  		
Juniors	  	 	—	  	  	 	—	  	  	 	10	  	  		  		
Moderate	  	 	3	  	  	 	—	  	  	 	—	  	  		  		
Other	  	 	818	  	  	 	1,357	  	  	 	3,397	  	  		  		
Corporate	  	 	2,595	  	  	 	4,067	  	  	 	1,748	  	  		  		
	  	 	 	 	  	 	 	 	  	 	 	 	  		  		
Total capital expenditures	  	$	5,122	  	  	$	7,033	  	  	$	7,703	  	  		  		

													
 	  	January 28, 2012	 	  	February 2, 2013	 	  	August 3, 2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Total Assets	  				  				  				
Vince	  	$	222,456	  	  	$	241,008	  	  	$	265,379	  	
ARP	  	 	61,811	  	  	 	61,781	  	  	 	68,892	  	
Juniors	  	 	55,932	  	  	 	49,453	  	  	 	57,865	  	
Moderate	  	 	21,564	  	  	 	15,316	  	  	 	24,302	  	
Other	  	 	35,579	  	  	 	49,777	  	  	 	47,212	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total assets of segments	  	 	397,342	  	  	 	417,335	  	  	 	463,650	  	
Unallocated corporate	  	 	31,173	  	  	 	16,403	  	  	 	3,978	  	
Discontinued operations	  	 	39,930	  	  	 	8,386	  	  	 	163	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total assets	  	$	468,445	  	  	$	442,124	  	  	$	467,791	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales results and long-lived assets are presented on a geographic basis below. We predominately operate within the United States and have a limited presence in international markets. Sales are presented based on customer location, while long-lived assets are presented based on asset location. Long-lived assets presented by geographic region below (in thousands) include property, plant and equipment, net of accumulated depreciation, as well as fixtures installed at our retailer sites, net of accumulated amortization.

 	  	2010	 	  	2011	 	  	2012	 	
Domestic	  	$	541,305	  	  	$	612,624	  	  	$	655,879	  	
International	  	 	45,269	  	  	 	50,222	  	  	 	52,116	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total net sales	  	$	586,574	  	  	$	662,846	  	  	$	707,995	  	

											
 	  	 	  	January 28,
2012	 	  	February 2,
2013	 	
Domestic	  		  	$	19,158	  	  	$	18,378	  	
International	  		  	 	37	  	  	 	23	  	
	  		  	 	 	 	  	 	 	 	
Total long-lived assets	  		  	$	19,195	  	  	$	18,401	  	
	  		  	 	 	 	  	 	 	 	
Note 17. Related Party Transactions
Vince Earnout Agreement
In connection with the acquisition of the Vince business, Kellwood Company entered into an agreement with CRL Group providing for contingent earnout payments as additional cash purchase consideration based upon the achievement of specified performance targets. Rea Laccone, former Chief Executive Officer and Chief Creative Officer of the Vince brand, is a member of the CRL Group.
 
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The agreement provided for the payment of contingent annual earnout payments to CRL Group for five periods between 2007 and 2011, as well as a cumulative contingent payment at the end of the agreement period. Additional consideration of $4,475, $58,465, and $806 was paid in fiscal 2010, fiscal 2011, and fiscal 2012, respectively. All consideration was recorded as an adjustment to the goodwill balance of our Vince segment in the fiscal year it was earned. See Note 5 to the Consolidated Financial Statements for a rollforward of goodwill balances by segment. As of January 28, 2012, we reported $806 within other accrued expenses on our Consolidated Balance Sheet.
Certain Indebtedness to affiliates of Sun Capital Partners, Inc.
We have substantial indebtedness to affiliates of Sun Capital Partners, Inc. (“Sun Capital”) after giving effect to the Acquisition in February 2008. Our debt obligations to affiliates of Sun Capital under the Sun Promissory Notes, Sun Capital Loan Agreement, and Sun Term Loan Agreements (as defined in Note 8 to the Consolidated Financial Statements) totaled $498,678 and $118,015 as of February 2, 2013 and August 3, 2013, respectively. These obligations were reported within long-term debt on the Consolidated Balance Sheets as of the respective periods and are comprised of both principal and capitalized PIK interest. See Note 8 to the Consolidated Financial Statements for additional discussion on the terms of each agreement.
On December 28, 2012, Sun Kellwood Finance waived all interest capitalized and accrued under the Sun Promissory notes prior to July 19, 2012. Additionally, Sun Kellwood Finance and SCSF Finance waived all interest capitalized and accrued under the Sun Capital Loan Agreement prior to July 19, 2012. As all parties are under the common control of Sun Capital, both transactions resulted in capital contributions of $270,852 and $18,249 for the Sun Promissory Notes and Sun Capital Loan Agreement, respectively. The capital contributions were recorded as adjustments to additional paid in capital on our Consolidated Balance Sheet as of February 2, 2013. These transactions had no significant income tax consequences.
On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in both the Sun Promissory Notes and note under our Sun Capital Loan Agreement to Sun Cardinal, LLC. Immediately following the assignment of these notes, Sun Cardinal contributed all outstanding principal and interest due under these notes as of June 18, 2013 to the capital of AHC. As all parties are under the common control of Sun Capital, these transactions were recorded in the second quarter of fiscal 2013 (unaudited) as increases to AHC’s additional paid in capital in the amounts of $334,595 and $72,932 for the Sun Promissory Notes and Sun Capital Loan Agreement, respectively. See Note 8 to the Consolidated Financial Statements.
Management Fees
In connection with the acquisition of Kellwood Company by affiliates of Sun Capital in 2008, Sun Capital Management, an affiliate of Sun Capital, entered into a Management Services Agreement with Kellwood Company that expires in May 2018, with automatic one-year extensions thereafter. Under this agreement, Sun Capital Management provides Kellwood Company with consulting and advisory services, including services relating to financing alternatives, financial reporting, accounting and management information systems. In exchange, Kellwood Company reimburses Sun Capital Management for reasonable out-of-pocket expenses incurred in connection with providing consulting and advisory services, additional and customary and reasonable fees for management consulting services provided in connection with corporate events, and also pays an annual management fee equal to $2,200 which is prepaid in equal quarterly installments. We reported $2,357, $2,420, and $2,447 for management fees to Sun Capital in other expense, net of the Consolidated Statements of Operations for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. We reported management fees of $1,243 and $1,201 for the first six months of fiscal 2012 and fiscal 2013 (unaudited), respectively.
 
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Upon the consummation of certain corporate events involving Kellwood Company or its direct or indirect subsidiaries, Kellwood Company is required to pay Sun Capital Management a transaction fee in an amount equal to 1% of the aggregate consideration paid to or by Kellwood Company and any of its direct or indirect subsidiaries or stockholders. We incurred no material transaction fees payable to Sun Capital Management during all periods presented on the Consolidated Statement of Operations. We reported $825, $926, and $971 for outstanding transaction fees within deferred income taxes and other on the Consolidated Balance Sheets as of January 28, 2012, February 2, 2013, and August 3, 2013 (unaudited).
Note 18. Subsequent Events
During the second quarter of fiscal 2013 we divested our Zobha business to focus resources on our larger contemporary and Juniors brands, as discussed further in Note 4 to our Consolidated Financial Statements. The historical results of operations and financial position of the Zobha business are reported as discontinued operations for all periods presented within our Consolidated Financial Statements.
On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in both the Sun Promissory Notes and the note under our Sun Capital Loan Agreement to Sun Cardinal, LLC. Immediately following the assignment of these notes, Sun Cardinal contributed all outstanding principal and interest due under these notes as of June 18, 2013 to the capital of AHC. These transactions were recorded in the second quarter of fiscal 2013 as increases to AHC’s additional paid in capital in the amounts of $334,595 and $72,932 for the Sun Promissory Notes and the note under the Sun Capital Loan Agreement, respectively. See Note 8 to the Consolidated Financial Statements.
On June 28, 2013 Kellwood Company and certain of its domestic subsidiaries, as borrowers, entered into the Fifth Amended and Restated Term Loan Agreement with SCSF Finance, LLC and Sun Kellwood Finance, LLC, as lenders, to provide for new Term G loans with a principal amount of $5,000, as discussed within Note 8 to the Consolidated Financial Statements.
We evaluated our consolidated financial statements as of and for the year ended February 2, 2013 for subsequent events through September 24, 2013, the date the financial statements were available to be issued.
 
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 SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Apparel Holding Corp. (Parent Company Only)
Condensed Statements of Operations
(In thousands)

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net sales	  	$	—	  	 	$	—	  	 	$	—	  	 	$	—	  	 	$	—	  	
Cost of products sold	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				 				 				
Selling, general and administrative expenses	  	 	34	  	 	 	45	  	 	 	22	  	 	 	12	  	 	 	12	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	34	  	 	 	45	  	 	 	22	  	 	 	12	  	 	 	12	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(34	) 	 	 	(45	) 	 	 	(22	) 	 	 	(12	) 	 	 	(12	) 	
Interest expense, net	  	 	67,950	  	 	 	81,363	  	 	 	68,683	  	 	 	47,895	  	 	 	15,883	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before provision for income taxes	  	 	(67,984	) 	 	 	(81,408	) 	 	 	(68,705	) 	 	 	(47,907	) 	 	 	(15,895	) 	
Provision for income taxes	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss before equity loss	  	 	(67,984	) 	 	 	(81,408	) 	 	 	(68,705	) 	 	 	(47,907	) 	 	 	(15,895	) 	
Equity loss, net of tax	  	 	(36,494	) 	 	 	(66,458	) 	 	 	(39,004	) 	 	 	(33,300	) 	 	 	(9,748	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Apparel Holding Corp. (Parent Company Only)
Condensed Statements of Comprehensive Loss
(In thousands)

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net Loss	  	$	(104,478	) 	 	$	(147,866	) 	 	$	(107,709	) 	 	$	(81,207	) 	 	$	(25,643	) 	
Foreign currency translation adjustment	  	 	100	  	 	 	(1	) 	 	 	(3	) 	 	 	4	  	 	 	(42	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	  	$	(104,378	) 	 	$	(147,867	) 	 	$	(107,712	) 	 	$	(81,203	) 	 	$	(25,685	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Apparel Holding Corp. (Parent Company Only)
Condensed Balance Sheets
(In thousands, except share amounts)

 	  	January 28,
2012	 	 	February 2,
2013	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	(unaudited)	 	
Assets	  				 				 				
Current assets:	  				 				 				
Cash and cash equivalents	  	$	402	  	 	$	282	  	 	$	219	  	
Receivables, net	  	 	—	  	 	 	2	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	  	 	402	  	 	 	284	  	 	 	219	  	
Investment in subsidiary	  	 	(130,994	) 	 	 	(169,659	) 	 	 	(179,140	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total assets	  	$	(130,592	) 	 	$	(169,375	) 	 	$	(178,921	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Deficit	  				 				 				
Current liabilities:	  				 				 				
Other accrued expenses	  	$	367	  	 	$	246	  	 	$	181	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	  	 	367	  	 	 	246	  	 	 	181	  	
Long-term debt	  	 	605,292	  	 	 	391,434	  	 	 	—	  	
Deferred income taxes and other	  	 	6,770	  	 	 	210	  	 	 	—	  	
Stockholders’ Deficit:	  				 				 				
Voting Common Stock at $0.001 par value (1,200,000 shares authorized, 918,924.91 issued and outstanding)	  	 	1	  	 	 	1	  	 	 	1	  	
Non-Voting Common Stock at $0.001 par value (1,700,000 shares authorized, 193.09 shares issued and
outstanding)	  	 	—	  	 	 	—	  	 	 	—	  	
Additional paid in capital	  	 	97,212	  	 	 	386,680	  	 	 	794,528	  	
Accumulated deficit	  	 	(840,171	) 	 	 	(947,880	) 	 	 	(973,523	) 	
Other comprehensive loss	  	 	(63	) 	 	 	(66	) 	 	 	(108	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ deficit	  	 	(743,021	) 	 	 	(561,265	) 	 	 	(179,102	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and stockholders’ deficit	  	$	(130,592	) 	 	$	(169,375	) 	 	$	(178,921	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Apparel Holding Corp. (Parent Company Only)
Condensed Statements of Cash Flows
(In thousands)

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Operating activities	  				 				 				 				 				
Net loss from Parent operations	  	$	(67,984	) 	 	$	(81,408	) 	 	$	(68,705	) 	 	$	(47,907	) 	 	$	(15,895	) 	
Add items not affecting operating cash flows:	  				 				 				 				 				
Capitalized Payment-In-Kind interest	  	 	67,371	  	 	 	79,915	  	 	 	69,085	  	 	 	47,227	  	 	 	13,758	  	
Changes in assets and liabilities:	  				 				 				 				 				
Receivables, net	  	 	—	  	 	 	—	  	 	 	(2	) 	 	 	—	  	 	 	2	  	
Accounts payable and accrued expenses	  	 	(80	) 	 	 	49	  	 	 	(121	) 	 	 	(12	) 	 	 	(65	) 	
Other assets and liabilities	  	 	579	  	 	 	1,448	  	 	 	(402	) 	 	 	667	  	 	 	2,125	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	(114	) 	 	 	4	  	 	 	(145	) 	 	 	(25	) 	 	 	(75	) 	

Investing activities	  				 				 				 				 				
Capital distributions from subsidiary	  	 	32	  	 	 	45	  	 	 	25	  	 	 	13	  	 	 	12	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by investing activities	  	 	32	  	 	 	45	  	 	 	25	  	 	 	13	  	 	 	12	  	

Financing activities	  				 				 				 				 				
Other	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by financing activities	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	

(Decrease) increase in cash and cash equivalents	  	 	(82	) 	 	 	49	  	 	 	(120	) 	 	 	(12	) 	 	 	(63	) 	
Cash and cash equivalents, beginning of period	  	 	435	  	 	 	353	  	 	 	402	  	 	 	402	  	 	 	282	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	  	$	353	  	 	$	402	  	 	$	282	  	 	$	390	  	 	$	219	  	

Supplemental Disclosures of Cash Flow Information	  	
Cash payments for interest	  	$	—	  	 	$	—	  	 	$	—	  	 	$	—	  	 	$	—	  	
	
Supplemental Disclosures of Non-Cash Investing and Financing Activities	  	
Forgiveness of capitalized and accrued interest on related-party debt	  	$	—	  	 	$	—	  	 	$	(289,101	) 	 	$	—	  	 	$	(407,527	) 	
Capital contribution from stockholder	  	 	—	  	 	 	—	  	 	 	289,101	  	 	 	—	  	 	 	407,527	  	
See accompanying notes to condensed financial statements.
 
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Apparel Holding Corp. (Parent Company Only)
Condensed Statements of Stockholders’ Deficit
(In thousands, except share amounts)

 	 	Common Stock	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of
Shares
Outstanding	 	 	Par Value	 	 	Additional
Paid in
Capital	 	 	Accumulated
Deficit	 	 	Accumulated
Other
Comprehen-
sive Income	 	 	Total
Stockholders’
Deficit	 	
Balance as of January 30, 2010	 	 	919,118	  	 	$	1	  	 	$	96,899	  	 	$	(587,827	) 	 	$	(162	) 	 	$	(491,089	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(67,984	) 	 	 	—	  	 	 	(67,984	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	100	  	 	 	100	  	
Earnings in equity investees	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(36,494	) 	 	 	—	  	 	 	(36,494	) 	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	248	  	 	 	—	  	 	 	—	  	 	 	248	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of January 29, 2011	 	 	919,118	  	 	$	1	  	 	$	97,147	  	 	$	(692,305	) 	 	$	(62	) 	 	$	(595,219	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(81,408	) 	 	 	—	  	 	 	(81,408	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(1	) 	 	 	(1	) 	
Earnings in equity investees	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(66,458	) 	 	 	—	  	 	 	(66,458	) 	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	65	  	 	 	—	  	 	 	—	  	 	 	65	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of January 28, 2012	 	 	919,118	  	 	$	1	  	 	$	97,212	  	 	$	(840,171	) 	 	$	(63	) 	 	$	(743,021	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(68,705	) 	 	 	—	  	 	 	(68,705	) 	
Foreign currency translation adjustment	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(3	) 	 	 	(3	) 	
Earnings in equity investees	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(39,004	) 	 	 	—	  	 	 	(39,004	) 	
Share-based compensation expense	 	 	—	  	 	 	—	  	 	 	367	  	 	 	—	  	 	 	—	  	 	 	367	  	
Capital contribution from stockholder	 	 	—	  	 	 	—	  	 	 	289,101	  	 	 	—	  	 	 	—	  	 	 	289,101	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of February 2, 2013	 	 	919,118	  	 	$	1	  	 	$	386,680	  	 	$	(947,880	) 	 	$	(66	) 	 	$	(561,265	) 	
Comprehensive loss:	 				 				 				 				 				 				
Net loss (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(15,895	) 	 	 	—	  	 	 	(15,895	) 	
Foreign currency translation adjustment (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(42	) 	 	 	(42	) 	
Earnings in equity investees (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(9,748	) 	 	 	—	  	 	 	(9,748	) 	
Share-based compensation expense (unaudited)	 	 	—	  	 	 	—	  	 	 	321	  	 	 	—	  	 	 	—	  	 	 	321	  	
Capital contribution from stockholder (unaudited)	 	 	—	  	 	 	—	  	 	 	407,527	  	 	 	—	  	 	 	—	  	 	 	407,527	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of August 3, 2013 (unaudited)	 	 	919,118	  	 	$	1	  	 	$	794,528	  	 	$	(973,523	) 	 	$	(108	) 	 	$	(179,102	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to condensed financial statements.
 
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Apparel Holding Corp. (Parent Company Only)
Notes to Condensed Financial Statements
(In thousands)
Note 1. Basis of Presentation
The condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of Apparel Holding Corp. (“AHC”) (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the company. The ability of AHC’s operating subsidiaries to pay dividends may be restricted due to the terms of the subsidiaries’ Credit Agreement, Term Loan Agreement, and the agreement governing the subsidiaries’ 12.785% Debentures, as defined in Notes 7 and 8 to the Consolidated Financial Statements.
The condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in this filing.
Note 2. Long-term Debt
Long-term debt consisted of the following as of fiscal years ended January 28, 2012 and February 2, 2013, and as of the six months ended August 3, 2013 (in thousands):

 	  	January 28,
2012	 	  	February 2,
2013	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Sun Promissory Notes	  	$	520,536	  	  	$	319,926	  	  	$	      —	  	
Sun Capital Loan Agreement	  	 	84,756	  	  	 	71,508	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	605,292	  	  	$	391,434	  	  	$	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Sun Promissory Notes
On May 2, 2008, AHC entered into a $225,000 Senior Subordinated Promissory Note and a $75,000 Senior Subordinated Promissory Note with Sun Kellwood Finance, LLC (“Sun Kellwood Finance”), an affiliate of Sun Capital Partners, Inc. We collectively refer to these notes as our “Sun Promissory Notes”. The unpaid principal balance of the notes accrue interest at 15% per annum until the maturity date of October 15, 2011, at which point any unpaid principal balance of the notes shall accrue interest at a rate of 17% per annum until the notes are paid in full. All interest which is not paid in cash on or before the last day of each calendar month are deemed paid in kind and added to the principal balance of the notes unless an election is made otherwise.
On July 19, 2012, AHC amended the Sun Promissory Notes to extend the maturity date to October 15, 2016 and reduce the interest rate to 12% per annum until maturity, at which point any unpaid principal balance of the notes shall accrue interest at a rate of 14% per annum until the notes are paid in full.
On December 28, 2012, Sun Kellwood Finance waived all interest capitalized and accrued under the notes prior to July 19, 2012. As both parties are under the common control of Sun Capital, this transaction resulted in a capital contribution of $270,852 which was recorded as an adjustment to additional paid in capital on our Condensed Balance Sheet as of February 2, 2013.
 
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On June 18, 2013, Sun Kellwood Finance assigned all title and interest in the Sun Promissory Notes to Sun Cardinal, LLC (“Sun Cardinal”). Immediately following the assignment, Sun Cardinal contributed all outstanding principal and interest due as of June 18, 2013 to the capital of AHC. As both parties are under common control of Sun Capital, this transaction resulted in a capital contribution of $334,595, which was recorded as an adjustment to AHC’s additional paid in capital on the Condensed Balance Sheet at August 3, 2013 (unaudited).
Sun Capital Loan Agreement
AHC is party to a Loan Authorization Agreement, originally dated February 13, 2008, by and between AHC (as the successor entity to Cardinal Integrated, LLC), SCSF Kellwood Finance, LLC (“SCSF Finance”) and Sun Kellwood Finance (as successors to Bank of Montreal) for a $72,000 line of credit, and $69,485 principal balance, which we refer to as the “Sun Capital Loan Agreement”. Under the terms of this agreement, as amended from time to time, interest accrues at a rate equal to the rate per annum announced by the Bank of Montreal, Chicago, Illinois, from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the U.S. plus 2%. Interest on the loan is due by the last day of each fiscal quarter and is payable either in immediately available funds on each interest payment date or by adding such interest to the unpaid principal balance of the loan on each interest payment date. The original maturity date of the loan was August 6, 2009. On July 19, 2012, the maturity date of the loan was extended to August 6, 2014.
On December 28, 2012, Sun Kellwood Finance and SCSF Finance waived all interest capitalized and accrued under the loan authorization agreement prior to July 19, 2012. As all parties are under the common control of Sun Capital, this transaction resulted in a capital contribution of $18,249, which was recorded as an adjustment to additional paid in capital on our Consolidated Balance Sheet as of February 2, 2013.
On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in the note under the Sun Capital Loan Agreement to Sun Cardinal. Immediately following the assignment, Sun Cardinal contributed all outstanding principal and interest due under these notes as of June 18, 2013 to the capital of AHC. As all parties are under common control of Sun Capital, this transaction resulted in a capital contribution of $72,932, which was recorded as an adjustment to AHC’s additional paid in capital on the Condensed Balance Sheet at August 3, 2013 (unaudited).
Principal amounts of the notes payable and long-term debt outstanding at February 2, 2013 include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK Interest	 	  	Total	 	  	Less:
Discount	 	  	Amount per
Condensed
Balance
Sheet	 	
Sun Promissory Notes	  	$	300,000	  	  	$	19,926	  	  	$	319,926	  	  	$	—	  	  	$	319,926	  	
Sun Capital Loan Agreement	  	 	69,485	  	  	 	2,023	  	  	 	71,508	  	  	 	—	  	  	 	71,508	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt outstanding	  	$	369,485	  	  	$	21,949	  	  	$	391,434	  	  	$	—	  	  	$	391,434	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Principal amounts of the notes payable and long-term debt outstanding at August 3, 2013 (unaudited) include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK Interest	 	  	Total	 	  	Less:
Discount	 	  	Amount per
Consolidated
Balance
Sheet	 	
Sun Promissory Notes	  	$	—	  	  	$	—	  	  	$	—	  	  	$	—	  	  	$	—	  	
Sun Capital Loan Agreement	  	 	—	  	  	 	—	  	  	 	—	  	  	 	—	  	  	 	—	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt outstanding	  	$	—	  	  	$	—	  	  	$	—	  	  	$	—	  	  	$	—	  	

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The following table provides a summary of future payments related to the principal and capitalized interest of our debt agreements at February 2, 2013. As discussed above, on June 18, 2013, Sun Cardinal contributed all outstanding principal and interest due under the Sun Promissory Notes and Sun Capital Loan Agreement as of June 18, 2013 to the capital of AHC. As such, no future payments will be made under these notes.

 	  	Future Payments due by Period	 	
 	  	Less than 1
Year	 	  	1 – 3
Years	 	  	3 – 5
Years	 	  	After 5
Years	 	  	Total	 	
Sun Promissory Notes	  	$	—	  	  	$	—	  	  	$	497,894	  	  	$	—	  	  	$	497,894	  	
Sun Capital Loan Agreement	  	 	—	  	  	 	77,450	  	  	 	—	  	  	 	—	  	  	 	77,450	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Payments	  	$	—	  	  	$	77,450	  	  	$	497,894	  	  	$	—	  	  	$	575,344	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Note 4. Distributions from Subsidiary
Cash distributions received by AHC were $32, $45, and $25 for fiscal 2010, fiscal 2011 and fiscal 2012, respectively. The distributions represented a return of capital.
Note 5. Subsequent Events
On June 18, 2013, Sun Kellwood Finance and SCSF Finance assigned all title and interest in both the Sun Promissory Notes and note under our Sun Capital Loan Agreement to Sun Cardinal, LLC. Immediately following the assignment of these notes, Sun Cardinal contributed all outstanding principal and interest due as of June 18, 2013 to the capital of AHC. These transactions were recorded in the second quarter of fiscal 2013 as increases to AHC’s additional paid in capital in the amounts of $334,595 and $72,932 for the Sun Promissory Notes and Sun Capital Loan Agreement, respectively. We evaluated our condensed financial statements as of and for the year ended February 2, 2013 for subsequent events through September 24, 2013, the date the financial statements were available to be issued.
 
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 SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

Description	  	Beginning
of Period	 	 	Expense
Charges,
net of
Reversals	 	 	Deductions
and
Write-offs,
net of
Recoveries	 	 	End of
Period	 	
Slow Moving and Obsolescence Provision on Finished Goods and Raw Materials	  				 				 				 				
Fiscal 2010	  	$	(7,259	) 	 	$	(8,537	) 	 	$	9,552	  	 	$	(6,244	) 	
Fiscal 2011	  	 	(6,244	) 	 	 	(11,455	) 	 	 	9,810	  	 	 	(7,889	) 	
Fiscal 2012	  	 	(7,889	) 	 	 	(10,009	) 	 	 	11,176	  	 	 	(6,722	) 	
Sales Allowances	  				 				 				 				
Fiscal 2010	  	 	(25,767	) 	 	 	(74,211	) 	 	 	79,669	  	 	 	(20,309	) 	
Fiscal 2011	  	 	(20,309	) 	 	 	(79,780	) 	 	 	78,380	  	 	 	(21,709	) 	
Fiscal 2012	  	 	(21,709	) 	 	 	(94,524	) 	 	 	92,073	  	 	 	(24,160	) 	
Allowance for Doubtful Accounts	  				 				 				 				
Fiscal 2010	  	 	(1,376	) 	 	 	473	  	 	 	(23	) 	 	 	(926	) 	
Fiscal 2011	  	 	(926	) 	 	 	(464	) 	 	 	386	  	 	 	(1,004	) 	
Fiscal 2012	  	 	(1,004	) 	 	 	(779	) 	 	 	922	  	 	 	(861	) 	
Valuation Allowance on Deferred Income Taxes	  				 				 				 				
Fiscal 2010	  	 	(44,644	) 	 	 	(9,308	) 	 	 	—	  	 	 	(53,952	) 	
Fiscal 2011	  	 	(53,952	) 	 	 	(33,663	) 	 	 	6,113	  	 	 	(81,502	) 	
Fiscal 2012	  	 	(81,502	) 	 	 	(31,197	) 	 	 	7,083	  	 	 	(105,616	) 	
 
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Table of Contents
 INDEX TO THE AUDITED FINANCIAL STATEMENTS FOR VINCE, LLC

Independent Auditor’s Report on Financial Statements	  	 	V-2	  	
Statements of Operations	  	 	V-3	  	
Balance Sheets	  	 	V-4	  	
Statements of Cash Flows	  	 	V-5	  	
Statements of Invested Equity	  	 	V-6	  	
Notes to Financial Statements	  	 	V-7	  	
Please note the following:
 
 	Ÿ 	 	Apparel Holding Corp. (to be renamed Vince Holding Corp. prior to the consummation of this offering) is the legal issuer of the shares offered in this offering. Investors will be investing in the Vince business, however, they will be purchasing shares issued by Apparel Holding Corp., not Vince, LLC;	
 
 	Ÿ 	 	The information set forth in this section is provided as supplemental information and should not be considered in lieu of the information pertaining to Apparel Holding Corp;	
 
 	Ÿ 	 	The financial information included in this section may not be indicative of Apparel Holding Corp.’s financial position, operating results and changes in equity after the completion of the IPO Restructuring Transactions, or what they would have been had the Vince business operated separately from the non-Vince businesses during the periods presented.	
 
 	Ÿ 	 	You should read the information in this section in conjunction with “Additional Information Related to AHC—Unaudited Pro Forma Consolidated Financial Data of AHC.”	
 
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Table of Contents
 Independent Auditor’s Report
To the Board of Directors of Vince, LLC:
We have audited the accompanying financial statements of Vince, LLC, which comprise the balance sheets as of February 2, 2013 and January 28, 2012, and the related statements of operations, invested equity, and cash flows for each of the three years ended February 2, 2013.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vince, LLC at February 2, 2013 and January 28, 2012, and the results of its operations and its cash flows for each of the three years ended February 2, 2013 in accordance with accounting principles generally accepted in the United States of America.
/s/    PricewaterhouseCoopers LLP
St. Louis, Missouri
July 11, 2013
 
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Table of Contents
 VINCE, LLC
STATEMENTS OF OPERATIONS
(In thousands)

 	  	Fiscal Year	 	  	Six Months Ended	 	
 	  	2010	 	  	2011	 	  	2012	 	  	July 28,
2012	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	 	 	  	(unaudited)	 	  	(unaudited)	 	
Net sales	  	$	111,492	  	  	$	175,255	  	  	$	240,352	  	  	$	90,531	  	  	$	114,657	  	
Cost of products sold	  	 	55,695	  	  	 	89,545	  	  	 	132,156	  	  	 	50,119	  	  	 	63,506	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Gross profit	  	 	55,797	  	  	 	85,710	  	  	 	108,196	  	  	 	40,412	  	  	 	51,151	  	
Operating expenses:	  				  				  				  				  				
Selling, general and administrative expenses	  	 	32,704	  	  	 	42,148	  	  	 	66,639	  	  	 	27,057	  	  	 	33,954	  	
Amortization of intangible assets	  	 	598	  	  	 	599	  	  	 	598	  	  	 	299	  	  	 	300	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total operating expenses	  	 	33,302	  	  	 	42,747	  	  	 	67,237	  	  	 	27,356	  	  	 	34,254	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Income from operations	  	 	22,495	  	  	 	42,963	  	  	 	40,959	  	  	 	13,056	  	  	 	16,897	  	
Interest expense	  	 	7,172	  	  	 	15,004	  	  	 	22,903	  	  	 	10,690	  	  	 	12,429	  	
Other expense, net	  	 	350	  	  	 	478	  	  	 	779	  	  	 	396	  	  	 	512	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Income before provision for income taxes	  	 	14,973	  	  	 	27,481	  	  	 	17,277	  	  	 	1,970	  	  	 	3,956	  	
Provision for income taxes	  	 	5,923	  	  	 	10,812	  	  	 	6,964	  	  	 	789	  	  	 	1,556	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net income	  	$	9,050	  	  	$	16,669	  	  	$	10,313	  	  	$	1,181	  	  	$	2,400	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
See accompanying notes to Financial Statements.
 
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Table of Contents
 VINCE, LLC
BALANCE SHEETS
(In thousands)

 	  	January 28,
2012	 	 	February 2,
2013	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	(unaudited)	 	
Assets	  				 				 				
Current assets:	  				 				 				
Cash and cash equivalents	  	$	34	  	 	$	35	  	 	$	106	  	
Trade receivables, net	  	 	26,474	  	 	 	33,931	  	 	 	39,903	  	
Inventories, net	  	 	10,527	  	 	 	18,887	  	 	 	28,005	  	
Prepaid expenses and other current assets	  	 	3,826	  	 	 	8,001	  	 	 	14,589	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	  	 	40,861	  	 	 	60,854	  	 	 	82,603	  	
Property, plant and equipment:	  				 				 				
Leasehold improvements	  	 	8,170	  	 	 	9,373	  	 	 	10,256	  	
Furniture, fixtures, and computer equipment	  	 	1,253	  	 	 	1,449	  	 	 	1,636	  	
Capitalized software	  	 	34	  	 	 	51	  	 	 	635	  	
Construction in process	  	 	122	  	 	 	219	  	 	 	2,018	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total property, plant and equipment	  	 	9,579	  	 	 	11,092	  	 	 	14,545	  	
Less accumulated depreciation and amortization	  	 	(2,985	) 	 	 	(4,104	) 	 	 	(5,047	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	  	 	6,594	  	 	 	6,988	  	 	 	9,498	  	
Intangible assets, net	  	 	111,440	  	 	 	110,842	  	 	 	110,542	  	
Goodwill	  	 	63,746	  	 	 	63,746	  	 	 	63,746	  	
Other assets	  	 	6,301	  	 	 	4,781	  	 	 	24,173	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total assets	  	$	228,942	  	 	$	247,211	  	 	$	290,562	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Liabilities and Invested Equity	  				 				 				
Current liabilities:	  				 				 				
Short-term borrowings	  	$	88,222	  	 	$	79,783	  	 	$	115,601	  	
Accounts payable	  	 	11,037	  	 	 	18,478	  	 	 	27,938	  	
Accrued salaries and employee benefits	  	 	1,438	  	 	 	11,151	  	 	 	2,325	  	
Other accrued expenses	  	 	967	  	 	 	1,054	  	 	 	2,141	  	
Accrued contingent purchase price	  	 	806	  	 	 	—	  	 	 	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	  	 	102,470	  	 	 	110,466	  	 	 	148,005	  	
Long-term debt	  	 	122,207	  	 	 	152,675	  	 	 	163,675	  	
				
Commitments and contingencies (Note 9)	  				 				 				
				
Deferred income taxes and other	  	 	5,789	  	 	 	6,087	  	 	 	5,041	  	
Invested equity	  	 	(1,524	) 	 	 	(22,017	) 	 	 	(26,159	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and invested equity	  	$	228,942	  	 	$	247,211	  	 	$	290,562	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to Financial Statements.
 
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 VINCE, LLC
STATEMENTS OF CASH FLOWS
(In thousands)

 	 	Fiscal Year	 	 	Six Months Ended	 	
 	 	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Operating activities	 				 				 				 				 				
Net income	 	$	9,050	  	 	$	16,669	  	 	$	10,313	  	 	$	1,181	  	 	$	2,400	  	
Add (deduct) items not affecting operating cash flows:	 				 				 				 				 				
Depreciation	 	 	894	  	 	 	1,102	  	 	 	1,411	  	 	 	622	  	 	 	806	  	
Amortization of intangible assets	 	 	598	  	 	 	599	  	 	 	598	  	 	 	299	  	 	 	300	  	
Amortization of debt issuance costs	 	 	1,289	  	 	 	1,499	  	 	 	2,154	  	 	 	1,104	  	 	 	1,050	  	
Deferred income taxes	 	 	3,091	  	 	 	5,825	  	 	 	(2,050	) 	 	 	2,441	  	 	 	1,173	  	
Capitalized PIK interest	 	 	1,486	  	 	 	5,614	  	 	 	10,468	  	 	 	4,511	  	 	 	5,999	  	
Deferred debt issuance cost write-off	 	 	738	  	 	 	1,747	  	 	 	—	  	 	 	—	  	 	 	—	  	
Loss on disposition of property, plant and equipment	 	 	—	  	 	 	8	  	 	 	—	  	 	 	—	  	 	 	262	  	
Changes in assets and liabilities:	 				 				 				 				 				
Receivables, net	 	 	(4,423	) 	 	 	(12,174	) 	 	 	(7,457	) 	 	 	(10,366	) 	 	 	(5,972	) 	
Inventories, net	 	 	(3,987	) 	 	 	(2,592	) 	 	 	(8,360	) 	 	 	(10,905	) 	 	 	(9,118	) 	
Prepaid expenses and other current assets	 	 	(2,036	) 	 	 	(490	) 	 	 	(2,455	) 	 	 	(3,829	) 	 	 	(6,588	) 	
Accounts payable and accrued expenses	 	 	3,779	  	 	 	3,133	  	 	 	17,108	  	 	 	8,138	  	 	 	1,213	  	
Other assets and liabilities	 	 	30	  	 	 	350	  	 	 	900	  	 	 	468	  	 	 	307	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by operating activities	 	 	10,509	  	 	 	21,290	  	 	 	22,630	  	 	 	(6,336	) 	 	 	(8,168	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investing activities	 				 				 				 				 				
Payments for capital expenditures	 	 	(1,602	) 	 	 	(1,450	) 	 	 	(1,821	) 	 	 	(457	) 	 	 	(3,406	) 	
Payments for contingent purchase price	 	 	(4,475	) 	 	 	(58,465	) 	 	 	(806	) 	 	 	(806	) 	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by investing activities	 	 	(6,077	) 	 	 	(59,915	) 	 	 	(2,627	) 	 	 	(1,263	) 	 	 	(3,406	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financing activities	 				 				 				 				 				
Borrowings of short-term debt obligations	 	 	—	  	 	 	14,900	  	 	 	—	  	 	 	—	  	 	 	—	  	
Payments for short-term debt obligations	 	 	—	  	 	 	(14,900	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Borrowings of long-term loan obligations	 	 	22,393	  	 	 	79,900	  	 	 	30,000	  	 	 	30,000	  	 	 	5,000	  	
Payments for debt extinguishment	 	 	—	  	 	 	—	  	 	 	(15,000	) 	 	 	—	  	 	 	—	  	
Borrowings of revolving credit facilities	 	 	185,172	  	 	 	399,621	  	 	 	620,367	  	 	 	221,940	  	 	 	392,627	  	
Payments for revolving credit facilities	 	 	(127,576	) 	 	 	(368,995	) 	 	 	(623,806	) 	 	 	(205,404	) 	 	 	(356,809	) 	
Fees paid for amendments to credit facility	 	 	(3,644	) 	 	 	—	  	 	 	—	  	 	 	(114	) 	 	 	—	  	
Fees paid for short-term debt obligations	 	 	—	  	 	 	(101	) 	 	 	—	  	 	 	—	  	 	 	—	  	
Fees paid for revolving credit facilities	 	 	—	  	 	 	(2,147	) 	 	 	(114	) 	 	 	(609	) 	 	 	32	  	
Fees paid for long-term loan obligations	 	 	—	  	 	 	(2,675	) 	 	 	(643	) 	 	 	(34	) 	 	 	(60	) 	
Distributions to Kellwood Company	 	 	(80,773	) 	 	 	(66,959	) 	 	 	(30,806	) 	 	 	(38,185	) 	 	 	(29,145	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by financing activities	 	 	(4,428	) 	 	 	38,644	  	 	 	(20,002	) 	 	 	7,594	  	 	 	11,645	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Increase (decrease) in cash and cash equivalents	 	 	4	  	 	 	19	  	 	 	1	  	 	 	(5	) 	 	 	71	  	
Cash and cash equivalents, beginning of period	 	 	11	  	 	 	15	  	 	 	34	  	 	 	34	  	 	 	35	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	 	$	15	  	 	$	34	  	 	$	35	  	 	$	29	  	 	$	106	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Supplemental Disclosures of Cash Flow Information	 				 				 				 				 				
Cash payments for interest	 	$	3,569	  	 	$	6,103	  	 	$	6,715	  	 	$	5,639	  	 	$	5,432	  	
Supplemental Disclosures of Non-Cash Investing and Financing Activities	 				 				 				 				 				
Capital expenditures in accounts payable	 	 	—	  	 	 	27	  	 	 	160	  	 	 	53	  	 	 	668	  	
Accrued contingent purchase price	 	 	8,137	  	 	 	806	  	 	 	—	  	 	 	—	  	 	 	—	  	
See accompanying notes to Financial Statements.
 
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 VINCE, LLC
STATEMENTS OF INVESTED EQUITY
(In thousands)

 	  	Invested Equity	 	
Balance January 30, 2010	  	$	120,489	  	
Net distributions to Kellwood Company	  	 	(80,773	) 	
Net income	  	 	9,050	  	
	  	 	 	 	
Balance January 29, 2011	  	 	48,766	  	
Net distributions to Kellwood Company	  	 	(66,959	) 	
Net income	  	 	16,669	  	
	  	 	 	 	
Balance January 28, 2012	  	 	(1,524	) 	
Net distributions to Kellwood Company	  	 	(30,806	) 	
Net income	  	 	10,313	  	
	  	 	 	 	
Balance February 2, 2013	  	 	(22,017	) 	
Net distributions to Kellwood Company	  	 	(6,542	) 	
Net income	  	 	2,400	  	
	  	 	 	 	
Balance August 3, 2013 (unaudited)	  	$	(26,159	) 	
	  	 	 	 	
See accompanying notes to Financial Statements.
 
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 VINCE, LLC
NOTES TO FINANCIAL STATEMENTS
(In thousands)
Note 1. Summary of Significant Accounting Policies
(A) Description of Business :    Vince is a prominent, high-growth contemporary apparel brand known for modern, effortless style and everyday luxury essentials. We reach our customers through a variety of channels, specifically through premier wholesale department stores and specialty stores in the United States (“U.S.”) and select international markets, as well as through our branded retail locations and our website. We design our products in the U.S. and source the vast majority of our products from contract manufacturers outside the U.S., primarily in Asia and South America.
Kellwood Company and its subsidiaries (“Kellwood Company”) acquired certain net assets from CRL Group, LLC, owner of the Vince ® brand and trademark (“Vince”) in 2006. On February 12, 2008, Kellwood Company was acquired by Cardinal Integrated, LLC, now known as Apparel Holding Corp., wholly-owned by affiliates of Sun Capital Partners, Inc., through a cash tender offer, including the assumption of debt. Effective September 1, 2012, Kellwood Company contributed the assets constituting the Vince business to Vince, LLC, a Delaware limited liability company and wholly-owned subsidiary of Kellwood Company. In these financial statements, unless the context otherwise requires, references to the “our,” “us,” and “we” refer to Vince, LLC.
(B) Basis of Presentation :    These financial statements have been presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Vince, LLC is a subsidiary of Kellwood Company and does not necessarily reflect a stand-alone entity. The financial statements of Vince, LLC reflect the assets, liabilities, operations and activities directly attributable to Vince, LLC, and charges for the use of services provided by centralized Kellwood Company departments and shared facilities, all of which were deemed reasonable by management to present the financial position, results of operations and changes in cash flows and invested equity of Vince, LLC on a stand-alone basis.
Vince, LLC is a borrower party under certain agreements governing Kellwood Company indebtedness, including the Wells Fargo Facility, the Cerberus Term Loan, and the Sun Term Loan Agreements (defined in Notes 3 and 4). As is such, these debt instruments and related balances including (but not limited to) interest expense and debt issuance costs have been reflected in these financial statements, as discussed further in Notes 3 and 4 herein. This presentation has been retrospectively applied to all periods presented to any debt instruments under which Vince, LLC would have been considered a borrower party had it been in existence.
The financial information included herein may not necessarily reflect the financial position, results of operations, changes in invested equity and cash flows of Vince, LLC in the future or what they would have been had Vince, LLC been a separate, stand-alone entity during the periods presented.
All intercompany accounts and transactions within Vince, LLC have been eliminated. In the opinion of management, the financial statements contain all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary to make the information presented therein not misleading.
 
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Statements of Operations
Operating expenses and revenues specifically identified as pertaining to Vince, LLC are charged or credited directly to Vince, LLC without allocation, which is true for all revenues recorded on the Statements of Operations. Additionally, Vince, LLC was charged for services provided by centralized Kellwood Company departments. These costs were charged based upon the actual cost incurred, without mark-up, and the method to determine the amount charged varied depending on the nature of the costs. See below for a summary of charges to Vince, LLC recorded within selling, general and administrative expenses:

 	  	2010	 	  	2011	 	  	2012	 	
Information technology support	  	$	3,263	  	  	$	4,399	  	  	$	2,626	  	
Corporate shared services	  	 	2,711	  	  	 	3,099	  	  	 	9,520	  	
Shared facilities	  	 	976	  	  	 	609	  	  	 	448	  	
Marketing support	  	 	2,015	  	  	 	2,352	  	  	 	1,783	  	
Retail and e-commerce support	  	 	1,460	  	  	 	2,918	  	  	 	3,459	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total charges from Kellwood Company	  	$	10,425	  	  	$	13,377	  	  	$	17,836	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Information technology (“IT”) support includes costs to purchase, maintain and support the use of IT hardware, software, and various financial and operational systems used by Vince, LLC. These costs are primarily charged based upon number of users or percentage of revenue.
Corporate shared services represent the costs of corporate departments that provide services across all or several divisions of Kellwood Company. These departments provide accounting, tax, legal, collections, invoice processing, treasury, human resources and other services which are charged using percentage of revenue or other drivers that approximate the volume of usage (such as number of invoices processed).
Charges for shared facilities were related to facility and other costs, which are charged primarily based upon percentage of revenue. In fiscal 2010 and fiscal 2011, marketing costs were incurred by a centralized marketing function and were charged based upon actual usage. In fiscal 2012, third party marketing spend was charged directly to Vince, LLC, as such the charges solely represent the marketing support provided by a centralized marketing department. Retail and e-commerce support are centralized functions in which costs are charged to the divisions of Kellwood Company that utilize these direct-to-consumer channels based upon sales volume.
Management fees incurred by Kellwood Company were charged to Vince, LLC in the amounts of $350, $471, and $779 for fiscal 2010, 2011 and 2012, respectively, based upon percentage of revenue, and are recorded in other expense, net.
Balance Sheets
The Balance Sheets are comprised of assets and liabilities that are directly identified as pertaining to Vince, LLC, as of the periods presented. Any assets or liabilities that are not specifically identifiable to Vince, LLC are not presented within these financial statements, which may include certain accounts payable, other current and accrued liabilities, fixed assets, and prepaid and other balances, with the exception of the Kellwood Company debt instruments and related balances discussed above. The invested equity balance is reflective of these types of balances that were absorbed by Kellwood Company on behalf of Vince, LLC, as well as balances that were absorbed by Vince, LLC on behalf of Kellwood Company, namely the debt and related balances. See Note 8 for further discussion of the invested equity balance.
 
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(C) Fiscal Year and Fiscal Quarter :    Vince, LLC operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period ending on the Saturday closest to January 31 of the following year.
 
 	Ÿ 	 	References to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011.	
 
 	Ÿ 	 	References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012;	
 
 	Ÿ 	 	References to “fiscal year 2012” or “fiscal 2012” refer to the fiscal year ended February 2, 2013;	
 
 	Ÿ 	 	References to “first six months of fiscal 2012” refer to the six months ended July 28, 2012; and	
 
 	Ÿ 	 	References to “first six months of fiscal 2013” refer to the six months ended August 3, 2013.	
Each of fiscal years 2011 and 2010 consisted of a 52-week period and fiscal year 2012 consisted of a 53-week period.
(D) Use of Estimates :    The preparation of financial statements in conformity with GAAP requires that management 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 which affect revenues and expenses during the period reported. Estimates are adjusted when necessary to reflect actual experience. Significant estimates and assumptions may affect many items in the financial statements. These include accounts receivable allowances, valuations of goodwill and other identified intangible assets, income tax liabilities and assets and related valuation allowances, inventory obsolescence, asset impairments, and other contingencies, as well as charges for services provided by centralized Kellwood Company departments and shared facilities (as described above). Actual results may differ from those estimates and assumptions.
(E) Financial Condition and Liquidity :    Kellwood Company has substantial indebtedness after giving effect to the February 2008 acquisition by affiliates of Sun Capital Partners, Inc. (the “Acquisition”). Since the Acquisition, Kellwood Company has incurred additional debt in order to fund negative cash flows, principally due to significant cash outflows resulting from numerous restructuring activities, the significant level of interest expense arising from substantial indebtedness and significant cash outflows related to payments for acquisitions. As a wholly owned subsidiary of Kellwood Company, Vince, LLC is a borrower party under the Wells Fargo Facility, the Cerberus Term Loan, and the Sun Term Loan Agreements (defined in Notes 3 and 4 below).
The Wells Fargo Facility and Cerberus Term Loan contain certain financial covenants related to the fixed charge coverage ratio and leverage ratio, as those terms are defined in those agreements. On May 3, 2013, Kellwood Company amended the Cerberus Term Loan in anticipation of not being in compliance with the fixed charge coverage ratio covenant during fiscal 2013. Kellwood Company was in compliance with all covenants under the debt agreements for fiscal year 2012 and expects to be in compliance during fiscal 2013, as further detailed in Notes 3 and 4 to the Financial Statements.
If Kellwood Company experiences an event of default under the Wells Fargo Facility and Cerberus Term Loan, including but not limited to a failure to pay cash interest obligations under said agreements or under the indenture, or a failure to maintain, or a failure to cure a default of, the applicable fixed charge or leverage ratios under such instruments, or other lack of liquidity caused by substantial leverage and the adverse conditions in the retail and apparel market or other factors, such an event would materially and adversely affect the financial condition and operating results of Vince, LLC.
(F) Cash and Cash Equivalents :    All highly liquid short-term time deposits with original maturities of three months or less maintained under cash management activities are considered cash
 
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equivalents. The effect of foreign currency exchange rate fluctuations on cash and cash equivalents was not significant for fiscal 2010, 2011 or 2012.
(G) Accounts Receivable and Concentration of Credit Risk :    We maintain an allowance for accounts receivable estimated to be uncollectible. The activity in this allowance is summarized as follows.

 	  	2010	 	 	2011	 	 	2012	 	
Balance, beginning of year	  	$	455	  	 	$	114	  	 	$	320	  	
Provisions for bad debt expense	  	 	(224	) 	 	 	319	  	 	 	314	  	
Bad debts written off	  	 	(117	) 	 	 	(113	) 	 	 	(485	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, end of year	  	$	114	  	 	$	320	  	 	$	149	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The provision for bad debts is included in selling, general and administrative expense. Substantially all of our trade receivables are derived from sales to retailers and are recorded at the invoiced amount and do not bear interest. We perform ongoing credit evaluations of our wholesale partners’ financial condition and require collateral as deemed necessary. Account balances are charged off against the allowance when we believe the receivable will not be collected.
Accounts receivable are recorded net of allowances for expected future chargebacks and margin support from wholesale partners. It is the nature of the apparel industry that suppliers like us face significant pressure from customers in the retail industry to provide allowances to compensate for wholesale customer margin shortfalls. This pressure often takes the form of customers requiring us to provide price concessions on prior shipments as a prerequisite for obtaining future orders. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of our products at retail. To the extent our wholesale partners have more of our goods on hand at the end of the season, there will be greater pressure for us to grant markdown concessions on prior shipments. Our accounts receivable balances are reported net of expected allowances for these matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season in order to collect the receivables. We evaluate the allowance balances on a continual basis and adjust them as necessary to reflect changes in anticipated allowance activity. We also provide an allowance for sales returns based on historical return rates.
In fiscal 2010, sales to three wholesale partners each accounted for more than ten percent of our net sales. These sales represented 15.2%, 13.0% and 11.2% of fiscal 2010 net sales. In fiscal 2011, sales to three wholesale partners each accounted for more than ten percent of our net sales. These sales represented 15.1%, 14.9% and 13.9% of fiscal 2011 net sales. In fiscal 2012, sales to three wholesale partners each accounted for more than ten percent of our net sales. These sales represented 21.4%, 15.5% and 14.3% of fiscal 2012 net sales.
In fiscal 2010, accounts receivable from two wholesale partners accounted for more than ten percent of our gross accounts receivable. These receivables represented 10.7% and 10.2% of fiscal 2010 gross accounts receivable. In fiscal 2011, accounts receivable from three wholesale partners accounted for more than ten percent of our gross accounts receivable. These receivables represented 12.4%, 11.2% and 11.0% of fiscal 2011 gross accounts receivable. In fiscal 2012, accounts receivable from three wholesale partners accounted for more than ten percent of our gross accounts receivable. These receivables represented 21.4%, 13.5% and 13.5% of fiscal 2012 gross accounts receivable.
(H) Inventories :    Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out basis. The cost of inventory includes manufacturing or purchase cost as well as
 
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sourcing, transportation, duty and other processing costs associated with acquiring, importing and preparing inventory for sale. Inventory costs are included in cost of products sold at the time of their sale. Product development costs are expensed in selling, general and administrative expense when incurred. Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost.
Inventories consist of the following:

 	  	2011	 	  	2012	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Finished goods	  	$	9,838	  	  	$	18,443	  	  	$	27,739	  	
Work in process	  	 	303	  	  	 	229	  	  	 	147	  	
Raw materials	  	 	386	  	  	 	215	  	  	 	119	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total inventories	  	$	10,527	  	  	$	18,887	  	  	$	28,005	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net of reserves of:	  	$	464	  	  	$	1,247	  	  	$	1,790	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
(I) Property, Plant and Equipment :    Property, plant and equipment are stated at cost. Depreciation is computed on the straight-line method over estimated useful lives of 3 to 10 years for furniture, fixtures, and computer equipment. Leasehold improvements are amortized on the straight-line basis over the shorter of their estimated useful lives or the remaining lease term, excluding renewal terms. Capitalized software is amortized on the straight-line basis over the estimated economic useful life of the software, generally three to five years. Depreciation expense was $894, $1,102 and $1,411 for fiscal 2010, 2011 and 2012, respectively.
(J) Impairment of Long-lived Assets :    We review long-lived assets with a finite life for existence of facts and circumstances which indicate that the useful life is shorter than previously estimated or the carrying amount may not be recoverable from future operations based on undiscounted expected future cash flows. Impairment losses are then recognized in operating results to the extent discounted expected future cash flows are less than the carrying value of the asset. There were no impairment charges related to long-lived assets recorded in fiscal 2010, fiscal 2011 or fiscal 2012.
(K) Goodwill and Other Intangible Assets:     Goodwill and other indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if a triggering event occurs. We completed our annual impairment testing on our goodwill and indefinite-lived intangible assets during the fourth quarters of fiscal 2010, fiscal 2011 or fiscal 2012.
Goodwill represents the excess of the cost of acquired businesses over the fair market value of the identifiable net assets. Indefinite-lived intangible assets are primarily company-owned trademarks. As the acquisition by Kellwood Company of the net assets of Vince occurred prior to the current requirements of ASC Topic 805 Business Combinations , the additional purchase consideration paid to the former owners of Vince subsequent to the acquisition date was recorded as an addition to the purchase price, and therefore goodwill, once determined.
In September 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to the Intangibles-Goodwill and Other topic of Accounting Standards Codification (“ASC”). Under this amendment, an entity may elect to perform a qualitative impairment assessment for goodwill. If adverse qualitative trends are identified during the qualitative assessment that indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is required. “Step one” of this quantitative impairment test requires that the fair value of the reporting unit be estimated and compared to carrying amount. If the carrying amount exceeds the
 
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estimated fair value of the asset, “step two” of the impairment test is performed to calculate the impairment loss. An impairment loss is recognized to the extent the carrying amount of the reporting unit exceeds the implied fair value.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. This amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We adopted this amendment during fiscal year 2012.
In fiscal 2012, we performed a qualitative assessment on the goodwill and determined that it was more likely than not that the carrying value of the reporting unit was greater than the fair value. In fiscal 2011, we performed “step one” of the impairment test for goodwill rather than electing early adoption of the guidance noted above due to the additional capitalized contingent purchase price. We estimated the fair value of the reporting unit based on an income approach, which uses discounted cash flow assumptions. The implied fair value of the reporting unit exceeded the book value. As such, we were not required to perform “step two” of the impairment test.
In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite Lived Assets for Impairment (“ASU 2012-02”). Under this amendment, an entity may elect to perform a qualitative impairment assessment for indefinite-lived intangible assets similar to the goodwill impairment testing guidance discussed above.
An entity may pass on performing the qualitative assessment for an indefinite-lived intangible asset and directly perform “step one” of the assessment. This determination can be made on an asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods. The amendment is effective for annual and interim impairment tests for indefinite-lived intangible assets performed for fiscal years beginning after September 15, 2012. We early adopted this amendment during fiscal 2012.
In fiscal 2012, we elected to perform a qualitative assessment on indefinite-lived intangible assets and determined that it was more likely than not that the carrying value of the assets exceeded the fair value. In fiscal 2011, we performed “step one” of the impairment test for indefinite-lived intangible assets. We estimated the fair value of the indefinite-lived assets primarily based on a relief from royalty model, which uses revenue projections, royalty rates and discount rates to estimate fair value. The implied fair value of the assets exceeded the book value, as such we were not required to perform “step two” of the impairment test.
Determining the fair value of goodwill and other intangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others. It is possible that estimates of future operating results could change adversely and impact the evaluation of the recoverability of the carrying value of goodwill and intangible assets and that the effect of such changes could be material.
Definite-lived intangible assets are comprised of customer relationships and are being amortized on a straight-line basis over their useful lives of 20 years.
See Note 2 for more information on the details surrounding the goodwill and intangible assets.
(L) Deferred Financing Costs :    Deferred financing costs, such as underwriting, financial advisory, professional fees, and other similar fees are capitalized and recognized in interest expense over the contractual life of the related debt instrument using the straight-line method, as this method results in recognition of interest expense that is materially consistent with that of the effective interest method.
 
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(M) Deferred Rent and Deferred Lease Incentives:     We lease various office spaces, showrooms and retail stores. Many of these operating leases contain predetermined fixed escalations of the minimum rentals during the original term of the lease. For these leases, we recognize the related rental expense on a straight-line basis over the life of the lease and record the difference between the amount charged to operations and amounts paid as deferred rent. Certain of our retail store leases contain provisions for contingent rent, typically a percentage of retail sales once a predetermined threshold has been met. These amounts are expensed as incurred. Additionally, we received lease incentives in certain leases. These allowances have been deferred and are amortized on a straight-line basis over the life of the lease as a reduction of rent expense.
(N) Revenue Recognition :    Sales are recognized when goods are shipped in accordance with customer orders for our wholesale business and e-commerce businesses, and at the time of sale to consumer for our retail business. The estimated amounts of sales discounts, returns and allowances are accounted for as reductions of sales when the associated sale occurs. These estimated amounts are adjusted periodically based on changes in facts and circumstances when the changes become known to us. Accrued discounts, returns and allowances are included as an offset to accounts receivable in the Balance Sheets for our wholesale business. The activity in the accrued discounts, returns and allowances account is summarized as follows.

 	  	2010	 	 	2011	 	 	2012	 	
Balance, beginning of year	  	$	1,452	  	 	$	2,540	  	 	$	4,347	  	
Provision	  	 	11,736	  	 	 	17,916	  	 	 	29,400	  	
Utilization	  	 	(10,648	) 	 	 	(16,109	) 	 	 	(26,568	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, end of year	  	$	2,540	  	 	$	4,347	  	 	$	7,179	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
For our wholesale business, amounts billed to customers for shipping and handling costs are not significant. Our stated terms are FOB shipping point. There is no stated obligation to customers after shipment, other than specifically set forth allowances or discounts that are accrued at the time of sale. The rights of inspection or acceptance contained in certain sales agreements are limited to whether the goods received by our wholesale partners are in conformance with the order specifications.
(O) Marketing and Advertising :    We provide cooperative advertising allowances to certain of our customers. These allowances are accounted for as reductions in sales as discussed in “Revenue Recognition” above. Production expense related to company-directed advertising is deferred until the first time at which the advertisement runs. Communication expense related to company-directed advertising is expensed as incurred. Marketing and advertising expense was $2,610, $3,609 and $2,591 in fiscal 2010, 2011 and 2012, respectively. There were not significant amounts of deferred production expenses associated with company-directed advertising at January 29, 2011, January 28, 2012 or February 2, 2013.
(P) Income Taxes :    Our operating results have historically been included in the U.S. federal and state income tax returns for Kellwood Company. Provision for income taxes in the financial statements have been determined on a stand-alone basis (i.e., on a “separate return” basis). As such, we are required to assess the realization of our net deferred tax assets, the need for a valuation allowance and judgments on the recognition of tax benefits based on our own facts and circumstances and exclude from that assessment any impact of the overall results of Kellwood Company. We believe the assumptions underlying the allocation of income taxes are reasonable; however the amounts allocated for income taxes in the financial statements are not necessarily indicative of the income taxes that would have been recorded had Vince, LLC been a separate, stand-alone entity during the periods presented.
 
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We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria. We recognize tax positions in the Balance Sheets as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts. Accrued interest and penalties related to unrecognized tax benefits are included in provision for income taxes in the Statements of Operations. See Note 7 for further discussion.
(Q) New Accounting Standards :    In September 2011 and July 2012, the FASB issued amendments to the Intangibles-Goodwill and Other topic of ASC. Under these amendments, an entity may elect to perform a qualitative impairment assessment for goodwill and indefinite-lived intangible assets, as discussed above. We adopted the provisions of these new standards during fiscal 2012.
Note 2. Goodwill and Intangible Assets
Goodwill balances by segment and changes therein subsequent to the January 29, 2011 Balance Sheet are as follows (in thousands):

 	  	Gross Goodwill	 	  	Accumulated
Impairment	 	 	Net Goodwill	 	
Balance as of January 29, 2011	  	$	59,554	  	  	$	(46,942	) 	 	$	12,612	  	
Additional contingent purchase price	  	 	51,134	  	  	 	—	  	 	 	51,134	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Balance as of January 28, 2012	  	 	110,688	  	  	 	(46,942	) 	 	 	63,746	  	
Additional contingent purchase price	  	 	—	  	  	 	—	  	 	 	—	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Balance as of February 2, 2013	  	 	110,688	  	  	 	(46,942	) 	 	 	63,746	  	
Additional contingent purchase price	  	 	—	  	  	 	—	  	 	 	—	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Balance as of August 3, 2013 (unaudited)	  	$	110,688	  	  	$	(46,942	) 	 	$	63,746	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Identifiable intangible assets are as follows:

 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of January 28, 2012:	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	11,970	  	  	$	(2,380	) 	 	$	9,590	  	
Indefinite-lived intangible assets:	  				  				 				
Trademark	  	 	101,850	  	  	 	—	  	 	 	101,850	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	113,820	  	  	$	(2,380	) 	 	$	111,440	  	

													
 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of February 2, 2013:	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	11,970	  	  	$	(2,978	) 	 	$	8,992	  	
Indefinite-lived intangible assets:	  				  				 				
Trademark	  	 	101,850	  	  	 	—	  	 	 	101,850	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	113,820	  	  	$	(2,978	) 	 	$	110,842	  	

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 	  	Gross Amount	 	  	Accumulated
Amortization	 	 	Net Book
Value	 	
Balance as of August 3, 2013 (unaudited)	  				  				 				
Amortizable intangible assets:	  				  				 				
Customer relationships	  	$	11,970	  	  	$	(3,278	) 	 	$	8,692	  	
Indefinite-lived intangible assets:	  				  				 				
Trademark	  	 	101,850	  	  	 	—	  	 	 	101,850	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	113,820	  	  	$	(3,278	) 	 	$	110,542	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Amortization of identifiable intangible assets was $598, $599 and $598 for fiscal 2010, 2011 and 2012, respectively. Amortization expense for the six months ended July 28, 2012 and August 3, 2013 (unaudited) was $299 and $300, respectively. Amortization expense for each of the fiscal years 2013 to 2017 is expected to be as follows (in thousands):

 	  	Future
Amortization	 	
2013	  	$	598	  	
2014	  	 	598	  	
2015	  	 	598	  	
2016	  	 	598	  	
2017	  	 	598	  	
	  	 	 	 	
Total next 5 fiscal years	  	$	2,990	  	
	  	 	 	 	
Identifiable indefinite-lived intangible assets represent the Vince trademark. No impairments of the Vince trademark were recorded as a result of our annual asset impairment tests during fiscal years 2010, 2011 or 2012. In fiscal 2011 and 2010, the fair value of the trademark was determined utilizing the relief from royalty method. The relief from royalty method calculates fair value using a royalty savings method, which measures the value by estimating cost savings. Key assumptions include revenue projections, royalty rates and discount rates for the business. In fiscal 2012, we performed the qualitative assessment on the Vince Trademark as allowed by ASU 2012-02 and determined that it was not more likely than not that the carrying value exceeded the fair value of the asset.
Additionally, there were no impairments recorded as a result of our annual goodwill impairment test during fiscal 2010, 2011 or 2012. In fiscal 2011 and 2010, we utilized an income approach to estimate the fair value of Vince and no impairment to goodwill was recorded as a result. This is considered a Level 3 fair value measure as management forecasts are a significant unobservable input utilized in the analyses. In fiscal 2012, we used a qualitative analysis to assess the goodwill and determined that it was not more likely than not that the fair value was less than the carrying value, as allowed by the Intangible—Goodwill and Other Topic of ASC. No events occurred during the first six months of fiscal 2013 that would trigger an impairment test to be performed on our goodwill or other intangible assets.
It is possible that our estimates of future operating results could change adversely and impact the evaluation of the recoverability of the carrying value of intangible assets and that the effect of such changes on our Financial Statements could be material. While we believe that the current recorded carrying value of our intangible assets is not impaired, there can be no assurance that a significant non-cash write down or write-off will not be required in the future.
In connection with the Kellwood Company acquisition of certain net assets from CRL Group, LLC in 2006, owner of the Vince ® brand and trademark, additional cash purchase consideration was paid based upon achievement of certain specified financial performance targets for each of the five full years after the acquisition (2007 through 2011) and the cumulative performance from 2007 to 2011.
 
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The additional consideration earned in fiscal 2011 and 2010 was $51,134 and $8,137, respectively. We paid $50,328 of the fiscal 2011 consideration during the fourth quarter of fiscal 2011 and paid the remaining consideration during the second quarter of fiscal 2012. The fiscal 2010 additional cash consideration was paid during first quarter of fiscal 2011.
Note 3. Short-term borrowings
Wells Fargo Facility
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as agent, and lenders from time to time, to provide the Borrowers with a non-amortizing senior revolving credit facility (the “Wells Fargo Facility”). The Wells Fargo Facility had aggregate lending commitments of $155,000 as of February 2, 2013. Vince, LLC is a borrower party under the Credit Agreement.
The Wells Fargo Facility terminates at the earliest to occur of (a) October 19, 2016, (b) 90 days prior to the scheduled December 31, 2014, maturity date of the 12.875% Notes (as defined in Note 4) (including any extension effective on or prior to such 90th day prior to such scheduled maturity date) or (c) 90 days prior to the scheduled maturity date of the Cerberus Term Loan (as defined in Note 4) (including any extension effective on or prior to such 90th day prior to such scheduled maturity date). The amount which the Borrowers may borrow from time to time under the Wells Fargo Facility is determined on the basis of a borrowing base formula that is a percentage of Kellwood Company and subsidiaries accounts receivable and inventory that meet eligibility criteria specified in the Credit Agreement, but in no case more than the aggregate lending commitments of the participating lenders. All borrowings under the Wells Fargo Facility bear interest at a rate per annum equal to an applicable margin (ranging from 2.5%-3.0% per annum for LIBOR Revolver Loans (as defined in the Credit Agreement) and 1.25%-1.75% for Base Rate Loans (as defined in the Credit Agreement) based on average availability under the Credit Agreement) plus, at the Borrowers’ election, LIBOR or a Base Rate as defined in the Credit Agreement. In addition to paying interest, the Borrowers will pay a periodic commitment fee to the lenders under the Credit Agreement based on the amount of unused availability under the borrowing base formula. The Wells Fargo Facility is secured by a first-priority security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory, and intellectual property. The Credit Agreement contains certain customary representations, warranties, provisions and restrictions. The Credit Agreement requires that the Borrowers maintain a fixed charge coverage ratio of at least 1:1 during any Covenant Testing Period (as defined in the Credit Agreement) which is triggered when excess availability is below 12.5% of the aggregate commitments under the Wells Fargo Facility (the “Covenant Testing Trigger Date”). The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the Credit Agreement) (with certain addbacks as defined in the Credit Agreement for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, management fees, as well as certain other costs and charges) minus capital expenditures and certain distributions; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash up to a certain amount, calculated over the trailing four fiscal quarters. If the covenants are not met, a cash dominion period will go into effect whereby the agent has the ability to direct the disposition of the balances in controlled deposit accounts. The cash dominion period will expire when availability is over 12.5% of the aggregate commitments under the Wells Fargo Facility for a period of 90 consecutive days.
On March 23, 2012, the Credit Agreement was amended to modify the Covenant Testing Period such that it is now triggered when excess availability is below $5,000 and triggered the cash dominion period, as defined in the Credit Agreement. This amendment was entered into in consideration for a
 
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guaranty of payment of obligations under the Credit Agreement and a $20,000 letter of credit to the benefit of Wells Fargo Bank, National Association, as agent, issued by an affiliate of Sun Capital Partners, Inc.
On April 20, 2012, the Credit Agreement was amended to extend the modification to the Covenant Testing Period to be in effect until March 21, 2014 unless the guaranty described above is no longer in effect or the full face amount of the letter of credit described above is no longer available to be drawn. The guaranty will be released, the letter of credit returned and the trigger for the Covenant Testing Period will return to the pre-amendment level when availability is above $35,000 for 90 consecutive days and is projected to remain above $25,000 through the remaining term of the Credit Agreement.
At February 2, 2013, the maximum capacity on the Wells Fargo Facility was $110,838 and there were borrowings outstanding and letters of credit outstanding of $79,783 and $13,304, respectively. At August 3, 2013, the maximum capacity on the Wells Fargo Facility was $146,646 and there were borrowings outstanding and letters of credit outstanding of $115,601 and $12,569, respectively. At February 2, 2013 and August 3, 2013 (unaudited), availability under the Wells Fargo Facility was $17,751 and $18,476, respectively. Kellwood Company was in compliance with all provisions as of all periods presented.
BMO Facility
On September 12, 2011 Kellwood Company, as borrower, and certain of its domestic subsidiaries, as guarantors, entered into a Loan Authorization Agreement with BMO Harris Financing, Inc. and Bank of Montreal, as lender, (the “BMO Facility”) for a revolving credit facility up to a maximum credit line of $14,900 (the “BMO Obligations”). The BMO Facility was guaranteed by an affiliate of Sun Capital Partners, Inc. and was subordinated in payment and security interest to the Amended and Restated Credit Facility, the 12.875% Notes, the Term A Obligations, the Term B Obligations, the Term C Obligations and the Term D Obligations (all as defined below). Interest accrued on the BMO Obligations at a rate equal to the greater of (i) the Reference Bank’s Prime Rate plus 2% per annum or (ii) LIBOR plus 4.75% per annum. Such interest was to be paid quarterly either in cash or with PIK Interest, at the option of Kellwood Company. The BMO Obligations were payable on demand with a 10-day grace period and was used for liquidity, working capital and other general corporate purposes. Vince, LLC would have been a borrower party under the BMO Facility, had it been in existence.
On October 19, 2011, Kellwood Company terminated the BMO Facility and the Amended and Restated Credit Facility and entered into certain debt agreements further described above. As a result of the termination, a non-cash charge of $1,747 was recorded in interest expense, net, related to the write-off of deferred debt issuance costs of the Amended and Restated Credit Facility.
Note 4. Long-Term Debt
Long-term debt consisted of the following as of January 28, 2012, February 2, 2013 and August 3, 2013 (in thousands):

 	  	January 28,
2012	 	  	February 2,
2013	 	  	August 3,
2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Cerberus Term Loan	  	$	55,000	  	  	$	45,431	  	  	$	45,660	  	
Term A Obligations	  	 	15,604	  	  	 	17,252	  	  	 	18,118	  	
Term B Obligations	  	 	24,884	  	  	 	27,507	  	  	 	28,889	  	
Term C Obligations	  	 	16,231	  	  	 	17,945	  	  	 	18,846	  	
Term D Obligations	  	 	10,488	  	  	 	11,595	  	  	 	12,177	  	
Term E Obligations	  	 	—	  	  	 	5,601	  	  	 	5,937	  	
Term F Obligations	  	 	—	  	  	 	27,344	  	  	 	28,989	  	
Term G Obligations	  	 	—	  	  	 	—	  	  	 	5,059	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	122,207	  	  	$	152,675	  	  	$	163,675	  	

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Cerberus Term Loan
On October 19, 2011, Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), entered into a Term Loan Agreement (the “Term Loan Agreement”) with Cerberus Business Finance, LLC (the “Agent”), as agent and the lenders from time to time party thereto. The Term Loan Agreement provides the Borrowers with a non-amortizing secured Term Loan in an aggregate amount of $55,000 (the “Cerberus Term Loan”). Vince, LLC is a borrower party under the Term Loan Agreement. On December 31, 2012, Kellwood Company sold a wholly-owned subsidiary, of which $10,000 in proceeds was remitted to the Agent as prepayment on the Cerberus Term Loan.
The Cerberus Term Loan terminates at the earliest to occur of (a) October 19, 2015, (b) the date on which the Wells Fargo Facility (as defined above in Note 3) has been paid in full and all commitments thereunder have been terminated or (c) 60 days prior to the scheduled December 31, 2014, maturity date of the 12.875% Notes (as defined below) (including any extensions thereof agreed to after October 19, 2011). All borrowings under the Cerberus Term Loan bear interest, from the date of the agreement until the effective date of the amendment described below at a rate per annum equal to an applicable margin (10.25%-11.25% per annum for LIBOR Rate Loans (as defined in the Term Loan Agreement) and 8.25%-8.75% for Reference Rate Loans (as defined in the Term Loan Agreement) based upon leverage and income tests under the Term Loan Agreement) plus, at the Borrowers’ election, LIBOR or a Reference Rate as defined in the Term Loan Agreement. Beginning on April 20, 2012 Kellwood Company, entered into an amendment which provided for a portion of interest equal to 1% per annum to be paid-in-kind and added to the principal amount of such term loans. The Cerberus Term Loan is secured by a security interest in substantially all of the assets of the Borrowers, principally consisting of accounts receivable, inventory and intellectual property, which security interest is contractually subordinated to security interests of the lenders under the Credit Agreement (as defined above in Note 3). The Term Loan Agreement contains certain customary representations, warranties, provisions and restrictions. The Term Loan Agreement requires that the Borrowers maintain a minimum fixed charge coverage ratio as of each fiscal quarter end prior to the effective date of the amendment described below ranging from 0.14:1—1.28:1 through the first quarter of fiscal 2013, and 1.10:1, 1.175:1, and 1.25:1 for the second, third and fourth quarters of fiscal 2013, respectively. The minimum fixed charge coverage ratio remains at 1.25:1 for fiscal quarters subsequent to 2013.
The fixed charge ratio is defined as the ratio of Consolidated EBITDA (as defined in the Term Loan Agreement) (with certain addbacks as defined in the amended Term Loan Agreement for certain restructuring charges, startup losses in newly developed brands, costs incurred in certain acquisitions, as well as certain other costs and charges) minus capital expenditures and certain distributions and management fees; to fixed charges, defined as consolidated net interest expense paid or payable in cash, scheduled principal payments on debt in cash and certain earnout payments paid in cash, excluding earnout payments related to the Company’s Vince brand for the 2011 fiscal year, up to a certain amount, calculated over the trailing four fiscal quarters. An amendment on May 3, 2013 allows Kellwood Company to exclude certain types of capital expenditures in the calculation of the minimum fixed charge coverage ratio for the second, third, and fourth quarters of fiscal 2013, not to exceed $7,500 in total. The Term Loan Agreement also requires that the Borrowers maintain a leverage ratio as defined in the Term Loan Agreement and ranging from 2.44:1—7.77:1 during the life of the Cerberus Term Loan. The leverage ratio is defined as the ratio of indebtedness secured by a lien on any collateral (including the debt under the Credit Agreement and Cerberus Term Loan, but excluding the debt under the Sun Term Loan Agreements (as defined below) and the 12.875% Notes (as defined below)), divided by Consolidated EBITDA (as defined in the Term Loan Agreement) for the trailing four fiscal quarters.
On January 26, 2012, Kellwood Company obtained a waiver to the Cerberus Term Loan until the end of the first quarter of fiscal 2012 (the “Waiver Period”), as it anticipated not being in compliance
 
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with the fixed charge coverage ratio and the leverage ratio covenants as of January 28, 2012. In conjunction with this waiver Kellwood Company, paid the Agent a $75 waiver fee and an affiliate of Sun Capital Partners, Inc. provided the Agent with a $10,000 letter of credit. The covenants were amended on April 20, 2012 prior to the end of the Waiver Period, at which time the $10,000 letter of credit was also released. On May 3, 2013, Kellwood Company amended the Cerberus Term Loan in anticipation of not being in compliance with the fixed charge coverage ratio covenant during the 2013 fiscal year. This amendment modified the definition of the fixed charge coverage ratio to allow Kellwood Company to exclude certain types of capital expenditures in the calculation of the minimum fixed charge coverage ratio for the second, third, and fourth quarters of fiscal 2013, as described above. Additionally, this amendment modified the minimum fixed charge coverage ratios starting in the second quarter of fiscal 2013.
At February 2, 2013 and August 3, 2013 (unaudited), Kellwood Company was in compliance with all provisions of the amended Cerberus Term Loan.
Term A/B/C/D/E/F/G Obligations
Kellwood Company and certain of its domestic subsidiaries, as borrowers (the “Borrowers”), affiliates of Sun Capital Partners, Inc., as lenders, and Sun Kellwood Finance, LLC, as collateral agent, have entered into various agreements (collectively the “Sun Term Loan Agreements”) to provide for Term Loans A/B/C/D/E/F/G (together the “Sun Term Loan Obligations”).
On July 23, 2009, the lenders made certain Term A loans with an original principal amount of $12,168, the proceeds of which were used by the Borrowers to fund payment of the principal amounts outstanding, plus accrued and unpaid interest on the 7.875% 1999 Debentures due July 15, 2009 that were not tendered as part of the exchange offer for the 12.875% Notes (defined below). On January 4, 2011, the lenders made certain Term B loans with an original principal amount of $22,393, the proceeds of which were used by the Borrowers solely to finance Kellwood Company’s acquisition of Rebecca Taylor. On March 18, 2011, the lenders made certain Term C loans with an original principal amount of $14,900, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers. On August 5, 2011, the lenders made certain Term D loans with an original principal amount of $10,000, the proceeds of which were used to fund all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of such assets or the acquisition of capital stock of any person owning such assets) used in the business of the Borrowers.
On April 20, 2012, the lenders made certain Term E loans with an original principal amount of $5,100, the proceeds of which were used to finance costs and expenses and earnout payments in respect of certain acquisitions consummated by the Borrowers, as well as certain Term F loans with an original principal amount of $24,900, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers. On June 28, 2013 (unaudited), the lenders made certain Term G loans with an original principal amount of $5,000, the proceeds of which were used to fund working capital, capital expenditures and other general corporate purposes of the Borrowers.
The Sun Term Loan Agreements conform with the major non-economic terms of the Credit Agreement and the Term Loan Agreement, including the representations, warranties and covenants. The Sun Term Loan Agreements provide a termination date of the earlier of (i) January 19, 2017 or (ii) the date on which the Cerberus Term Loan has been terminated; provided that, if the Cerberus Term Loan is extended, the stated maturity date set forth in (i) above shall be extended by a period of the same duration. The Sun Term Loan Obligations bear interest at 10% per annum (or 12% per annum in the case of the Term E loans, the Term F loans and the Term G loans) that will be added to the principal amounts
 
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of the Sun Term Loan Obligations. If the availability under the Credit Agreement is not less than $45,000, Kellwood Company may pay interest at a rate of 5% per annum in cash (6% in the case of the Term E loans, Term F Loans and the Term G loans). No cash interest has been paid on the Sun Term Loan Agreements. The Sun Term Loan Agreements are secured by a security interest in substantially all of the assets of the Borrowers, which security interest is contractually subordinated to the security interests of the lenders under the Credit Agreement and the Term Loan Agreement.
Principal amounts of the notes payable and long-term debt outstanding at February 2, 2013 include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK
Interest	 	  	Total	 	
Cerberus Term Loan	  	$	45,000	  	  	$	431	  	  	$	45,431	  	
Term A Obligations	  	 	12,168	  	  	 	5,084	  	  	 	17,252	  	
Term B Obligations	  	 	22,393	  	  	 	5,114	  	  	 	27,507	  	
Term C Obligations	  	 	14,900	  	  	 	3,045	  	  	 	17,945	  	
Term D Obligations	  	 	10,000	  	  	 	1,595	  	  	 	11,595	  	
Term E Obligations	  	 	5,100	  	  	 	501	  	  	 	5,601	  	
Term F Obligations	  	 	24,900	  	  	 	2,444	  	  	 	27,344	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	134,461	  	  	$	18,214	  	  	$	152,675	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Principal amounts of the notes payable and long-term debt outstanding at August 3, 2013 include the following (in thousands):

 	  	Outstanding
Principal	 	  	Capitalized
PIK
Interest	 	  	Total	 	
Cerberus Term Loan	  	$	45,000	  	  	$	660	  	  	$	45,660	  	
Term A Obligations	  	 	12,168	  	  	 	5,950	  	  	 	18,118	  	
Term B Obligations	  	 	22,393	  	  	 	6,496	  	  	 	28,889	  	
Term C Obligations	  	 	14,900	  	  	 	3,946	  	  	 	18,846	  	
Term D Obligations	  	 	10,000	  	  	 	2,177	  	  	 	12,177	  	
Term E Obligations	  	 	5,100	  	  	 	837	  	  	 	5,937	  	
Term F Obligations	  	 	24,900	  	  	 	4,089	  	  	 	28,989	  	
Term G Obligations	  	 	5,000	  	  	 	59	  	  	 	5,059	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	139,461	  	  	$	24,214	  	  	$	163,675	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
The 12.875% Notes, which totaled $143,188 and $146,768 in aggregate principal amount (including capitalized PIK interest) as of February 2, 2013 and August 3, 2013 (unaudited), respectively, are guaranteed by various Kellwood Company subsidiaries on a secured basis, including Vince, LLC. This security interest is contractually subordinated to security interests of lenders under the Wells Fargo Facility, the Cerberus Term Loan and the Sun Term Loan Agreements. The 12.875% Notes contain certain customary provisions that, among other things, limit the ability of Kellwood Company and its restricted subsidiaries, which include Vince, LLC, to incur additional indebtedness, make certain restricted payments, dispose of assets or redeem or repurchase capital stock or prepay subordinated indebtedness. In the event that Kellwood Company fails to satisfy any of its obligations thereunder, Vince, LLC, as a subsidiary guarantor, shall be jointly and severally liable to satisfy such obligations (along with the other guarantors), until such time as its guarantee is discharged or released.
Note 5. Fair Value
The recorded amounts of cash, receivables, accounts payable and short-term debt approximate their fair values at January 28, 2012 and February 2, 2013, due to the short maturity of these instruments. The estimated fair value of our long-term debt at January 28, 2012 and February 2, 2013 approximates the carrying value.
 
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Note 6. Leases
We lease substantially all of our office space, retail stores and certain machinery and equipment under operating leases having remaining terms up to twelve years, excluding renewal terms. Most of our real estate leases contain covenants that require us to pay real estate taxes, insurance, and other executory costs. Certain of these leases require contingent rent payments, kick-out clauses and/or opt-out clauses, based on the operating results of the retail operations utilizing the leased premises. Rent under leases with scheduled rent changes or lease concessions are recorded on a straight-line basis over the lease term. Rent expense under all operating leases was $4,295, $5,567 and $7,448 for 2010, 2011 and 2012, respectively.
The future minimum lease payments under operating leases at February 2, 2013 were as follows:

2013	  	$	6,612	  	
2014	  	 	6,750	  	
2015	  	 	6,850	  	
2016	  	 	6,422	  	
2017	  	 	6,080	  	
Thereafter	  	 	17,335	  	
	  	 	 	 	
Total minimum lease payments	  	$	50,049	  	
	  	 	 	 	
Note 7. Income Taxes
The provision (benefit) for income taxes consists of the following:

 	  	Fiscal Year Ended
January 29, 2011	 	  	Fiscal Year Ended
January 28, 2012	 	  	Fiscal Year Ended
February 2, 2013	 	
Current:	  				  				  				
Federal	  	$	2,208	  	  	$	3,932	  	  	$	5,819	  	
State	  	 	635	  	  	 	1,059	  	  	 	1,559	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current	  	 	2,843	  	  	 	4,991	  	  	 	7,378	  	
Deferred:	  				  				  				
Federal	  	 	2,685	  	  	 	5,075	  	  	 	(361	) 	
State	  	 	395	  	  	 	746	  	  	 	(53	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total deferred	  	 	3,080	  	  	 	5,821	  	  	 	(414	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total provision for income taxes	  	$	5,923	  	  	$	10,812	  	  	$	6,964	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
$1,645 of income tax benefit was recorded in invested equity during 2012 related to an increase in tax basis resulting from a disallowed loss that was reallocated from other businesses of Kellwood Company to Vince, LLC. This is included as part of net distributions to Kellwood Company within the statement of Invested Equity for fiscal 2012. Income before provision for income taxes is from domestic sources for all years.
Current income taxes are the amounts payable under the respective tax laws and regulations on each year’s earnings. A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:

 	  	Fiscal Year Ended
January 29, 2011	 	 	Fiscal Year Ended
January 28, 2012	 	 	Fiscal Year Ended
February 2, 2013	 	
Statutory rate	  	 	34.0	% 	 	 	34.0	% 	 	 	34.0	% 	
State taxes, net of federal benefit	  	 	5.4	% 	 	 	5.2	% 	 	 	5.6	% 	
Other	  	 	0.2	% 	 	 	0.1	% 	 	 	0.7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	39.6	% 	 	 	39.3	% 	 	 	40.3	% 	

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Deferred income tax assets and liabilities consisted of the following:

 	  	January 28, 2012	 	 	February 2, 2013	 	
Deferred tax assets:	  				 				
Depreciation and amortization	  	$	4,431	  	 	$	3,652	  	
Employee related costs	  	 	513	  	 	 	1,811	  	
Allowance for asset valuations	  	 	883	  	 	 	1,487	  	
Accrued expenses	  	 	5	  	 	 	1,118	  	
Long-term debt	  	 	1,674	  	 	 	4,782	  	
Other	  	 	8	  	 	 	13	  	
	  	 	 	 	 	 	 	 	
Total deferred tax assets	  	 	7,514	  	 	 	12,863	  	
Deferred tax liabilities:	  				 				
Depreciation and amortization	  	 	(9,616	) 	 	 	(11,605	) 	
	  	 	 	 	 	 	 	 	
Total deferred tax liabilities	  	 	(9,616	) 	 	 	(11,605	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax assets (liabilities)	  	$	(2,102	) 	 	$	1,258	  	
	  	 	 	 	 	 	 	 	
Included in:	  				 				
Prepaid expenses and other current assets	  	$	983	  	 	$	2,703	  	
Deferred income taxes and other	  	 	(3,085	) 	 	 	(1,445	) 	
	  	 	 	 	 	 	 	 	
Net deferred income tax assets (liabilities)	  	$	(2,102	) 	 	$	1,258	  	
	  	 	 	 	 	 	 	 	
A deemed change of ownership occurred in 2008 under Section 382 of the U.S. tax code resulting in certain built in losses to be subject to an annual limitation of $0. Since the realization of these benefits is remote, the associated deferred tax assets have been written down to zero.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

 	  	2010	 	 	2011	 	 	2012	 	
Beginning balance	  	$	325	  	 	$	701	  	 	$	399	  	
Increases for tax positions in current year	  	 	700	  	 	 	395	  	 	 	1,693	  	
Decreases for tax positions in prior years	  	 	(324	) 	 	 	(290	) 	 	 	(181	) 	
Lapse in statute of limitations	  	 	0	  	 	 	(407	) 	 	 	(216	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	701	  	 	$	399	  	 	$	1,695	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
As of January 28, 2012 and February 2, 2013, no unrecognized tax benefits would impact our effective tax rate if recognized. It is reasonably possible that within the next 12 months we could have the statute of limitations expire in various jurisdictions. Should these events occur, our unrecognized tax benefits could be reduced by up to $321.
We include accrued interest and penalties on underpayments of income taxes in our income tax provision. As of January 28, 2012 and February 2, 2013, we had interest and penalties accrued on our Balance Sheets of $75 and $89, respectively. Net interest and penalty provisions of $11, $4 and $9 were recognized in our Statements of Operations for the years ended January 29, 2011, January 28, 2012, and February 2, 2013, respectively. Interest is computed on the difference between the tax position recognized net of any unrecognized tax benefits and the amount previously taken or expected to be taken in our tax returns.
With limited exceptions, we are no longer subject to examination for U.S. federal and state income tax for 2007 and prior.
 
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During the first quarter of fiscal 2013 (unaudited), Kellwood Company sold a non-Vince trademark that resulted in a disallowed tax loss, of which a portion was allocated to the basis of the Vince intangible assets. This resulted in an increase to Vince, LLC’s deferred tax assets of $22,603, with the offset recorded to Invested Equity.
Our effective tax rate for continuing operations for the six months ended July 28, 2012 and August 3, 2013 (unaudited) was 40.1% and 39.3%, respectively. The rates for the six months ended July 28, 2012 and August 3, 2013 differed from the statutory rate of 34% primarily due to state taxes for the periods presented.
Note 8. Related Party Transactions
Transactions with Kellwood Company
Our results of operations include charges for the use of services provided by centralized Kellwood departments and shared facilities. These costs were charged upon the actual cost incurred, without mark-up. The charges to Vince, LLC may not be representative of what the costs would have been had we been operated separately from the Kellwood Company during the periods presented, however, we believe the amounts charged are representative of incremental cost to Kellwood Company to provide these services to us. In future periods we will continue to use certain of these services, such as distribution, information technology and back office support, from Kellwood Company as part of a shared services agreement.
During the years ended January 29, 2011, January 28, 2012, and February 2, 2013 and the first six months of fiscal 2013, Kellwood Company provided all cash management functions on behalf of Vince, LLC through a centralized treasury function. Substantially all of the cash balances of Vince, LLC are swept to Kellwood Company on a daily basis, where the cash is managed and invested by Kellwood Company. As a result, all costs charged to Vince, LLC from Kellwood Company are transacted through the centralized treasury function and are deemed to have been paid by us to Kellwood Company, in cash, during the period in which the charges are recorded. In addition, all of our cash receipts are advanced to Kellwood Company upon receipt. The invested equity balance recorded on the Balance Sheets is reflective of the accumulated cash disbursements made by Kellwood Company on behalf of Vince, LLC, net of cash receipts advanced to Kellwood Company by Vince, LLC, during the period. We consider all transactions with Kellwood Company to be financing activities, which are presented as one net amount within the Statements of Cash Flows.
The invested equity balance for Vince, LLC may not be indicative of the capital structure that Vince, LLC would have required had it been a stand-alone entity during the periods presented as there was no independent financing. Any contributions from or distributions to Kellwood Company were recorded at cost, without mark-up. Accordingly, no interest expense is charged or allocated between Vince, LLC and Kellwood Company based upon this balance.
From time to time, Kellwood Company posts letters of credit on behalf of Vince, LLC, primarily related to leased facilities. The outstanding letters of credit related to Vince, LLC totaled $352, $995 and $847 as of January 29, 2011, January 28, 2012 and February 2, 2013, respectively.
Vince Earnout Agreement
In connection with the acquisition of the Vince business, Kellwood Company entered into an agreement with CRL Group, LLC providing for contingent earnout payments as additional cash purchase consideration based upon the achievement of specified performance targets. Rea Laccone, a former Chief Executive Officer and Chief Creative Officer of the Vince brand, is a member of the CRL Group, LLC. The agreement provided for the payment of contingent annual earnout payments to CRL
 
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Group, LLC for five periods between fiscal 2007 and fiscal 2011, as well as a cumulative contingent payment at the end of the agreement period. Additional consideration of $4,475, $58,465, and $806 was paid in fiscal 2010, fiscal 2011, and fiscal 2012, respectively. All consideration was recorded as an adjustment to the goodwill balance in the fiscal year it was earned; see Note 2 for a rollforward of the goodwill balance. As of January 28, 2012, we reported $806 within other accrued contingent purchase price on our Balance Sheet.
Kellwood Company Indebtedness to Sun Capital Partners, Inc. 
Kellwood Company has substantial indebtedness to Sun Capital Partners, Inc. (“Sun Capital”) to which Vince, LLC is a borrower party. Kellwood Company’s debt obligations to Sun Capital under the Sun Term Loan Agreements (as defined in Note 4) totaled $107,244 and $118,015 as of February 2, 2013 and August 3, 2013 (unaudited), respectively. These obligations were reported within long-term debt on the Balance Sheets as of the respective periods and are comprised of both principal and capitalized PIK interest. See Note 4 for additional discussion on the terms of these agreements.
Management Fees
Kellwood Company pays management fees to Sun Capital Partners Management V, LLC (“Sun Capital Management”) under a Management Services Agreement. Under this agreement, Sun Capital Management provides Kellwood Company with consulting and advisory services, including services relating to financing alternatives, financial reporting, accounting and management information systems. In exchange, Kellwood Company reimburses Sun Capital Management for reasonable out-of-pocket expenses incurred in connection with providing consulting and advisory services, additional and customary and reasonable fees for management consulting services provided in connection with corporate events, and also pays an annual management fee. Kellwood Company charged Vince, LLC a portion of these fees incurred in the amounts of $350, $478, $779 and $250 for fiscal 2010, fiscal 2011, fiscal 2012 and the six months ended August 3, 2013 (unaudited), respectively. These amounts were recorded in in other expense, net within the Statements of Operations.
Upon the consummation of certain corporate events involving Kellwood Company or its direct or indirect subsidiaries (including Vince, LLC), Kellwood Company is required to pay Sun Capital Management a transaction fee in an amount equal to 1% of the aggregate consideration paid to or by Kellwood Company and any of its direct or indirect subsidiaries or stockholders.
Upon consummation of this offering, Vince, LLC will no longer incur management fees payable to Sun Capital Management, as the obligations under the related Management Services Agreement will be terminated or remain with Kellwood Company. We will enter into a services agreement with Sun Capital Management, pursuant to which we will agree to reimburse Sun Capital Management for out-of-pocket expenses incurred in connection with providing consulting services to us.
Note 9. Contingencies
We are currently party to various legal proceedings. While management, including internal counsel, currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse impact on our financial position or results of operations, litigation is subject to inherent uncertainties.
Note 10. Segment and Geographical Financial Information
Vince is a prominent, high-growth contemporary apparel brand known for its modern, effortless style and everyday luxury essentials. We operate and manage our business by distribution channel and have identified two reportable segments, as further described below. These segments represent activities driven by distribution channels for which discrete financial information is readily available and
 
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utilized by our Chief Operating Decision Maker (“CODM”) to evaluate each segment’s performance on a regular basis. We considered both similar and dissimilar economic characteristics, internal reporting and management structures, as well as products, customers, and supply chain logistics to identify the following reportable segments:
 
 	Ÿ 	 	Wholesale segment – consists of our operations to distribute products to premier department stores and specialty stores in the United States and select international markets.	
 
 	Ÿ 	 	Direct-to-consumer segment – consists of our operations to distribute products directly to the consumer through our branded full-price specialty retail stores, outlet stores, and e-commerce platform.	
Segment performance is evaluated by the Company’s CODM based on Adjusted EBITDA, defined as net earnings before interest expense, provision for income taxes, depreciation and amortization. Unallocated corporate expenses are comprised of selling, general, and administrative expenses attributable to corporate and administrative activities, and other charges that are not directly attributable to our operating segments. Unallocated corporate assets are comprised of capitalized debt placement costs, the carrying values of our goodwill and unamortized trademark, and other assets that will be utilized to generate revenue for both of our reportable segments.
Our wholesale segment sells apparel to our direct-to-consumer segment at cost. The wholesale intercompany sales of $3,905, $6,027, and $9,907 have been excluded from the net sales totals presented below for fiscal 2010, fiscal 2011, and fiscal 2012, respectively. Wholesale intercompany sales of $4,282 and $5,973 have been excluded from the net sales totals presented for the first six months of fiscal 2012 and fiscal 2013 (unaudited), respectively. Furthermore, as intercompany sales are sold at cost, no intercompany profit is reflected in Adjusted EBITDA or income before provision for income taxes for the three periods presented below.
Summary information for our operating segments is presented below (in thousands).

 	  	Fiscal Year	 	 	Six Months Ended	 	
 	  	2010	 	 	2011	 	 	2012	 	 	July 28,
2012	 	 	August 3,
2013	 	
 	  	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Net Sales	  				 				 				 				 				
Wholesale	  	$	95,798	  	 	$	151,921	  	 	$	203,107	  	 	$	78,064	  	 	$	92,551	  	
Direct-to-consumer	  	 	15,694	  	 	 	23,334	  	 	 	37,245	  	 	 	12,467	  	 	 	22,106	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total net sales	  	$	111,492	  	 	$	175,255	  	 	$	240,352	  	 	$	90,531	  	 	$	114,657	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	  				 				 				 				 				
Wholesale	  	$	39,353	  	 	$	63,171	  	 	$	73,515	  	 	$	27,932	  	 	$	32,072	  	
Direct-to-consumer	  	 	1,045	  	 	 	1,713	  	 	 	5,865	  	 	 	(698	) 	 	 	3,002	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment adjusted EBITDA	  	 	40,398	  	 	 	64,884	  	 	 	79,380	  	 	 	27,234	  	 	 	35,074	  	
Unallocated corporate expense	  	 	(16,761	) 	 	 	(20,698	) 	 	 	(37,191	) 	 	 	(13,653	) 	 	 	(17,583	) 	
Interest expense	  	 	(7,172	) 	 	 	(15,004	) 	 	 	(22,903	) 	 	 	(10,690	) 	 	 	(12,429	) 	
Depreciation	  	 	(894	) 	 	 	(1,102	) 	 	 	(1,411	) 	 	 	(622	) 	 	 	(806	) 	
Amortization of intangible assets	  	 	(598	) 	 	 	(599	) 	 	 	(598	) 	 	 	(299	) 	 	 	(300	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	  	$	14,973	  	 	$	27,481	  	 	$	17,277	  	 	$	1,970	  	 	$	3,956	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital Expenditures	  				 				 				 				 				
Wholesale	  	$	13	  	 	$	146	  	 	$	459	  	 				 				
Direct-to-consumer	  	 	1,589	  	 	 	1,304	  	 	 	1,362	  	 				 				
	  	 	 	 	 	 	 	 	 	 	 	 	 				 				
Total capital expenditures	  	$	1,602	  	 	$	1,450	  	 	$	1,821	  	 				 				

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 	  	January 28, 2012	 	  	February 2, 2013	 	  	August 3, 2013	 	
 	  	 	 	  	 	 	  	(unaudited)	 	
Total Assets	  				  				  				
Wholesale	  	$	45,648	  	  	$	60,627	  	  	$	80,684	  	
Direct-to-consumer	  	 	11,012	  	  	 	14,679	  	  	 	19,099	  	
Unallocated corporate	  	 	172,282	  	  	 	171,905	  	  	 	190,779	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total assets	  	$	228,942	  	  	$	247,211	  	  	$	290,562	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Sales results are presented on a geographic basis below (in thousands). We predominately operate within the U.S. and sell our products in 43 countries either directly to premier department and specialty stores, or through distribution relationships with highly-regarded international partners with exclusive rights to certain territories. Sales are presented based on customer location. All long-lived assets, including property, plant and equipment and fixtures installed at our retailer sites, are located in the U.S.

 	  	2010	 	  	2011	 	  	2012	 	
Domestic	  	$	104,139	  	  	$	164,209	  	  	$	226,691	  	
International	  	 	7,353	  	  	 	11,046	  	  	 	13,661	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total net sales	  	$	111,492	  	  	$	175,255	  	  	$	240,352	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Note 11. Subsequent Events
On June 28, 2013, Kellwood Company and certain of its domestic subsidiaries, as borrowers, entered into the Fifth Amended and Restated Term Loan Agreement with SCSF Finance, LLC and Sun Kellwood Finance, LLC, as lenders, as disclosed in Note 4 above. We evaluated our financial statements for fiscal 2012 for subsequent events through September 24, 2013, the date the financial statements were available to be issued.
 
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Through and including                     , 2013 (the 25 th  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.
             Shares
Common Stock

PRELIMINARY    PROSPECTUS

 
			
Goldman, Sachs & Co.	 	Baird	

				
BofA Merrill Lynch	 	Barclays	 	J.P. Morgan	 	UBS Investment Bank	

			
KeyBanc Capital Markets	 	Stifel	 	William Blair	
                    , 2013

 

Table of Contents
PART II
Item 13.    Other expenses of issuance and distribution
The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid by us in connection with the sale of the shares of common stock being registered hereby. All amounts are estimates except for the SEC registration fee, the FINRA filing fee and the New York Stock Exchange listing fee.

SEC registration fee	  	$	27,280	  	
FINRA filing fee	  	 	30,500	  	
New York Stock Exchange listing fee	  	 	            	* 	
Blue Sky fees and expenses	  	 	            	* 	
Accounting fees and expenses	  	 	            	* 	
Directors’ and Officers’ Insurance	  	 	            	* 	
Legal fees and expenses	  	 	            	* 	
Printing and engraving expenses	  	 	            	* 	
Transfer agent and registrar fees and expenses	  	 	            	* 	
Other expenses	  	 	            	* 	
	  	 	 	 	
Total	  	$	            	* 	

*	To be provided by amendment.	
Item 14.    Indemnification of directors and officers
Section 102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability.
Section 145 of the DGCL (“Section 145”), provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.
 
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Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.
Our amended and restated bylaws will provide that we must indemnify our directors and officers to the fullest extent permitted by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified.
In addition, prior to the consummation of this offering, we will enter into indemnification agreements with certain of our executive officers and directors pursuant to which we will agree to indemnify such persons against all expenses and liabilities incurred or paid by such person in connection with any proceeding arising from the fact that such person is or was an officer or director of our company, and to advance expenses as incurred by or on behalf of such person in connection therewith.
The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our amended and restated certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers.
The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification of our directors and officers by the underwriters party thereto against certain liabilities. See “Item 17. Undertakings” for a description of the SEC’s position regarding such indemnification provisions.
Item 15.    Recent sales of unregistered securities
None.
Item 16.    Exhibits and Financial Statement Schedules
 
 	(a)	Exhibits	
The exhibit index attached hereto is incorporated herein by reference.
 
 	(b)	Financial Statement Schedule	
All schedules have been omitted because the information required to be set forth in the schedules is either not applicable or is shown in the financial statements or notes thereto.
Item 17.    Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the purchase agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
 
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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 SEC, 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 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 of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the 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; and
(2) For the purpose of determining any liability under the Securities Act of 1933, 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 the time shall be deemed to be the initial bona fide offering thereof.
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Apparel Holding Corp., a Delaware corporation, has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on September 24, 2013.

APPAREL HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
	 	Name:	 	Jill Granoff	
	 	Title:	 	Chief Executive Officer	
POWER OF ATTORNEY
Each person whose signature appears below (other than Jill Granoff) constitutes and appoints Lisa Klinger and Christopher T. Metz and each of them singly, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act and to file the same, with all exhibits thereto and all other documents in connection therewith, with the SEC, granting unto each said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their, his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates listed.

Signature	  	Title	  	Date	
			
/s/ Jill Granoff
Jill Granoff	  	Chief Executive Officer (principal executive officer) and Director	  	September 24, 2013	
			
/s/ Lisa Klinger
Lisa Klinger	  	Chief Financial Officer and Treasurer (principal financial and accounting officer)	  	September 24, 2013	
			
/s/ Christopher T. Metz
Christopher T. Metz	  	Director	  	September 24, 2013	
			
/s/ Mark E. Brody
Mark E. Brody	  	Director	  	September 24, 2013	
			
/s/ Jason H. Neimark
Jason H. Neimark	  	Director	  	September 24, 2013	
 
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EXHIBIT INDEX

Exhibit
Number	 	Exhibit Description	
		
  1.1*	 	Form of Underwriting Agreement	
		
  3.1*	 	Form of Amended & Restated Certificate of Incorporation of Vince Holding Corp.	
		
  3.2*	 	Form of Amended & Restated Bylaws of Vince Holding Corp.	
		
  4.1*	 	Form of Stock certificate	
		
  4.2**	 	Registration Agreement, dated as of February 20, 2008, among Apparel Holding Corp., Sun Cardinal, LLC, SCSF Cardinal, LLC and the Other Investors party thereto	
		
  5.1	 	Form of Opinion of Kirkland & Ellis LLP	
		
10.1**	 	Form of Contribution and Acceptance Agreement, dated as of September 12, 2012, by and between Kellwood Company and Vince, LLC	
		
10.2*	 	Form of Shared Services Agreement between Vince, LLC and Kellwood Company, LLC	
		
10.3*	 	Form of Tax Receivable Agreement between Vince Intermediate Holding, LLC, the Stockholders, and Sun Cardinal, LLC as Stockholder Representative	
		
10.4*	 	Form of Transfer Agreement between Vince Intermediate Holding, LLC and Kellwood Intermediate Holding, LLC	
		
10.5*	 	Form of Kellwood Note Receivable between Vince Intermediate Holding, LLC and Kellwood Company	
		
10.6*	 	Form of Consulting Agreement between Vince Holding Corp. and Sun Capital Partners Management V, LLC	
		
10.7	 	$75,000,000 Senior Subordinated Promissory Note, dated as of May 2, 2008, by Apparel Holding Corp. to SCSF Kellwood Finance, LLC	
		
10.8	 	Amendment No. 1 to Senior Subordinated Promissory Note, dated as of July 19, 2012, by and between Apparel Holding Corp. and SCSF Kellwood Finance, LLC	
		
10.9	 	Agreement Regarding Amendment No. 1 to Senior Subordinated Promissory Note, dated as of December 28, 2012, by and between Apparel Holding Corp. and SCSF Kellwood Finance, LLC	
		
10.10	 	$225,000,000 Senior Subordinated Promissory Note, dated as of May 2, 2008, by Apparel Holding Corp. to Sun Kellwood Finance, LLC	
		
10.11	 	Amendment No. 1 to Senior Subordinated Promissory Note, dated as of July 19, 2012, by and between Apparel Holding Corp. and Sun Kellwood Finance, LLC	
		
10.12	 	Agreement Regarding Amendment No. 1 to Senior Subordinated Promissory Note, dated as of December 28, 2012, by and between Apparel Holding Corp. and Sun Kellwood Finance, LLC	
		
10.13	 	Bank of Montreal Loan Authorization Agreement, dated as of February 13, 2008, by and between Bank of Montreal and Apparel Holding Corp.	
		
10.14	 	First Amendment to Bank of Montreal Loan Authorization Agreement, dated May 2, 2008, by and between Bank of Montreal and Apparel Holding Corp.	
		
10.15	 	Second Amendment to Bank of Montreal Loan Authorization Agreement, dated August 13, 2008, by and between Bank of Montreal and Apparel Holding Corp.	
		
10.16	 	Third Amendment to Bank of Montreal Loan Authorization Agreement, dated December 28, 2012, by and between Bank of Montreal and Apparel Holding Corp.	
 
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Exhibit
Number	 	Exhibit Description	
		
10.17	 	Assignment and Assumption Agreement, dated as of April 9, 2009, by and among Bank of Montreal, SCSF Kellwood Finance, LLC, Sun Kellwood Finance, LLC and Apparel Holding Corp.	
		
10.18	 	Loan Authorization Agreement, dated as of September 9, 2011, by and among Kellwood Company and BMO Harris Financing, Inc.	
		
10.19	 	Amendment No. 4 to Loan Authorization Agreement, dated as of July 19, 2012, by and among Apparel Holding Corp., SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
		
10.20	 	Agreement Regarding Amendment No. 4 to Loan Authorization Agreement, dated as of December 28, 2012, by and among Apparel Holding Corp., SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
		
10.21	 	Credit Agreement, dated as of October 19, 2011, among Kellwood Company and its Domestic Subsidiaries, other Obligors and Wells Fargo Bank, National Association	
		
10.22	 	Amendment No. 1 to Credit Agreement, entered into as of March 23, 2012, by and among the Lenders, Wells Fargo Bank, National Association, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.23	 	Consent and Amendment No. 2 to Credit Agreement, entered into as of April 20, 2012, by and among the Lenders, Wells Fargo Bank, National Association, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.24	 	Amendment No. 3 to Credit Agreement, entered into as of July 25, 2012, by and among the Lenders, Wells Fargo Bank, National Association, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.25	 	Consent and Amendment No. 4 to Credit Agreement, entered into as of December 31, 2012, by and among the Lenders, Wells Fargo Bank, National Association, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.26	 	Amended and Restated Term A Loan Agreement dated as of October 19, 2011, by and among Kellwood Company and its domestic subsidiaries, other Obligors, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
		
10.27	 	Second Amended and Restated Term A Loan Agreement, dated as of April 20, 2012, among Kellwood Company and its Domestic Subsidiaries, other Obligors, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
		
10.28	 	Amendment No. 1 to Second Amended and Restated Term A Loan Agreement, entered into as of July 2012, by and among the Lenders, Sun Kellwood Finance, LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.29	 	Consent and Amendment No. 2 to Second Amended and Restated Term A Loan Agreement, entered into as of December 31, 2012, by and among the Lenders, Sun Kellwood Finance, LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.30	 	Amendment No. 3 to Second Amended and Restated Term A Loan Agreement, dated as of June 28, 2013, by and among Kellwood Company, the Domestic Subsidiaries, the other Obligors, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
		
10.31	 	Fifth Amended and Restated Term Loan B/C/D/E/F/G Agreement, dated as of June 28, 2013, among Kellwood Company, the Domestic Subsidiaries, other Obligors, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC	
 
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Exhibit
Number	 	Exhibit Description	
		
10.32	 	Term Loan Agreement, dated as of October 19, 2011, among Kellwood Company, the Domestic Subsidiaries, other Obligors and Cerberus Business Finance LLC	
		
10.33	 	Consent and Amendment No. 1 to Credit Agreement, entered into as of April 20, 2012, by and among the Lenders, Cerberus Business Finance LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.34	 	Amendment No. 2 to Credit Agreement, entered into as of July 25, 2012, by and among the Lenders, Cerberus Business Finance LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.35	 	Consent and Amendment No. 3 to Term Loan Agreement, entered into as of December 31, 2012, by and among the Lenders, Cerberus Business Finance LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.36	 	Modification to Consent and Amendment No. 4 to Term Loan Agreement, entered into as of March 2013, by and among the Lenders, Cerberus Business Finance LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.37	 	Amendment No. 5 to Credit Agreement, entered into as of May 3, 2013, by and among the Lenders, Cerberus Business Finance LLC, Kellwood Company, the Domestic Subsidiaries and the other Obligors	
		
10.38*	 	New term loan credit facility of Vince Intermediate Holding, LLC	
		
10.39*	 	New revolving credit facility of Vince Intermediate Holding, LLC	
		
10.40	 	Indenture Agreement, dated as of July 23, 2009, by and among Kellwood Company, the Guarantors named therein and Wells Fargo Bank National Association	
		
10.41	 	Indenture Agreement, dated as of September 30, 1997, by and between Kellwood Company and The Chase Manhattan Bank	
		
10.42	 	Indenture Agreement, dated as of June 22, 2004, by and between Kellwood Company and Union Bank of California, N.A.	
		
10.43	 	Joinder Agreement, dated as of September 18, 2012, by and between Vince, LLC and Wells Fargo Bank, National Association	
		
10.44	 	Fourth Supplemental Indenture, dated as of September 18, 2012, among Vince, LLC, Kellwood Company, the other Guarantors and Wells Fargo Bank, National Association	
		
10.45	 	Joinder to Term Loan Agreement, dated as of September 1, 2012, by Vince, LLC	
		
10.46	 	Joinder to Second Amended and Restated Term Loan A Agreement, dated as of September 1, 2012, by Vince, LLC	
		
10.47	 	Joinder to Fourth Amended and Restated Term Loan Agreement, dated as of September 1, 2012, by Vince, LLC	
		
10.48†**	 	Employment Agreement, dated as of May 4, 2012, between Jill Granoff and Kellwood Company	
		
10.49†**	 	Amendment to Employment Agreement, dated as of December 30, 2012, between Jill Granoff and Kellwood Company	
		
10.50†	 	Amendment No. 2 to Employment Agreement, dated as of September 24, 2013, between Jill Granoff and Kellwood Company	
		
10.51†**	 	Debt Recovery Bonus Side Letter Agreement, dated June 11, 2013, between Jill Granoff and Kellwood Company	
		
10.52†**	 	Employment Offer Letter, dated as of November 2, 2012, between Lisa Klinger and Kellwood Company	
 
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Exhibit
Number	 	Exhibit Description	
		
10.53†**	 	Amended and Restated Letter Agreement, effective May 1, 2013, by and between Kellwood Company and Arthur Gordon	
		
10.54†**	 	Option Cancellation Agreement, dated as of October 4, 2012, by and between Arthur Gordon and Kellwood Company	
		
10.55	 	Option Extension Agreement, dated as of August 5, 2013, by and between Michael Saunders, Kellwood Company, Apparel Holding Corp., SCSF Cardinal, LLC and Sun Cardinal, LLC.	
		
10.56†**	 	2010 Stock Option Plan of Kellwood Company	
		
10.57†**	 	Form of 2010 Stock Option Plan grant agreement for executive officers	
		
10.58†**	 	2010 Stock Plan of Kellwood Company Grant Agreement, dated as of May 4, 2012, by and between Kellwood Company and Jill Granoff	
		
10.59†**	 	Amendment to Grant Agreement, between Kellwood Company and Jill Granoff	
		
10.60†**	 	First Amendment to Grant Agreement, dated December 30, 2012, between Kellwood Company and Jill Granoff	
		
10.61†**	 	2010 Stock Plan of Kellwood Company Grant Agreement, dated as of December 10, 2012, by and between Kellwood Company and Lisa Klinger	
		
10.62†**	 	2010 Stock Plan of Kellwood Company Grant Agreement, dated as of June 30, 2010, by and between Kellwood Company and Michael Saunders	
		
10.63†*	 	Form of Indemnification Agreement (for directors and officers affiliated with Sun Capital Partners)	
		
10.64†*	 	Form of Indemnification Agreement (for directors and officers not affiliated with Sun Capital Partners)	
		
10.65*	 	Form of Escrow Agreement	
		
10.66†*	 	Form of Vince Holding Corp. 2013 Incentive Plan	
		
10.67†*	 	Form of Vince Holding Corp. 2013 Employee Stock Purchase Plan	
		
21.1	 	List of subsidiaries of Vince Holding Corp.	
		
23.1	 	Consent of Pricewaterhouse Coopers LLP for Apparel Holding Corp.	
		
23.2	 	Consent of Pricewarterhouse Coopers LLP for Vince, LLC	
		
23.3	 	Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)	

*	Indicates to be filed by amendment.	
**	Indicates exhibits previously filed by the registrant.	
†	Indicates exhibits that constitute management contracts or compensatory plans or arrangements.	
 
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Exhibit 5.1

300 North LaSalle
Chicago, Illinois 60654
www.kirkland.com
, 2013
Apparel Holding Corp.
1441 Broadway - 6th Floor
New York, New York 10018
 
 	Re:	Registration Statement on Form S-1	
Ladies and Gentlemen:
We are acting as special counsel to Kellwood Holding Corp., a Delaware corporation to be renamed Vince Holding Corp. prior to the consummation of this offering (the “ Company ”), in connection with the proposed registration by the Company              shares (the “ Firm Shares ”) of the Company’s common stock, par value $0.01 per share (the “ Common Stock ”), including              shares of Common Stock, if any, to cover the exercise of an option to purchase additional shares, pursuant to a Registration Statement on Form S-1 (Registration No. 333-            ), originally filed with the Securities and Exchange Commission (the “ Commission ”) on September 20, 2013 under the Securities Act of 1933, as amended (the “ Act ”) (such Registration Statement, as amended or supplemented, is hereinafter referred to as the “ Registration Statement ”). The shares of Common Stock to be issued and sold by the Company pursuant to the Registration Statement are referred to herein as the “ Shares .”
In connection therewith, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including (i) the corporate and organizational documents of the Company, including the Amended and Restated Certificate of Incorporation of the Company (the “ Amended and Restated Certificate ”) to be filed with the Secretary of State of the State of Delaware prior to the sale of the Shares, (ii) minutes and records of the proceedings of the Company with respect to the issuance and sale of the Shares and (iii) the form of Underwriting Agreement in the form filed as Exhibit 1.1 to the Registration Statement (the “Underwriting Agreement”), filed with the Commission on [September 20], 2013.
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents by the parties thereto other than the Company. We have not independently established or verified any facts relevant to the opinions expressed herein, but have relied upon statements and representations of officers and other representatives of the Company and others.

																	
Hong Kong	 	London	 	Los Angeles	 	Munich	 	New York	 	Palo Alto	 	San Francisco	 	Shanghai	 	Washington, D.C.	

 
Apparel Holding Corp.
            , 2013
Page 2
 
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that upon filing of the Amended and Restated Certificate with the Secretary of State of the State of Delaware, the Shares will be duly authorized, and, when the Registration Statement becomes effective under the Act, the final Underwriting Agreement is duly executed and delivered by the parties thereto and the Shares are registered by the Company’s transfer agent and delivered against payment of the agreed consideration therefor, all in accordance with the final Underwriting Agreement, the Shares will be validly issued, fully paid and non-assessable.
Our opinion expressed above is subject to the qualification that we express no opinion as to the applicability of, compliance with, or effect of any laws except the General Corporation Law of the State of Delaware (including the statutory provisions, all applicable provisions of the Delaware constitution and reported judicial decisions interpreting the foregoing).
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading “Legal Matters” in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. This opinion and consent may be incorporated by reference in a subsequent registration statement on Form S-1 filed pursuant to Rule 462(b) under the Act with respect to the registration of additional securities for sale in the offering contemplated by the Registration Statement and shall cover such additional securities, if any, registered on such subsequent registration statement.
We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or “Blue Sky” laws of the various states to the issuance and sale of the Shares.
This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. This opinion speaks only as of the date that the Registration Statement becomes effective under the Act and we assume no obligation to revise or supplement this opinion after the date of effectiveness should the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision or otherwise after the date hereof.

 
Apparel Holding Corp.
            , 2013
Page 3

Sincerely,	

KIRKLAND & ELLIS LLP	

Exhibit 10.7
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES LAW. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE MAKER HAS RECEIVED EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE MAKER.
SENIOR SUBORDINATED PROMISSORY NOTE

May 2, 2008	  	$	75,000,000	  	
FOR VALUE RECEIVED, Kellwood Holding Corp., a Delaware corporation, (the “ Maker ”) hereby covenants and promises to pay to SCSF Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”) the principal amount of SEVENTY FIVE MILLION DOLLARS ($75,000,000).
1. Interest .
(a) Interest Accrual . Interest shall accrue on a daily basis at a rate of fifteen percent (15%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding; provided , however , that, if the principal amount of this Note shall not be paid on the Maturity Date (as defined in Section 2(a) ), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date this Note is paid in full at a rate of seventeen percent (17%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding.
(b) PIK Interest; Capitalization of Interest . All accrued interest which is not paid in cash on or before an Interest Payment Date in such Fiscal Year (the “ Capitalization Date ”) shall be deemed to be paid in kind and added to the principal amount outstanding hereunder, in each case, as of the Capitalization Date. It is understood and agreed that all accrued interest shall be deemed to be interest paid in kind, unless the Maker notifies the Payee of its election otherwise.
2. Principal .
(a) Maturity Date . On October 15 , 2011 (the “ Maturity Date ”), the Maker shall pay the entire unpaid principal amount of this Note then outstanding to the Payee, together with all accrued and unpaid interest thereon.
(b) Prepayment at the Maker’s Election . At any time, the Maker may without premium or penalty prepay all or any portion of the unpaid principal amount of this Note.

(c) Mandatory Prepayment . Upon a Change of Control, the Maker shall redeem this Note in full in cash at a price equal to the unpaid principal amount of the Note, plus all accrued and unpaid interest.
(d) Replacement Notes . The Maker or holder of this Note may, but shall not be obligated to, request the issuance of replacement notes to evidence any increases in the principal amount of this Note pursuant to Section 1(b) with such replacement notes being identical in form and substance in all respects to this Note, including the subordination provisions hereunder. Upon any such request, the Maker shall issue such replacement notes and the holder(s) of this Note or such replacement notes shall return such notes to be replaced to the Maker, in each case marked “cancelled”, or deliver to the Maker a lost note indemnity in form and substance satisfactory to the Maker. The replacement and cancellation of notes pursuant to this Section 2(d) shall in no way be a novation of the Indebtedness evidenced by the notes being replaced and cancelled nor shall the security interests granted pursuant to any Subordinated Loan Document be released, terminated or otherwise impaired by such replacement and cancellation.
(e) Application of Principal Payments and Reductions . All payments and prepayments of principal on this Note and all principal reductions effected in accordance with the terms of this Note shall be applied first , to the unpaid principal balance of this Note then outstanding (other than principal attributable to the capitalization of interest in accordance with Section 1(c) ) and second , to the unpaid principal balance of this Note attributable to the capitalization of interest in accordance with Section 1(b) .
3. Intentionally Omitted.
4. Representations and Warranties .
(a) Organization. The Maker is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization and has full and adequate power to own its property and conduct its business as now conducted.
(b) Power and Authority . The Maker has all requisite power and authority to issue the Note hereunder, to execute and deliver each document to which it is a party, and to consummate the transactions contemplated thereby.
(c) Binding Obligation . The Note has been duly and validly executed and delivered by the Maker and constitute legal, valid and binding obligations of the Maker enforceable in accordance with the term thereof.
5. Covenants .
(a) Use of Proceeds . The Maker shall use the proceeds provided by the Payee pursuant to the terms of this Note for general corporate purposes, including repaying certain obligations under that certain Bank of Montreal Loan Authorization Agreement dated February 12, 2008 by and among the Maker and Bank of Montreal (as amended, restated, modified, renewed or extended from time to time, the “ BOM Agreement ”).
 
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(b) Notifications of Defaults on BOM Agreement and BOA Agreement . As soon as practicable and in event within two (2) Business Days after giving or receiving any notice that a default or event of default has occurred under the BOM Agreement or the BOA Agreement, the Maker shall deliver to the holder of this Note a copy of any such notice.
(c) Guaranties and Collateral . The Maker shall deliver, or cause to delivered, such guaranties, security agreement, mortgages and other collateral documents as requested by the holders of this Note and as are necessary to them with guaranties and security interests in the assets of the Maker, together with such opinions, title insurance policies, endorsements, financing statements, control agreements and other agreements, documents and instruments in furtherance of such guaranties and collateral arrangements as the holder of this Note may from time to time reasonably request.
6. Events of Default; Remedies .
(a) Events of Default . The term “ Event of Default ” as used herein means the occurrence or happening, at any time and from time to time, any of the following:
(i) the failure of the Maker to pay when due and payable (whether at maturity or otherwise) the full amount of interest then accrued on this Note or the full amount of any principal payment on this Note, and such failure to pay is not cured within thirty (30) days after the same becomes due and payable; provided , that any interest which is paid in kind in accordance with Section 1 shall not be deemed to be an Event of Default under this Note due to the fact that such interest is not paid in cash;
(ii) an Insolvency Event occurs;
(iii) the Maker or any Guarantor shall be in material default under the Maker’s covenants set forth herein, any guaranty or any other Subordinated Loan Document, and shall fail to cure such material default within thirty (30) days following written notice from Payee;
(iv) any representation or warranty made or deemed made by or on behalf of Maker or any Guarantor or by any officer of the foregoing under or in connection with this Note or under or in connection with any report, certificate, or other document delivered to any holder of this Note shall have been incorrect in any material respect when made or deemed made;
(v) the Maker, any Guarantor or any of their respective Subsidiaries shall fail to pay when due any principal of or interest or premium on any of its Indebtedness (excluding the obligations hereunder) to the extent that the aggregate principal amount of all such Indebtedness exceeds $23,000,000 (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such other default or event is to accelerate the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness shall
 
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be required to be made, in each case, prior to the stated maturity thereof; provided that this clause (v) shall not apply to Indebtedness that becomes due as a result of the voluntary sale or transfer of property or assets or as a result of the application (other than by reason of a breach or default by the Maker or any Guarantor) of any provision in such Indebtedness that requires the Maker or any Guarantor to prepay a portion (but less than substantially all) of such Indebtedness then outstanding or that requires the Maker or any Guarantor to offer to redeem or repurchase some (but less than substantially all) of such Indebtedness then outstanding; or
(vi) any material provision of this Note, or any other Subordinated Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Maker or any Guarantor intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Maker or any Guarantor or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Maker or any Guarantor shall deny in writing that it has any liability or obligation purported to be created under this Note, or any other Subordinated Loan Document; or
(vii) any security agreement, any mortgage or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected lien in favor of the holder of this Note on any Collateral purported to be covered thereby.
(b) Remedies . Upon the occurrence of an Event of Default, the Majority Payees may declare all or any portion of the unpaid Obligations to be immediately due and payable (provided, however, that if an Event of Default specified in Section 6(a)(ii) occurs, the entire unpaid Obligations shall forthwith become and be immediately due and payable without any declaration or other act on the part of the Majority Payees).
7. Amendment or Waiver . Except as otherwise expressly provided herein, the provisions of this Note may be amended or waived and the Maker may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Maker has obtained the written consent of the Majority Payees.
8. Definitions . For purposes of this Note, the following capitalized terms have the following meaning:
“ BOA Agreement ” means that certain Loan and Security Agreement, dated April 12, 2006, by and among Kellwood Company (“ Kellwood ”), the domestic subsidiaries of Kellwood, the lenders party thereto and Bank of America, N.A., as amended, restated or otherwise modified from time to time.
“ Business Day ” means each day other than a Saturday, Sunday or legal holiday in the States of Delaware or Florida.
 
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“ Capital Stock ” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
“ Change of Control ” means (i) Sun Capital Partners, Inc. or its affiliates, collectively, at any time fail to own beneficially, directly or indirectly, at least fifty-one percent (51%) of all of the issued and outstanding voting Capital Stock of Maker or (ii) the sale of all or substantially all of the assets of the Maker.
“ Collateral ” means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a lien or security interest is granted or purported to be granted by such Person as security for all or any part of the obligations under this note or the other Subordinated Loan Documents.
“ Guarantor ” means any Person who executes a guaranty in connection with this Note or the Obligations.
“ Governmental Authority ” means any nation or government, any federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“ Indebtedness ” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit or bankers acceptances (c) all obligations as a lessee under capital leases, (d) all obligations or liabilities of others secured by a lien on any asset of a Person or its subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices) and (f) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (e) above.
“ Insolvency Event ” means (a) the Maker, any Guarantor or any of their Subsidiaries commencing any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Maker, any Guarantor or any of their Subsidiaries making a general assignment for the benefit of its creditors; or (b) there being commenced against the Maker, any Guarantor or any of their Subsidiaries any case, proceeding or other action of a nature referred to in clause (a) above; or (c) there being commenced against the Maker, any Guarantor or any of their Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets; or (d) the Maker, any Guarantor or any of their Subsidiaries
 
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taking any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b) or (c) above; or (e) the Maker, any Guarantor or any of their Subsidiaries is generally not paying, or being unable to pay, or admitting in writing its inability to pay, its debts as they become due.
“ Interest Payment Date ” means the first day of each month.
“ Majority Payees ” means the holders of a majority of then outstanding principal amount of this Note and any additional notes issued in connection with assignments and transfers permitted by Section 10 .
“ Obligations ” means (a) all loans, advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Event regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Event), contingent reimbursement obligations with respect to outstanding letters of credit, premiums, liabilities, obligations (including indemnification obligations), fees, charges, costs, lease payments, guaranties, covenants, and duties of any kind and description owing by the Maker to the Payee pursuant to or evidenced by this Note and the other Subordinated Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all expenses that the Maker is required to pay or reimburse by the Subordinated Loan Documents, by law, or otherwise, and any reference in this Note or in the Subordinated Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Event.
“ Person ” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“ Subordinated Loan Documents ” means this Note, any guaranties, security agreements and any other agreement, document or instrument delivered to or in favor of Payee or any holder in connection with any of the foregoing.
“ Subordinated Debt ” means any Indebtedness of the Maker which, by its terms, is expressly subordinated to the obligations evidenced by this Note.
“ Subsidiary ” means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person.
 
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9. Cancellation . Immediately after all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall be automatically canceled and the Payee shall immediately surrender this Note to the Maker for cancellation. After cancellation of this Note, this Note shall not be reissued.
10. Assignment . The rights and obligations of the Maker and the holder of this Note shall be binding upon and benefit the successors and permitted assigns and transferees of the Maker and the holder of this Note. In the event of any permitted assignment hereunder, (i) the Payees agree to pay for all costs associated with documenting, implementing or otherwise accommodating a sale, exchange, assignment, pledge, hypothecation, transfer or other disposition (each, a “ Transfer ”), (ii) the prospective Payee shall be, and shall provide a representation that it is, entering into such Transfer for its own account and not with a view to, or for sale in connection with, any subsequent distribution) and (iii) the prospective Payee shall become a party to this Note (or any replacement hereof).
11. Payments . All payments to be made to the Payee shall be made in the lawful money of the United States of America in immediately available funds.
12. Place of Payments . Payments of principal and interest shall be delivered as directed by prior written notice by the holder of this Note to the Maker or, if not specified by such holder, then to such holder, at the address of such holder set forth on the Maker’s records or at such other address as is specified by prior written notice by such holder to the Maker.
13. Governing Law . THE VALIDITY OF THIS NOTE, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW CASTLE, STATE OF DELAWARE, PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE PAYEE’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE PAYEE ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE MAKER AND THE PAYEE WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13 .
 
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THE MAKER AND THE PAYEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE MAKER AND THE PAYEE REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. Waiver of Presentment, Demand and Dishonor . The Maker hereby waives presentment for payment, protest, demand, notice of protest, notice of nonpayment and diligence with respect to this Note, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, exemption, or homestead now provided or that hereafter may be provided by any federal or applicable state statute, including but not limited to exemptions provided by or allowed under the Federal Bankruptcy Code, both as to itself and as to all of its property, whether real or personal, against the enforcement and collection of the Obligations and any and all extensions, renewals, and modifications hereof.
15. Expenses; Taxes; Attorneys Fees . The Maker will pay on demand, all costs and expenses incurred by or on behalf of each holder, including reasonable fees, costs, client charges and expenses of counsel for each holder, accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Note and any other Subordinated Loan Document, (b) any requested amendments, waivers or consents to this Note or any other Subordinated Loan Document whether or not such documents become effective or are given, (c) the preservation and protection of any holder’s rights under this Note or any other Subordinated Loan Document, (d) the defense of any claim or action asserted or brought against any holder by any Person that arises from or relates to this Note or any other Subordinated Loan Document or any holder’s claims against the Maker or any Guarantor, or any and all matters in connection therewith, (e) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Note or any other Subordinated Loan Document, (f) the filing of any petition, complaint, answer, motion or other pleading by any holder, or the taking of any action in respect of the Collateral or other security, in connection with this Note or any other Subordinated Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Note or any other Subordinated Loan Document, (h) any attempt to enforce any lien or security interest in any Collateral or other security in connection with this Note or any other Subordinated Loan Document, (i) any attempt to collect from the Maker or any Guarantor, (j) all liabilities and costs arising from or in connection with the past, present or future operations of the Maker or any Guarantor involving any damage to real or personal property or natural resources or harm or injury alleged to have resulted from any release of hazardous materials on,
 
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upon or into such property, (k) any environmental liabilities and costs incurred in connection with the investigation, removal, cleanup or remediation of any hazardous materials present or arising out of the operations of any facility owned or operated by the Maker or any Guarantor, or (l) the receipt by any holder of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Subordinated Loan Document: (x) the Maker agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by any holder to be payable in connection with this Note or any other Subordinated Loan Document, and the Maker agrees to save each holder harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (y) the Maker agrees to pay all broker fees that may become due in connection with the transactions contemplated by this Note and the other Subordinated Loan Documents, and (z) if the Maker fails to perform any covenant or agreement contained herein or in any other Subordinated Loan Document, the holder may itself perform or cause performance of such covenant or agreement, and the expenses of the holder incurred in connection therewith shall be reimbursed on demand by the Maker.
16. Business Days . If any payment is due, or any time period for giving notice or taking action expires, on a day which is not a Business Day, the payment shall be due and payable on, and the time period shall automatically be extended to, the immediately following Business Day, and interest shall continue to accrue at the required rate hereunder until any such payment is made.
17. No Waiver . The rights and remedies of the holder of this Note expressly set forth in this Note are cumulative and in addition to, and not exclusive of, all other rights and remedies available at law, in equity or otherwise. No failure or delay on the part of the holder of this Note in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or be construed to be a waiver of any Event of Default. No course of dealing between the Maker and the holder of this Note or their agents or employees shall be effective to amend, modify or discharge any provision of this Note or to constitute a waiver of any Event of Default. No notice to or demand upon Maker in any case shall entitle Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of the holder of this Note to exercise any right or remedy or take any other or further action in any circumstances without notice or demand.
18. Construction . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” whether or not so expressly stated in each such instance and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be
 
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construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Note in its entirety and not to any particular provision hereof, (d) all references herein to Sections shall be construed to refer to Sections of this Note and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP.
19. Usury Laws . It is the intention of the Maker and each holder of this Note to conform strictly to all applicable usury laws now or hereafter in force, and any interest payable under this Note shall be subject to reduction to the amount not in excess of the maximum legal amount allowed under the applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters. If the maturity of this Note is accelerated by reason of an election by the holder hereof resulting from an Event of Default, voluntary prepayment by the Maker or otherwise, then earned interest may never include more than the maximum amount permitted by law, computed from the date hereof until payment, and any interest in excess of the maximum amount permitted by law shall be canceled automatically and, if theretofore paid, shall at the option of the holder hereof either be rebated to the Maker or credited on the principal amount of this Note, or if this Note has been paid, then the excess shall be rebated to the Maker. The aggregate of all interest (whether designated as interest, service charges, points or otherwise) contracted for, chargeable, or receivable under this Note shall under no circumstances exceed the maximum legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time. If such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess shall be canceled automatically and, if theretofore paid, rebated to the Maker or credited on the principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated to the Maker.
20. Counterparts; Telefacsimile or Electronic Mail Execution . This Note may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Note. Delivery of an executed counterpart of this Note by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Note. Any party delivering an executed counterpart of this Note by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Note but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Note.
*       *       *       *       *
 
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IN WITNESS WHEREOF, the Maker has executed and delivered this Senior Subordinated Promissory Note on the date first above written.

KELLWOOD HOLDING CORP., a Delaware corporation	
		
By:	 	/s/ Jason Bernzweig	
Name:	 	Jason Bernzweig	
Its:	 	Vice President	
Agreed to and accepted this              day of May, 2008
SCSF KELLWOOD FINANCE, LLC

By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Its:	 	Vice President	

Exhibit 10.8
AMENDMENT No. 1
TO
SENIOR SUBORDINATED PROMISSORY NOTE
This AMENDMENT No. 1 to SENIOR SUBORDINATED PROMISSORY NOTE (this “ Amendment ”) is made and entered into as of this 19th day of July, 2012, by and between Kellwood Holding Corp., a Delaware corporation (the “ Maker ”) and SCSF Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”).
WHEREAS, the Maker and the Payee are parties to that certain Senior Subordinated Promissory Note dated May 2, 2008 (the “ Note ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Note);
WHEREAS, the maturity date in the Note is October 15, 2011;
WHEREAS, notwithstanding such maturity date, the principal amount and all accrued and unpaid interest thereon under the Note remain outstanding and unpaid by Maker;
WHEREAS, pursuant to and in accordance with Section 7 of the Note, the Maker and the Payee desire to amend the Note as provided in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:
1. Amendment of the Note . Effective as of the date hereof, the Note shall be hereby amended as follows:
1.1 Amendment to Section 1(a) . Section 1(a) of the Note is hereby amended by deleting it in its entirety and substituting the following in its place:
(a) Interest Accrual . Interest shall accrue on a daily basis at a rate of twelve percent (12%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding; provided , however , that, if the principal amount of this Note shall not be paid on the Maturity Date (as defined in Section 2(a) , as amended herein), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date this Note is paid in full at a rate of fourteen percent (14%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding.
1.2 Amendment of Section 2(a) . Section 2(a) of the Note is hereby amended by deleting it in its entirety and substituting the following in its place:
(a) Maturity Date . On October 15 , 2016 (the “ Maturity Date ”), the Maker shall pay the entire unpaid principal amount of this Note then outstanding to the Payee, together with all accrued and unpaid interest thereon.

2. Miscellaneous .
2.1 From and after the date hereof, each reference in the Note to “the Note,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Note as amended hereby.
2.2 Neither Maker nor Payee is, by entering into this Amendment, waiving any rights or remedies available to such party under the Note. Each of the rights and remedies of Maker and Payee available to such party immediately prior to the execution of this Amendment shall remain available to such party subsequent to the execution of this Amendment (including Payee’s right to interest at the rate of seventeen percent (17%) per annum pursuant to Section 1(a) of the Note for the period beginning on October 15, 2011 and ending on the date hereof).
2.3 Except as specifically set forth above, the Note shall remain unaltered and in full force and effect and the respective terms, conditions or covenants thereof are hereby in all respects ratified and confirmed.
2.4 This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
2.5 This Amendment shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year first above written.

SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell C. Lentz	
Name:	 	Maxwell C. Lentz	
Title:	 	Vice President	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
Name:	 	Jill Granoff	
Title:	 	CEO and President	
Signature Page to Amendment to Note

Exhibit 10.9
AGREEMENT REGARDING AMENDMENT No. 1
TO
SENIOR SUBORDINATED PROMISSORY NOTE
This AGREEMENT REGARDING AMENDMENT No. 1 to SENIOR SUBORDINATED PROMISSORY NOTE (this “ Agreement ”) is made and entered into as of this 28th day of December, 2012, by and between Kellwood Holding Corp., a Delaware corporation (the “ Maker ”) and SCSF Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”).
WHEREAS, the Maker and the Payee are parties to that certain Senior Subordinated Promissory Note dated May 2, 2008 (as amended, the “ Note ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Note);
WHEREAS, Amendment No. 1 to the Note dated July 19, 2012 (“ Amendment No. 1 ”) provided in Section 1 that interest shall accrue on a daily basis at a rate of twelve percent (12%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of the Note then outstanding (the “ 12% Rate ”); provided , however , that, if the principal amount of the Note shall not be paid on the Maturity Date (as defined in Section 2(a) , as amended therein), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date the Note is paid in full at a rate of fourteen percent (14%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding (the “ 14% Rate ”, and together with the 12% Rate, “ Amended Interest Rate ”);
WHEREAS, at the time of Amendment No. 1, the Maker and Payee intended to amend the Note in such a manner as to waive, forgive and cancel all then accrued interest under the Note and to provide that the Note would accrue interest as of and after the date of Amendment No. 1 at the Amended Interest Rate;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Waiver, Forgiveness and Cancellation of Accrued Interest . Maker and Payee here agree that all interest that accrued under the Note prior to July 19, 2012 is hereby waived, forgiven and cancelled.
2. Confirmation of Amount Owing . For the avoidance of doubt and notwithstanding any documentation of Maker or the Payee to the contrary, Maker and Payee hereby acknowledge and agree that, after giving effect to this Agreement, as of July 19, 2012 the total amount outstanding and owing under the Note was $75,000,000 and any accruals of interest prior to such date are hereby waived, forgiven and cancelled in their entirety (it being agreed and understood that as of July 19, 2012 such $75,000,000 shall accrue interest in accordance with Section 1 of Amendment No. 1).

3. Miscellaneous .
3.1 This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
3.2 This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year first above written.

SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Title:	 	Vice President and Asst. Secretary	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
Name:	 	Jill Granoff	
Title:	 	CEO	
Signature Page to Amendment Regarding Amendment No. 1 to Note

Exhibit 10.10
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES LAW. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE MAKER HAS RECEIVED EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE MAKER.
SENIOR SUBORDINATED PROMISSORY NOTE

May 2, 2008	  	$	225,000,000	  	
FOR VALUE RECEIVED, Kellwood Holding Corp., a Delaware corporation, (the “ Maker ”) hereby covenants and promises to pay to Sun Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”) the principal amount of TWO HUNDRED TWENTY FIVE MILLION DOLLARS ($225,000,000).
1. Interest .
(a) Interest Accrual . Interest shall accrue on a daily basis at a rate of fifteen percent (15%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding; provided , however , that, if the principal amount of this Note shall not be paid on the Maturity Date (as defined in Section 2(a) ), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date this Note is paid in full at a rate of seventeen percent (17%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding.
(b) PIK Interest; Capitalization of Interest . All accrued interest which is not paid in cash on or before an Interest Payment Date in such Fiscal Year (the “ Capitalization Date ”) shall be deemed to be paid in kind and added to the principal amount outstanding hereunder, in each case, as of the Capitalization Date. It is understood and agreed that all accrued interest shall be deemed to be interest paid in kind, unless the Maker notifies the Payee of its election otherwise.
2. Principal .
(a) Maturity Date . On October 15 , 2011 (the “ Maturity Date ”), the Maker shall pay the entire unpaid principal amount of this Note then outstanding to the Payee, together with all accrued and unpaid interest thereon.
(b) Prepayment at the Maker’s Election . At any time, the Maker may without premium or penalty prepay all or any portion of the unpaid principal amount of this Note.

(c) Mandatory Prepayment . Upon a Change of Control, the Maker shall redeem this Note in full in cash at a price equal to the unpaid principal amount of the Note, plus all accrued and unpaid interest.
(d) Replacement Notes . The Maker or holder of this Note may, but shall not be obligated to, request the issuance of replacement notes to evidence any increases in the principal amount of this Note pursuant to Section 1(b) with such replacement notes being identical in form and substance in all respects to this Note, including the subordination provisions hereunder. Upon any such request, the Maker shall issue such replacement notes and the holder(s) of this Note or such replacement notes shall return such notes to be replaced to the Maker, in each case marked “cancelled”, or deliver to the Maker a lost note indemnity in form and substance satisfactory to the Maker. The replacement and cancellation of notes pursuant to this Section 2(d) shall in no way be a novation of the Indebtedness evidenced by the notes being replaced and cancelled nor shall the security interests granted pursuant to any Subordinated Loan Document be released, terminated or otherwise impaired by such replacement and cancellation.
(e) Application of Principal Payments and Reductions . All payments and prepayments of principal on this Note and all principal reductions effected in accordance with the terms of this Note shall be applied first , to the unpaid principal balance of this Note then outstanding (other than principal attributable to the capitalization of interest in accordance with Section 1(c) ) and second , to the unpaid principal balance of this Note attributable to the capitalization of interest in accordance with Section 1(b) .
3. Intentionally Omitted.
4. Representations and Warranties .
(a) Organization. The Maker is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization and has full and adequate power to own its property and conduct its business as now conducted.
(b) Power and Authority . The Maker has all requisite power and authority to issue the Note hereunder, to execute and deliver each document to which it is a party, and to consummate the transactions contemplated thereby.
(c) Binding Obligation . The Note has been duly and validly executed and delivered by the Maker and constitute legal, valid and binding obligations of the Maker enforceable in accordance with the term thereof.
5. Covenants .
(a) Use of Proceeds . The Maker shall use the proceeds provided by the Payee pursuant to the terms of this Note for general corporate purposes, including repaying certain obligations under that certain Bank of Montreal Loan Authorization Agreement dated February 12, 2008 by and among the Maker and Bank of Montreal (as amended, restated, modified, renewed or extended from time to time, the “ BOM Agreement ”).
 
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(b) Notifications of Defaults on BOM Agreement and BOA Agreement . As soon as practicable and in event within two (2) Business Days after giving or receiving any notice that a default or event of default has occurred under the BOM Agreement or the BOA Agreement, the Maker shall deliver to the holder of this Note a copy of any such notice.
(c) Guaranties and Collateral . The Maker shall deliver, or cause to delivered, such guaranties, security agreement, mortgages and other collateral documents as requested by the holders of this Note and as are necessary to them with guaranties and security interests in the assets of the Maker, together with such opinions, title insurance policies, endorsements, financing statements, control agreements and other agreements, documents and instruments in furtherance of such guaranties and collateral arrangements as the holder of this Note may from time to time reasonably request.
6. Events of Default; Remedies .
(a) Events of Default . The term “ Event of Default ” as used herein means the occurrence or happening, at any time and from time to time, any of the following:
(i) the failure of the Maker to pay when due and payable (whether at maturity or otherwise) the full amount of interest then accrued on this Note or the full amount of any principal payment on this Note, and such failure to pay is not cured within thirty (30) days after the same becomes due and payable; provided , that any interest which is paid in kind in accordance with Section 1 shall not be deemed to be an Event of Default under this Note due to the fact that such interest is not paid in cash;
(ii) an Insolvency Event occurs;
(iii) the Maker or any Guarantor shall be in material default under the Maker’s covenants set forth herein, any guaranty or any other Subordinated Loan Document, and shall fail to cure such material default within thirty (30) days following written notice from Payee;
(iv) any representation or warranty made or deemed made by or on behalf of Maker or any Guarantor or by any officer of the foregoing under or in connection with this Note or under or in connection with any report, certificate, or other document delivered to any holder of this Note shall have been incorrect in any material respect when made or deemed made;
(v) the Maker, any Guarantor or any of their respective Subsidiaries shall fail to pay when due any principal of or interest or premium on any of its Indebtedness (excluding the obligations hereunder) to the extent that the aggregate principal amount of all such Indebtedness exceeds $23,000,000 (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other default under any agreement or instrument relating to any such Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such other default or event is to accelerate the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease such Indebtedness shall
 
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be required to be made, in each case, prior to the stated maturity thereof; provided that this clause (v) shall not apply to Indebtedness that becomes due as a result of the voluntary sale or transfer of property or assets or as a result of the application (other than by reason of a breach or default by the Maker or any Guarantor) of any provision in such Indebtedness that requires the Maker or any Guarantor to prepay a portion (but less than substantially all) of such Indebtedness then outstanding or that requires the Maker or any Guarantor to offer to redeem or repurchase some (but less than substantially all) of such Indebtedness then outstanding; or
(vi) any material provision of this Note, or any other Subordinated Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Maker or any Guarantor intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Maker or any Guarantor or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Maker or any Guarantor shall deny in writing that it has any liability or obligation purported to be created under this Note, or any other Subordinated Loan Document; or
(vii) any security agreement, any mortgage or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected lien in favor of the holder of this Note on any Collateral purported to be covered thereby.
(b) Remedies . Upon the occurrence of an Event of Default, the Majority Payees may declare all or any portion of the unpaid Obligations to be immediately due and payable (provided, however, that if an Event of Default specified in Section 6(a)(ii) occurs, the entire unpaid Obligations shall forthwith become and be immediately due and payable without any declaration or other act on the part of the Majority Payees).
7. Amendment or Waiver . Except as otherwise expressly provided herein, the provisions of this Note may be amended or waived and the Maker may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Maker has obtained the written consent of the Majority Payees.
8. Definitions . For purposes of this Note, the following capitalized terms have the following meaning:
“ BOA Agreement ” means that certain Loan and Security Agreement, dated April 12, 2006, by and among Kellwood Company (“ Kellwood ”), the domestic subsidiaries of Kellwood, the lenders party thereto and Bank of America, N.A., as amended, restated or otherwise modified from time to time.
“ Business Day ” means each day other than a Saturday, Sunday or legal holiday in the States of Delaware or Florida.
“ Capital Stock ” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
 
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“ Change of Control ” means (i) Sun Capital Partners, Inc. or its affiliates, collectively, at any time fail to own beneficially, directly or indirectly, at least fifty-one percent (51%) of all of the issued and outstanding voting Capital Stock of Maker or (ii) the sale of all or substantially all of the assets of the Maker.
“ Collateral ” means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a lien or security interest is granted or purported to be granted by such Person as security for all or any part of the obligations under this note or the other Subordinated Loan Documents.
“ Guarantor ” means any Person who executes a guaranty in connection with this Note or the Obligations.
“ Governmental Authority ” means any nation or government, any federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“ Indebtedness ” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit or bankers acceptances (c) all obligations as a lessee under capital leases, (d) all obligations or liabilities of others secured by a lien on any asset of a Person or its subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices) and (f) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (e) above.
“ Insolvency Event ” means (a) the Maker, any Guarantor or any of their Subsidiaries commencing any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Maker, any Guarantor or any of their Subsidiaries making a general assignment for the benefit of its creditors; or (b) there being commenced against the Maker, any Guarantor or any of their Subsidiaries any case, proceeding or other action of a nature referred to in clause (a) above; or (c) there being commenced against the Maker, any Guarantor or any of their Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets; or (d) the Maker, any Guarantor or any of their Subsidiaries
 
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taking any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b) or (c) above; or (e) the Maker, any Guarantor or any of their Subsidiaries is generally not paying, or being unable to pay, or admitting in writing its inability to pay, its debts as they become due.
“ Interest Payment Date ” means the first day of each month.
“ Majority Payees ” means the holders of a majority of then outstanding principal amount of this Note and any additional notes issued in connection with assignments and transfers permitted by Section 10 .
“ Obligations ” means (a) all loans, advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Event regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Event), contingent reimbursement obligations with respect to outstanding letters of credit, premiums, liabilities, obligations (including indemnification obligations), fees, charges, costs, lease payments, guaranties, covenants, and duties of any kind and description owing by the Maker to the Payee pursuant to or evidenced by this Note and the other Subordinated Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all expenses that the Maker is required to pay or reimburse by the Subordinated Loan Documents, by law, or otherwise, and any reference in this Note or in the Subordinated Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Event.
“ Person ” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“ Subordinated Loan Documents ” means this Note, any guaranties, security agreements and any other agreement, document or instrument delivered to or in favor of Payee or any holder in connection with any of the foregoing.
“ Subordinated Debt ” means any Indebtedness of the Maker which, by its terms, is expressly subordinated to the obligations evidenced by this Note.
“ Subsidiary ” means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person.
 
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9. Cancellation . Immediately after all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall be automatically canceled and the Payee shall immediately surrender this Note to the Maker for cancellation. After cancellation of this Note, this Note shall not be reissued.
10. Assignment . The rights and obligations of the Maker and the holder of this Note shall be binding upon and benefit the successors and permitted assigns and transferees of the Maker and the holder of this Note. In the event of any permitted assignment hereunder, (i) the Payees agree to pay for all costs associated with documenting, implementing or otherwise accommodating a sale, exchange, assignment, pledge, hypothecation, transfer or other disposition (each, a “ Transfer ”), (ii) the prospective Payee shall be, and shall provide a representation that it is, entering into such Transfer for its own account and not with a view to, or for sale in connection with, any subsequent distribution) and (iii) the prospective Payee shall become a party to this Note (or any replacement hereof).
11. Payments . All payments to be made to the Payee shall be made in the lawful money of the United States of America in immediately available funds.
12. Place of Payments . Payments of principal and interest shall be delivered as directed by prior written notice by the holder of this Note to the Maker or, if not specified by such holder, then to such holder, at the address of such holder set forth on the Maker’s records or at such other address as is specified by prior written notice by such holder to the Maker.
13. Governing Law . THE VALIDITY OF THIS NOTE, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW CASTLE, STATE OF DELAWARE, PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE PAYEE’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE PAYEE ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE MAKER AND THE PAYEE WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13 .
 
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THE MAKER AND THE PAYEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE MAKER AND THE PAYEE REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. Waiver of Presentment, Demand and Dishonor . The Maker hereby waives presentment for payment, protest, demand, notice of protest, notice of nonpayment and diligence with respect to this Note, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, exemption, or homestead now provided or that hereafter may be provided by any federal or applicable state statute, including but not limited to exemptions provided by or allowed under the Federal Bankruptcy Code, both as to itself and as to all of its property, whether real or personal, against the enforcement and collection of the Obligations and any and all extensions, renewals, and modifications hereof.
15. Expenses; Taxes; Attorneys Fees . The Maker will pay on demand, all costs and expenses incurred by or on behalf of each holder, including reasonable fees, costs, client charges and expenses of counsel for each holder, accounting, due diligence, periodic field audits, physical counts, valuations, investigations, searches and filings, monitoring of assets, appraisals of Collateral, title searches and reviewing environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals, arising from or relating to: (a) the negotiation, preparation, execution, delivery, performance and administration of this Note and any other Subordinated Loan Document, (b) any requested amendments, waivers or consents to this Note or any other Subordinated Loan Document whether or not such documents become effective or are given, (c) the preservation and protection of any holder’s rights under this Note or any other Subordinated Loan Document, (d) the defense of any claim or action asserted or brought against any holder by any Person that arises from or relates to this Note or any other Subordinated Loan Document or any holder’s claims against the Maker or any Guarantor, or any and all matters in connection therewith, (e) the commencement or defense of, or intervention in, any court proceeding arising from or related to this Note or any other Subordinated Loan Document, (f) the filing of any petition, complaint, answer, motion or other pleading by any holder, or the taking of any action in respect of the Collateral or other security, in connection with this Note or any other Subordinated Loan Document, (g) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Note or any other Subordinated Loan Document, (h) any attempt to enforce any lien or security interest in any Collateral or other security in connection with this Note or any other Subordinated Loan Document, (i) any attempt to collect from the Maker or any Guarantor, (j) all liabilities and costs arising from or in connection with the past, present or future operations of the Maker or any Guarantor involving any damage to real or personal property or natural resources or harm or injury alleged to have resulted from any release of hazardous materials on,
 
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upon or into such property, (k) any environmental liabilities and costs incurred in connection with the investigation, removal, cleanup or remediation of any hazardous materials present or arising out of the operations of any facility owned or operated by the Maker or any Guarantor, or (l) the receipt by any holder of any advice from professionals with respect to any of the foregoing. Without limitation of the foregoing or any other provision of any Subordinated Loan Document: (x) the Maker agrees to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by any holder to be payable in connection with this Note or any other Subordinated Loan Document, and the Maker agrees to save each holder harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (y) the Maker agrees to pay all broker fees that may become due in connection with the transactions contemplated by this Note and the other Subordinated Loan Documents, and (z) if the Maker fails to perform any covenant or agreement contained herein or in any other Subordinated Loan Document, the holder may itself perform or cause performance of such covenant or agreement, and the expenses of the holder incurred in connection therewith shall be reimbursed on demand by the Maker.
16. Business Days . If any payment is due, or any time period for giving notice or taking action expires, on a day which is not a Business Day, the payment shall be due and payable on, and the time period shall automatically be extended to, the immediately following Business Day, and interest shall continue to accrue at the required rate hereunder until any such payment is made.
17. No Waiver . The rights and remedies of the holder of this Note expressly set forth in this Note are cumulative and in addition to, and not exclusive of, all other rights and remedies available at law, in equity or otherwise. No failure or delay on the part of the holder of this Note in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or be construed to be a waiver of any Event of Default. No course of dealing between the Maker and the holder of this Note or their agents or employees shall be effective to amend, modify or discharge any provision of this Note or to constitute a waiver of any Event of Default. No notice to or demand upon Maker in any case shall entitle Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of the holder of this Note to exercise any right or remedy or take any other or further action in any circumstances without notice or demand.
18. Construction . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” whether or not so expressly stated in each such instance and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be
 
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construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Note in its entirety and not to any particular provision hereof, (d) all references herein to Sections shall be construed to refer to Sections of this Note and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given it under GAAP.
19. Usury Laws . It is the intention of the Maker and each holder of this Note to conform strictly to all applicable usury laws now or hereafter in force, and any interest payable under this Note shall be subject to reduction to the amount not in excess of the maximum legal amount allowed under the applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters. If the maturity of this Note is accelerated by reason of an election by the holder hereof resulting from an Event of Default, voluntary prepayment by the Maker or otherwise, then earned interest may never include more than the maximum amount permitted by law, computed from the date hereof until payment, and any interest in excess of the maximum amount permitted by law shall be canceled automatically and, if theretofore paid, shall at the option of the holder hereof either be rebated to the Maker or credited on the principal amount of this Note, or if this Note has been paid, then the excess shall be rebated to the Maker. The aggregate of all interest (whether designated as interest, service charges, points or otherwise) contracted for, chargeable, or receivable under this Note shall under no circumstances exceed the maximum legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time. If such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess shall be canceled automatically and, if theretofore paid, rebated to the Maker or credited on the principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated to the Maker.
20. Counterparts; Telefacsimile or Electronic Mail Execution . This Note may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Note. Delivery of an executed counterpart of this Note by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Note. Any party delivering an executed counterpart of this Note by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Note but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Note.
*       *       *       *       *
 
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IN WITNESS WHEREOF, the Maker has executed and delivered this Senior Subordinated Promissory Note on the date first above written.

KELLWOOD HOLDING CORP., a Delaware corporation	
		
By:	 	/s/ Jason Bernzweig	
Name:	 	Jason Bernzweig	
Its:	 	Vice President	
Agreed to and accepted this              day of May, 2008
SUN KELLWOOD FINANCE, LLC

By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Its:	 	Vice President	

Exhibit 10.11
AMENDMENT No. 1
TO
SENIOR SUBORDINATED PROMISSORY NOTE
This AMENDMENT No. 1 to SENIOR SUBORDINATED PROMISSORY NOTE (this “ Amendment ”) is made and entered into as of this 19th day of July, 2012, by and between Kellwood Holding Corp., a Delaware corporation (the “ Maker ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”).
WHEREAS, the Maker and the Payee are parties to that certain Senior Subordinated Promissory Note dated May 2, 2008 (the “ Note ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Note);
WHEREAS, the maturity date in the Note is October 15, 2011;
WHEREAS, notwithstanding such maturity date, the principal amount and all accrued and unpaid interest thereon under the Note remain outstanding and unpaid by Maker;
WHEREAS, pursuant to and in accordance with Section 7 of the Note, the Maker and the Payee desire to amend the Note as provided in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:
1. Amendment of the Note . Effective as of the date hereof, the Note shall be hereby amended as follows:
1.1 Amendment to Section 1(a) . Section 1(a) of the Note is hereby amended by deleting it in its entirety and substituting the following in its place:
(a) Interest Accrual . Interest shall accrue on a daily basis at a rate of twelve percent (12%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding; provided , however , that, if the principal amount of this Note shall not be paid on the Maturity Date (as defined in Section 2(a) , as amended herein), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date this Note is paid in full at a rate of fourteen percent (14%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding.
1.2 Amendment of Section 2(a) . Section 2(a) of the Note is hereby amended by deleting it in its entirety and substituting the following in its place:
(a) Maturity Date . On October 15 , 2016 (the “ Maturity Date ”), the Maker shall pay the entire unpaid principal amount of this Note then outstanding to the Payee, together with all accrued and unpaid interest thereon.

2. Miscellaneous .
2.1 From and after the date hereof, each reference in the Note to “the Note,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Note as amended hereby.
2.2 Neither Maker nor Payee is, by entering into this Amendment, waiving any rights or remedies available to such party under the Note. Each of the rights and remedies of Maker and Payee available to such party immediately prior to the execution of this Amendment shall remain available to such party subsequent to the execution of this Amendment (including Payee’s right to interest at the rate of seventeen percent (17%) per annum pursuant to Section 1(a) of the Note for the period beginning on October 15, 2011 and ending on the date hereof).
2.3 Except as specifically set forth above, the Note shall remain unaltered and in full force and effect and the respective terms, conditions or covenants thereof are hereby in all respects ratified and confirmed.
2.4 This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
2.5 This Amendment shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year first above written.

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell C. Lentz	
Name:	 	Maxwell C. Lentz	
Title:	 	Vice President	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
Name:	 	Jill Granoff	
Title:	 	CEO and President	
Signature Page to Amendment to Note

Exhibit 10.12
AGREEMENT REGARDING AMENDMENT No. 1
TO
SENIOR SUBORDINATED PROMISSORY NOTE
This AGREEMENT REGARDING AMENDMENT No. 1 to SENIOR SUBORDINATED PROMISSORY NOTE (this “ Agreement ”) is made and entered into as of this 28th day of December, 2012, by and between Kellwood Holding Corp., a Delaware corporation (the “ Maker ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (the “ Payee ”).
WHEREAS, the Maker and the Payee are parties to that certain Senior Subordinated Promissory Note dated May 2, 2008 (as amended, the “ Note ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Note);
WHEREAS, Amendment No. 1 to the Note dated July 19, 2012 (“ Amendment No. 1 ”) provided in Section 1 that interest shall accrue on a daily basis at a rate of twelve percent (12%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of the Note then outstanding (the “ 12% Rate ”); provided , however , that, if the principal amount of the Note shall not be paid on the Maturity Date (as defined in Section 2(a) , as amended therein), interest shall accrue on a daily basis during the period commencing on the Maturity Date and ending on the date the Note is paid in full at a rate of fourteen percent (14%) per annum (calculated on the basis of the number of days in the applicable Fiscal Year) on the unpaid principal balance of this Note then outstanding (the “ 14% Rate ”, and together with the 12% Rate, the “ Amended Interest Rate ”);
WHEREAS, at the time of Amendment No. 1, the Maker and Payee intended to amend the Note in such a manner as to waive, forgive and cancel all then accrued interest under the Note and to provide that the Note would accrue interest as of and after the date of Amendment No. 1 at the Amended Interest Rate;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Waiver, Forgiveness and Cancellation of Accrued Interest . All interest that accrued under the Note prior to July 19, 2012 is hereby waived, forgiven and cancelled.
2. Confirmation of Amount Owing . For the avoidance of doubt and notwithstanding any documentation of Maker or the Payee to the contrary, Maker and Payee hereby acknowledge and agree that, after giving effect to this Agreement, as of July 19, 2012 the total amount outstanding and owing under the Note was $225,000,000 and any accruals of interest prior to such date are hereby waived, forgiven and cancelled in their entirety (it being agreed and understood that as of July 19, 2012 such $225,000,000 shall accrue interest in accordance with Section 1 of Amendment No. 1).

3. Miscellaneous .
3.1 This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
3.2 This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Title:	 	Vice President and Asst. Secretary	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
Name:	 	Jill Granoff	
Title:	 	CEO	
Signature Page to Agreement Regarding Amendment No. 1 to Note

Exhibit 10.13
B ANK OF M ONTREAL L OAN A UTHORIZATION A GREEMENT
D ATED : F EBRUARY 13, 2008
The Company referred to below has applied for, and Bank of Montreal, Chicago, Illinois (“Bank” ), has approved the establishment of, a loan authorization account (“Loan Account”) from which the Company may from time to time request loans up to the maximum amount of credit shown below (the “Maximum Credit”) provided that the aggregate principal amount of loans hereunder shall not exceed $370,000,000. Interest on such loans is computed at a variable rate which may change daily based upon changes in the Bank’s Prime Rate. The Company may make principal payments at any time and in any amount. The request by the Company for, and the making by the Bank of, any loan against the Loan Account pursuant hereto, shall constitute an agreement between the Company and the Bank as follows:

Name of Company:	  	C ARDINAL I NTEGRATED , LLC, a Delaware limited liability company	

Address:	  	5200 Town Center Circle
Suite 600
Boca Raton, FL 33486
Attn.: Jason H. Neimark, Jason G. Bernzweig and C. Deryl Couch	

Type of Loan Account:	  	x Revolving, which means as principal is repaid, the Company may reborrow subject to this Agreement.	
		
	  	¨ Multiple Advances, which means that the Company may not reborrow any amounts that have been repaid but may still borrow the difference between the Maximum Credit and the principal amounts of prior borrowings.	
Amount of Maximum Credit: $370,000,000
Each Loan Requested Shall Be At Least: $ 100,000

Variable Interest Rate:	  	The interest rate applicable prior to the Maturity Date equals the rate per annum announced by the Bank from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the United States (the “Prime Rate”) minus 1%.	

Maturity Date:	  	The Loan Account terminates, and Loans are payable on August 13, 2008, unless the Loan Account is terminated and the Loans are sooner declared due and payable pursuant to Section 5 below as a result of the occurrence and continuance of an Event of Default.	
Periodic Statement reflecting accrued interest will be sent and interest will be payable quarterly.

Payments shall be due at the Bank’s principal office in Chicago, Illinois, paid to the order of the Bank, and	 		  		
made by:	 	x	  	By Fed Wire:
Pay to the order of Harris N.A., Chicago, IL
ABA 071000288
To the account of: Bank of Montreal, Chicago Branch
Account#: 183-320-1
Reference: Cardinal Integrated, LLC
Attn.: Client Services Dept.	
 
If Letters of Credit may be requested, check here: ¨ and attach Letter of Credit Rider following signature page hereof.
 
1.	Using the Account. All loans and advances from the Loan Account are referred to in this Agreement as “Loans”. Loan requests must be by telephone and confirmed in writing (including by facsimile) and shall	

 	be sent to the Company’s Bank of Montreal Account Officer or Client Services Officer no later than 1:00 p.m. on the date of the proposed borrowing in order to be honored the same day. Loan proceeds shall be credited to the Company’s deposit account at the Bank unless the Bank is directed otherwise by special written directions from the Company. The amount of each Loan requested shall be at least the minimum amount shown above, and the Bank shall have the right to refuse to honor any Loan requested by the Company which is less than that minimum amount, even if the Bank has previously honored a Loan request for less than the minimum amount. The Company shall not request any Loan which, when taken together with the Loans then outstanding, would exceed the Maximum Credit. The Company shall furnish to the Bank certificates in the form of Exhibit A attached to the Guaranty described in Section 4 hereof at the times set forth in the Guaranty, properly completed and duly certified by Sun Capital Partners V, L.P. (the “Guarantor”).	
Loans will be made available from the Loan Account subject to the Bank’s approval on a case-by-case basis as and when Loans are requested by the Company.
All Loans shall be made against and evidenced by the Company’s promissory note payable to the order of the Bank in the principal amount of $370,000,000, such note to be in the form of Exhibit A attached hereto (the “Note” ). The Bank agrees that notwithstanding the fact that the Note is in the principal amount of $370,000,000, it shall evidence only the actual unpaid principal balance of Loans made under the Loan Account and issued pursuant hereto. All Loans and other extensions of credit made against the Note and the status of all amounts evidenced by the Note shall be recorded by the Bank on its books and records or, at its option in any instance, endorsed on a schedule to the Note and the unpaid principal balance and status and rates so recorded or endorsed by the Bank shall be prima facie evidence in any court or other proceeding brought to enforce the Note of the principal amount remaining unpaid thereon, the status of the Loans and other extensions of credit evidenced thereby and the interest rates applicable thereto, absent manifest error; provided that the failure of the Bank to record any of the foregoing shall not limit or otherwise affect the obligation of the Company to repay the principal amount of the Note together with accrued interest thereon. The Bank agrees that if it transfers or assigns the Note, the Bank will stamp thereon a statement of the actual principal amount evidenced thereby at the time of transfer. The Company agrees that in any action or proceeding instituted to collect or enforce collection of the Note, the amount shown as owing the Bank on its records shall be prima facie evidence of the unpaid balance of principal and interest on the Note, absent manifest error.
 
2.	Interest. The Company shall pay the Bank interest on the unpaid principal balance of Loans in accordance with the terms of this Agreement. Accrued interest will be billed quarterly, and is due by the last day of each fiscal quarter (each, an “Interest Payment Date” ). Interest for each billing period is computed by applying a daily periodic rate based on the Bank’s Prime Rate minus 1% to each day’s ending Loan balance. Interest shall be computed on the basis of a year of 360 days for the actual number of days elapsed. The Bank’s Prime Rate reflects market rates of interest as well as other factors, and it is not necessarily the Bank’s best or lowest rate. The daily Loan balance shall be computed by taking the principal balance of Loans at the beginning of each day, adding any Loans posted to the Loan Account that day, and subtracting any principal payments posted to the Loan Account as of that day. Interest begins to accrue on the date a Loan is posted to the Loan Account. The principal balance of Loans which remains unpaid after demand for repayment or during the existence of any other Event of Default shall bear interest until paid in full at a post-maturity rate of 2% per annum above the interest rate otherwise applicable to the Loans (determined as aforesaid). The interest rate payable under this Agreement shall be subject, however,	
 
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 	to the limitation that such interest rate shall never exceed the highest rate which the Company may contract to pay under applicable law. Interest on the Loans shall, at the option of the Company and subject to the following terms and conditions, be payable either (i) in immediately available funds on each Interest Payment Date in accordance with this paragraph 2, or (ii) by adding such interest to the unpaid principal balance of the Loans on each Interest Payment Date, in which event such interest shall become a like amount of the principal of the Note (a borrowing of a Loan of like amount) which the Company hereby promises to pay as hereinafter set forth, or (iii) by any combination of the methods described in the immediately preceding clauses (i) and (ii) selected by the Company which results in such methods being applied in the satisfaction in full of all interest due on the Loans on such Interest Payment Date:	
(i) Unless the Company notifies the Bank that the Company intends to pay the interest due on the Loans on each Interest Payment Date with funds not borrowed under this Agreement, the Company shall be deemed to have irrevocably requested a Loan on each Interest Payment Date in the amount of the interest then due on the Loans, in each case subject to the provisions of this Agreement (other than the requirement that a Loan be in a certain minimum amount), which new Loan shall be applied to pay the interest then due on the Loans. In the event the Company has elected to pay the interest due on the Loans with funds not borrowed under this Agreement and the Company fails to make any such payment within twenty (20) days of the applicable Interest Payment Date the Bank may in its sole discretion deem the Company to have irrevocably requested a Loan in the amount of the interest then due on the Loans, in each case subject to the provisions of this Agreement (other than the requirement that a Loan be in a certain minimum amount) which new Loans shall be applied to pay the interest then due on the Loans.
(ii) Each payment of interest by a borrowing of a Loan shall be evidenced by the Note, shall bear interest from the date made at a rate per annum equal at all times to the rate then applicable to the Loans, payable on the last day of each calendar month, subject to the provisions of paragraph 10 herein.
(iii) In no event shall the unpaid principal balance of all Loans, including, without limitation, each borrowing of a Loan to pay interest then due on the Loans, exceed the Maximum Credit.
 
3.	Fees. The Company agrees to pay to the Bank a non-refundable Closing Fee in an amount equal to .15% of the Maximum Credit.	
 
4.	Guaranty. The Guarantor shall at all times guarantee all Loans issued pursuant to this Agreement. The Company hereby acknowledges that the Guaranty being provided by the Guarantor is a material inducement to the Bank's extension of credit hereunder and that in determining whether or not to extend additional credit to the Company and whether or not to demand repayment of this Loan, the Bank will be considering issues related to the continued creditworthiness and liquidity position of the Guarantor.	
 
5.	Events of Default; Enforcement. The occurrence of any of the following shall be an “Event of Default”: (a) non-payment of (i) any principal of or interest or fee hereon within 5 business days after such amount is due, or (ii) any other indebtedness or liabilities of the Borrower owing to the Bank within 5 business days after such amount is due; (b) breach of any term or condition of the Guaranty; (c) any representation made by the Borrower or any guarantor hereof in this Agreement is untrue in any material respect; (d) dissolution, termination or insolvency of the Borrower or any material guarantor of the Loans; (e) the institution by or against the Borrower or any material guarantor of the Loans of any involuntary bankruptcy or similar proceeding for the relief of debtors or the appointment of any receiver for any such party or any of its property (and such proceeding or petition shall continue undismissed or unstayed for sixty (60) days); and (f) the making of an assignment for the benefit of creditors by the Borrower or any guarantor of the Loans.	
 
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During the existence of any Event of Default, the Bank may, by notice to the Borrower, take either or both of the following actions: (i) terminate the Loan Account and any other obligation of the Bank to extend any further credit hereunder on the date (which may be the date thereof) stated in such notice; and (ii) declare the principal of and accrued interest on the Loans and all other amounts owing under this Agreement to be immediately due and payable, without further demand, presentment, protest, or notice of any kind.
When any Event of Default described in clause (e) or (f) above regarding the Borrower has occurred and is continuing, then both principal and interest, and all other amounts payable under this Agreement shall immediately become due and payable without presentment, demand, protest or notice of any kind, and the obligation of the Bank to extend further credit pursuant to any of the terms hereof shall immediately terminate.
No delay by the Bank in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Bank of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. The Borrower agrees to pay to the Bank all reasonable out-of-pocket costs and expenses incurred or paid by the Bank in connection with the collection of the Loans and any other amounts due under this Agreement or any guarantee, including, without limitation, reasonable attorneys’ fees for one outside counsel for the Bank and court costs (including, without limitation, all such costs and expenses incurred in connection with any proceeding under the United States Bankruptcy Code involving the Borrower or any guarantor). The Bank shall have the right, at any time during the existence of an Event of Default, to set-off the balance of any deposit account that the Borrower may at any time maintain with the Bank or any of its affiliates against any amounts at any time owing under this Agreement, whether or not the balance of Loans under this Agreement is then due.
 
6.	Maturity Date; Payments. The Company shall pay to the Bank the principal balance of outstanding Loans together with any accrued interest on the M ATURITY D ATE . Payments received by the Bank on the Loans shall be applied first to accrued interest and then to the principal balance of outstanding Loans, provided that during the existence of an Event of Default all payments received shall be applied in such order and manner as the Bank shall determine. If any payment from the Company under this Agreement becomes due on a Saturday, Sunday, or a day which is a legal holiday for banks in the State of Illinois, such payment shall be made on the next bank business day and any such extension shall be included in computing interest under this Agreement.	
 
7.	Periodic Statements. The Bank will furnish the Company with a monthly statement for each billing period which has any transaction or balance.	
 
8.	Financial Statements. The Company agrees to furnish financial information of the Company to the Bank upon request of the Bank from time to time. Such information shall be furnished as soon as reasonably possible, but in any event within 30 days after request by the Bank. Without limiting the foregoing, the Bank may request the Company to deliver:	
(a) as soon as available, and in any event within 30 days after the last day of each month, a copy of the consolidated balance sheet of the Company and its subsidiaries as of the last
 
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day of such month and the consolidated statements of income, retained earnings and cash flows of the Company and its subsidiaries for the month and the fiscal year-to-date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by the Company in accordance with general accepted accounting principles (“GAAP ”), except as otherwise stated therein, and certified to by its chief financial officer or such other officer reasonably acceptable to the Bank; and/or
(b) as soon as available, and in any event within 90 days after the close of each fiscal year of the Company, a copy of the consolidated and consolidating balance sheet of the Company and its subsidiaries as of the close of such period and the consolidated statements of income, retained earnings and cash flows of the Company and its subsidiaries for such period, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion thereon of a firm of independent public accountants of recognized national standing, selected by the Company and reasonably satisfactory to the Bank, to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in all material respects in accordance with GAAP the consolidated financial condition of the Company and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended.
 
9.	Representations and Warranties. In consideration of establishing and maintaining the Loan Account, the Company hereby represents and warrants to the Bank that: (a) the Company is a limited liability company duly organized, validly existing, and in good standing under the laws of its state of organization; (b) the execution, delivery, and performance by the Company of this Agreement, the Note and all documents executed in connection therewith (collectively, the “Loan Documents”) are within its powers, have been duly authorized by all necessary action, and do not contravene the Company's certificate of formation or operating agreement or any law or contractual restriction binding on or affecting the Company; (c) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the Company’s due execution, delivery, and performance of this Agreement or the other Loan Documents; (d) this Agreement is, and the other Loan Documents when executed and delivered by the Company will be, the Company’s legal, valid, and binding obligation enforceable against the Company in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies; and (e) there is no pending or threatened action or proceeding affecting the Company before any court, governmental agency or arbitrator, which may materially adversely affect the Company’s financial condition or operations or which purports to affect the legality, validity, or enforceability of this Agreement or any other Loan Documents.	
 
10.	D EMAND O BLIGATION ; E NFORCEMENT . T HE LOANS ARE PAYABLE ON THE MATURITY DATE . I N ADDITION , THE B ANK CAN DEMAND PAYMENT IN FULL OF THE LOANS IN ACCORDANCE WITH S ECTION 5 OF THIS AGREEMENT AT ANY TIME IN ITS SOLE DISCRETION .	
No delay by the Bank in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Bank of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. The Company agrees to pay to the Bank all reasonable expenses incurred or paid by the Bank in connection with the establishment and maintenance of the Loan Account
 
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and the collection of the Loans and any court costs and other reasonable amounts due under this Agreement, including, without limitation, reasonable attorneys’ fees. The Bank shall have the right at any time to set-off the balance of any deposit account that the Company may at any time maintain with the Bank against any amounts at any time owing under this Agreement, whether or not the balance of Loans or reimbursement or other obligations under this Agreement are then due.
 
11.	Termination; Renewal. The availability of additional Loans under this Agreement will automatically terminate on the M ATURITY D ATE . Prior to the Maturity Date, the Bank reserves the right at any time without notice to suspend the Company’s borrowing privileges or refuse any Loan request at any time any Event of Default, or any event of condition which with notice or lapse of time, or both, would constitute an Event of Default, exists. The Company may terminate this Agreement at any time effective upon receipt by the Bank of at least 15 days prior written notice. No termination under this Section shall affect the Bank’s rights or the Company’s obligations regarding payment or default under this Agreement. Such termination shall not affect the Company’s obligation to pay all Loans and other obligations and the interest accrued through the date of final payment. The Bank may also elect to honor Loan requests after termination of this Agreement, and the Company agrees that any such payment by the Bank shall constitute a Loan to the Company issued at the request of the Company under this Agreement.	
 
12.	Notices. The Bank may rely on instructions from the Company with respect to any matters relating to this Agreement or the Loan Account, including telephone loan requests (including by facsimile) which are made by persons whom the Bank reasonably believes to be the persons authorized by the Company to make such loan requests. All notices and statements to be furnished by the Bank shall be sufficient if delivered to any such person at the billing address for the Loan Account shown on the records of the Bank. All notices from the Company shall be sent to the Bank at 115 South LaSalle Street, Chicago, Illinois 60603, Attention: Client Services, Department 17 West. The Company waives presentment and notice of dishonor. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. No amendment or waiver of any provision of this Agreement or the Note or any other Loan Document, nor consent to any departure by the Company therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank. If any part of this Agreement is unenforceable, that will not make any other part unenforceable. This Agreement shall be governed by the laws of the State of Illinois.	
 
13.	Consent to Jurisdiction. T HE C OMPANY SUBMITS TO THE NON - EXCLUSIVE JURISDICTION OF THE U NITED S TATES D ISTRICT C OURT FOR THE N ORTHERN D ISTRICT OF I LLINOIS AND OF ANY I LLINOIS S TATE C OURT SITTING IN C OOK C OUNTY , I LLINOIS , FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY .	
 
14.	Jury Trial Waiver. T HE C OMPANY AND THE B ANK WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY .	
 
15.	Counterparts. This Agreement may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Agreement by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. Delivery of execution counterparts of this Agreement and the Loan Documents by telecopy or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as originals.	
 
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16.	Costs and Expenses. The Company agrees to pay all expenses, legal and/or otherwise (including court costs and reasonable attorneys’ fees) paid or incurred by the Bank in endeavoring to collect obligations of the Company, in connection with transactions contemplated in or financed by this Agreement, the Loan Documents, or any other documents executed in connection herewith including any security agreements, intercreditor agreements or subordination agreements (“Ancillary Documents”), or any part thereof, and in protecting, defending or enforcing this Agreement, any of the Loan Documents or any Ancillary Documents in any litigation, bankruptcy or insolvency proceedings or otherwise.	
 
17.	USA Patriot Act. The Bank hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify, and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Bank to identify the Company in accordance with the Act.	
 
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The Company agrees to the terms set forth above.
This Agreement is dated as of the date first written above.

C ARDINAL I NTEGRATED , LLC	
		
By:	 	/s/ Jason Neimark	
			
Printed:	 	Jason Neimark	
			
Its:	 	 	
This Agreement is dated as of the date first written above.

B ANK OF M ONTREAL	
		
By:	 	/s/ Brett M. Sanchez	
			
Printed Name:	 	Brett M. Sanchez	
			
Its:	 	Vice President	
 
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Exhibit 10.14
K ELLWOOD H OLDING C ORP .
F IRST A MENDMENT TO B ANK OF M ONTREAL
L OAN A UTHORIZATION A GREEMENT
Bank of Montreal
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Bank of Montreal Loan Authorization Agreement dated as of February 13, 2008 (the Bank of Montreal Loan Authorization Agreement as the same may be amended from time to time, being referred to herein as the “Loan Agreement” ), between the undersigned, Kellwood Holding Corp. (formerly known as Cardinal Integrated, LLC), a Delaware corporation (the “Borrower” ), and Bank of Montreal (the “Bank” ). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Loan Agreement.
The Borrower has requested that the Bank decrease the amount of Maximum Credit under the Loan Agreement and make certain amendments to the Loan Agreement to reflect this decrease. The Bank is willing to do so under the terms and conditions set forth in this agreement (herein, the “Amendment” ).
 
S ECTION  1.	A MENDMENTS .	
Subject to the satisfaction of all of the conditions precedent set forth in Section 3 below, the Loan Agreement shall be and hereby is amended as follows:
1.1. The amount “$370,000,000” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the amount “$76,000,000” .
1.2. Exhibit A to the Loan Agreement shall be amended and restated in its entirety in the form of Exhibit A attached hereto.
 
S ECTION  2.	N EW N OTE .	
In replacement for that certain Promissory Note payable to the order of Bank of Montreal dated as of February 13, 2008 in the principal amount of $370,000,000 (the “Previous Note” ), the Borrower shall execute and deliver to the Bank a new demand note in the amount of $76,000,000, dated as of the date of its issuance and otherwise in the form of Exhibit A attached hereto (the “New Note” ) which shall substitute for the Bank’s Previous Note and shall evidence the loans outstanding to the Bank. All references in the Loan Agreement to the Note shall be deemed references to the New Note.

S ECTION  3.	C ONDITIONS P RECEDENT .	
3.1. The Borrower and the Bank shall have executed and delivered this Amendment and the executed New Note.
3.2. The Bank shall have received copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment to the extent the Bank or its counsel may reasonably request.
3.3. Legal matters incident to the execution and delivery of this Amendment shall be reasonably satisfactory to the Bank and its counsel.
3.4. Sun Capital Partners V, L.P. shall have executed and delivered to the Bank its consent to this Amendment in the form set forth below and the First Amendment to Guaranty.
 
S ECTION  4.	R EPRESENTATIONS .	
In order to induce the Bank to execute and deliver this Amendment, the Borrower hereby represents to the Bank that as of the date hereof the representations and warranties set forth in the Loan Agreement are and shall be and remain true and correct in all material respects except to the extent such representations and warranties relate to a particular date, in which case they are true and correct in all material respects as of such date, and the Borrower is in compliance with the terms and conditions of the Loan Agreement.
 
S ECTION  5.	M ISCELLANEOUS .	
5.1. Except as specifically amended herein, the Loan Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Loan Agreement, the Note, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Loan Agreement, any reference in any of such items to the Loan Agreement being sufficient to refer to the Loan Agreement as amended hereby.
5.2. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Delivery of a counterpart by facsimile or electronic transmission shall constitute delivery of an original counterpart hereunder. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois.
[S IGNATURE P AGE TO F OLLOW ]
 
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This First Amendment to Bank of Montreal Loan Authorization Agreement is entered into as of this 2 nd day of May, 2008.

K ELLWOOD H OLDING C ORP .	
		
By:	 		
			
Printed Name:	 	Jason Bernzweig	
			
Its:	 	Vice President	
Accepted and agreed to this 2 nd day of May, 2008.

B ANK OF M ONTREAL	
		
By:	 		
Name:	 	Brett M. Sanchez	
Its:	 	Vice President	
 
[Signature Page to First Amendment to Loan Authorization Agreement]

Exhibit 10.15
K ELLWOOD H OLDING C ORP .
S ECOND A MENDMENT TO B ANK OF M ONTREAL
L OAN A UTHORIZATION A GREEMENT
Bank of Montreal
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Bank of Montreal Loan Authorization Agreement dated as of February 13, 2008 (the Bank of Montreal Loan Authorization Agreement as the same may be amended from time to time, being referred to herein as the “Loan Agreement” ), between the undersigned, Kellwood Holding Corp. (formerly known as Cardinal Integrated, LLC), a Delaware corporation (the “Borrower” ), and Bank of Montreal (the “Bank” ). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Loan Agreement.
The Borrower has requested that the Bank (i) decrease the amount of Maximum Credit and extend the Maturity Date under the Loan Agreement and (ii) make certain amendments to the Loan Agreement to reflect this decrease and extension. The Bank is willing to do so under the terms and conditions set forth in this agreement (herein, the “Amendment” ).
 
S ECTION  1.	A MENDMENTS .	
Subject to the satisfaction of all of the conditions precedent set forth in Section 3 below, the Loan Agreement shall be and hereby is amended as follows:
1.1. The amount “$76,000,000” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the amount “$67,785,197” .
1.2. The date “August 13, 2008” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the date “February 6, 2009” .
1.3. Exhibit A to the Loan Agreement shall be amended and restated in its entirety in the form of Exhibit A attached hereto.
 
S ECTION  2.	N EW N OTE .	
In replacement for that certain Promissory Note payable to the order of Bank of Montreal dated as of May 2, 2008 in the principal amount of $76,000,000.00 (the “Previous Note” ), the Borrower shall execute and deliver to the Bank a new demand note in the amount of $67,785,197.00, dated as of the date of its issuance and otherwise in the form of Exhibit A attached hereto (the “New Note” ) which shall substitute for the Bank’s Previous Note and shall evidence the loans outstanding to the Bank. All references in the Loan Agreement to the Note shall be deemed references to the New Note.

S ECTION  3.	C ONDITIONS P RECEDENT .	
3.1. The Borrower and the Bank shall have executed and delivered this Amendment and the executed New Note.
3.2. The Bank shall have received copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment to the extent the Bank or its counsel may reasonably request.
3.3. Legal matters incident to the execution and delivery of this Amendment shall be reasonably satisfactory to the Bank and its counsel.
3.4. Sun Capital Partners V, L.P. shall have executed and delivered to the Bank its consent to this Amendment in the form set forth below and the Second Amendment to Guaranty.
 
S ECTION  4.	R EPRESENTATIONS .	
In order to induce the Bank to execute and deliver this Amendment, the Borrower hereby represents to the Bank that as of the date hereof the representations and warranties set forth in the Loan Agreement are and shall be and remain true and correct in all material respects except to the extent such representations and warranties relate to a particular date, in which case they are true and correct in all material respects as of such date, and the Borrower is in compliance with the terms and conditions of the Loan Agreement.
 
S ECTION  5.	M ISCELLANEOUS .	
5.1. Except as specifically amended herein, the Loan Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Loan Agreement, the Note, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Loan Agreement, any reference in any of such items to the Loan Agreement being sufficient to refer to the Loan Agreement as amended hereby.
5.2. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Delivery of a counterpart by facsimile or electronic transmission shall constitute delivery of an original counterpart hereunder. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois.
[S IGNATURE P AGE TO F OLLOW ]
 
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This Second Amendment to Bank of Montreal Loan Authorization Agreement is entered into as of this 13th day of August, 2008.

K ELLWOOD H OLDING C ORP .	
		
By:	 		
			
Printed Name:	 	Robert C. Skinner, Jr.	
			
Its:	 	President and CEO	
Accepted and agreed to this 13th day of August, 2008.

B ANK OF M ONTREAL	
		
By:	 		
Name:	 	Denise Sidlo	
Its:	 	Vice President	
 
[Signature Page to Second Amendment to Loan Authorization Agreement]

Exhibit 10.16
K ELLWOOD H OLDING C ORP .
T HIRD A MENDMENT TO B ANK OF M ONTREAL
L OAN A UTHORIZATION A GREEMENT
Bank of Montreal
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Bank of Montreal Loan Authorization Agreement dated as of February 13, 2008 (the Bank of Montreal Loan Authorization Agreement as the same may be amended from time to time, being referred to herein as the “ Loan Agreement ”), between the undersigned, Kellwood Holding Corp. (formerly known as Cardinal Integrated, LLC), a Delaware corporation (the “ Borrower ”), and Bank of Montreal (the “ Bank ”). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Loan Agreement.
The Borrower has requested that the Bank (i) increase the amount of Maximum Credit and extend the Maturity Date under the Loan Agreement and (ii) make certain amendments to the Loan Agreement to reflect this increase and extension. The Bank is willing to do so under the terms and conditions set forth in this agreement (herein, the “ Amendment ”).
 
S ECTION  1.	A MENDMENTS .	
Subject to the satisfaction of all of the conditions precedent set forth in Section 3 below, the Loan Agreement shall be and hereby is amended as follows:
1.1. The amount “ $67,785,197 ” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the amount “ $72,000,000 ”.
1.2. The date “ February 6, 2009 ” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the date “ August 6, 2009 ”.
1.3. Exhibit A to the Loan Agreement shall be amended and restated in its entirety in the form of Exhibit A attached hereto.
 
S ECTION  2.	N EW N OTE .	
In replacement for that certain Promissory Note payable to the order of Bank of Montreal dated as of August 13, 2008 in the principal amount of $67,785,197.00 (the “ Previous Note ”), the Borrower shall execute and deliver to the Bank a new demand note in the amount of $72,000,000.00, dated as of the date of its issuance and otherwise in the form of Exhibit A attached hereto (the “ New Note ”) which shall substitute for the Bank’s Previous Note and shall evidence the loans outstanding to the Bank. All references in the Loan Agreement to the Note shall be deemed references to the New Note.

S ECTION  3.	C ONDITIONS P RECEDENT .	
3.1. The Borrower and the Bank shall have executed and delivered this Amendment and the Borrower shall have executed and delivered to the Bank the New Note.
3.2. The Bank shall have received copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment to the extent the Bank or its counsel may reasonably request.
3.3. Legal matters incident to the execution and delivery of this Amendment shall be reasonably satisfactory to the Bank and its counsel.
3.4. Sun Capital Partners V, L.P. shall have executed and delivered to the Bank its consent to this Amendment in the form set forth below and the Third Amendment to Guaranty.
 
S ECTION  4.	R EPRESENTATIONS .	
In order to induce the Bank to execute and deliver this Amendment, the Borrower hereby represents to the Bank that as of the date hereof the representations and warranties set forth in the Loan Agreement are and shall be and remain true and correct in all material respects except to the extent such representations and warranties relate to a particular date, in which case they are true and correct in all material respects as of such date, and the Borrower is in compliance with the terms and conditions of the Loan Agreement.
 
S ECTION  5.	M ISCELLANEOUS .	
5.1. Except as specifically amended herein, the Loan Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Loan Agreement, the Note, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Loan Agreement, any reference in any of such items to the Loan Agreement being sufficient to refer to the Loan Agreement as amended hereby.
5.2. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Delivery of a counterpart by facsimile or electronic transmission shall constitute delivery of an original counterpart hereunder. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois.
[S IGNATURE P AGE TO F OLLOW ]
 
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This Third Amendment to Bank of Montreal Loan Authorization Agreement is entered into as of this 6th day of February, 2009.

K ELLWOOD H OLDING C ORP .	
		
By:	 		

Printed Name:	 	Michael W. Kramer	
			
Its:	 	President and Chief Executive Officer	
Accepted and agreed to this 6th day of February, 2009.

B ANK OF M ONTREAL	
		
By:	 		
	 	 	
Name:	 	Craig S. Munro	
Its:	 	Managing Director	
[Signature Page to Third Amendment to Loan Authorization Agreement]

Exhibit 10.17
ASSIGNMENT AND ASSUMPTION
April 9, 2009 (the “ Effective Date ”)
This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date and is entered into by and between the Assignor identified in item 1 below (the “ Assignor ”) and each Assignee is identified in item 2 below (referred to individually herein as an “ Assignee ” and collectively, the “ Assignees ”) with their applicable pro rata percentage of the Assigned Interests (defined below) being assigned to them by the Assignor (“ Applicable Percentage ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Authorization Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by each 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 Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to each Assignee its Applicable Percentage, and each Assignee hereby irrevocably purchases and assumes its Applicable Percentage 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 Bank as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as the Bank 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 without limitation any letters of credit, guarantees, and swingline loans 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 the Bank) 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 by the Assignor to each Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	 	Assignor:	  	Bank of Montreal	
			
2.	 	Assignees:	  	SCSF Kellwood Finance, LLC (25%) and Sun Kellwood Finance, LLC (75%)	
			
3.	 	Borrower:	  	Kellwood Holding Corp., a Delaware corporation (formerly known as Cardinal Integrated, LLC)	

					
4.	 	Credit Agreement:	  	Bank of Montreal Loan Authorization Agreement dated February 13, 2008 between the Borrower and Bank of Montreal (as the same has been and may further be amended, restated, supplemented or otherwise modified from time to time)	
5.	 	Assigned Interest:	  		
			
	 	See Exhibit A.	  		
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
 
2

Dates as of the date first written above.
The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR:	
	
BANK OF MONTREAL	
		
By:	 	/s/ Brett M Sanchez	
Name: Brett M Sanchez	
Title:   Vice President	

ASSIGNEES :	
	
SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	

The terms set forth in this Assignment and Assumption are hereby acknowledged by:

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	

ANNEX 1
LOAN AUTHORIZATION AGREEMENT
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
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 Assumption 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 Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan 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 any Loan 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 any Loan Document.
1.2. Assignee . Each 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 Assumption and to consummate the transactions contemplated hereby and to become the Bank under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as the Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of the Bank thereunder, (iii) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (iv) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 8 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (v) it has, independently and without reliance upon the Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest; and (b) agrees that (i) it will, independently and without reliance on the Bank, 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 Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as the Bank.

2. Payments . From and after the Effective Date, (i) each Assignee shall make all payments in respect of its Applicable Percentage of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and (ii) Assignor shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to each Assignee with respect to its Applicable Percentage for amounts which have accrued from and after the Effective Date.
3. Assignees’ Rights . Assignor agrees that each Assignee and its affiliates (including Guarantor) shall have all rights of exoneration, contribution, reimbursement, recourse or subrogation as if the indebtedness evidenced by the Note has been paid in full, notwithstanding the fact that payment in full has not actually occurred but rather has been effectuated by an assignment of interests therein and that the provisions of Section 5 of the Guaranty shall be of no further force or effect.
4. Release . Each Assignee agrees that Assignor shall be released of all of its obligations and liabilities under the Loan Documents.
5. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption 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 Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Illinois.

EXHIBIT A

Facility
Assigned	  	Original Loan
Authorization Date	 	  	Principal Due as
of Effective Date	 	  	Interest Due as of
Effective Date	 	  	Fees Due as of
Effective Date	 	  	Amount of
Commitment/
Loans Assigned	 	  	% Assigned of
Commitment/Loans	 	 	CUSIP
Number	
Loans	  	 	February 13, 2008	  	  	$	68,768,082.36	  	  	$	717,116.50	  	  	$	4,691.31	  	  	$	72,000,000	  	  	 	100	% 	 	[______]	

Exhibit 10.18
L OAN A UTHORIZATION A GREEMENT
D ATED : S EPTEMBER  9, 2011
The Company referred to below has applied for, and BMO Harris Financing, Inc. (“ Lender ”), has approved the establishment of, a loan authorization account (“ Loan Account ”) from which the Company may from time to time request loans and may request letters of credit up to the maximum amount of credit shown below (the “ Maximum Credit ”) provided that the aggregate principal amount of loans and the aggregate stated amounts of letters of credit hereunder shall not exceed $14,900,000. Interest on such loans is computed at a variable rate which may change daily based upon changes in the Reference Bank’s Prime Rate or the LIBOR Quoted Rate (each as hereinafter defined). The Company may make principal payments at any time and in any amount. The request by the Company for, and the making by the Lender of, any loan against the Loan Account or the issuance by Bank of Montreal of any letters of credit pursuant hereto (Bank of Montreal in its capacity as issuer of letters of credit, herein referred to as the “Issuing Bank” and in any other capacity as the “ Reference Bank ”), shall constitute an agreement between the Company and the Lender as follows:
Name of Company: K ELLWOOD C OMPANY , a Delaware corporation

Address:	  	600 Kellwood Parkway	
	  	Chesterfield, Missouri 63017	
	  	Attn.: Keith Grypp - Legal Department	

Type of Loan Account:	 	x	  	Revolving, which means as principal is repaid, the Company may reborrow subject to this Agreement.	
			
	 	¨	  	Multiple Advances, which means that the Company may not reborrow any amounts that have been repaid but may still borrow the difference between the Maximum Credit and the principal amounts of prior borrowings.	
Amount of Maximum Credit: $14,900,000
Each Loan Requested Shall Be At Least: $100,000

Variable Interest Rate:	 	The interest rate applicable prior to the Maturity Date equals the greater of (i) the rate per annum announced by the Reference Bank from time to time as its prime commercial rate, or equivalent, for U.S. Dollar loans to borrowers located in the United States (the “ Prime Rate ”) plus the rate of 2.00% per annum or (ii) the LIBOR Quoted Rate for such day plus the rate of 4.75% per annum. As used herein, the term “LIBOR Quoted Rate” means, for any day, the rate per annum equal to the quotient of (i) the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a three-month interest period which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on such day (or, if such day is not a business day, on the immediately preceding business day) divided by (ii) one (1) minus the Reserve Percentage; the term “LIBOR01 Page” means the display designated as “LIBOR01 Page” on the Reuters Service (or such other page as may replace the LIBOR Page on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits); and “Reserve Percentage” means, for any day, the maximum reserve percentage, expressed as a decimal, at which reserves (including, without limitation, any emergency, marginal, special, and supplemental reserves) are imposed by the Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”, as defined in such Board’s Regulation D (or any successor thereto), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto, without benefit or credit for any prorations, exemptions or offsets under Regulation D (and adjusted automatically on and as of the effective date of any change in any such reserve percentage).	

Maturity Date: The Loan Account terminates, and Loans are payable, O N D EMAND ; provided that to the extent funds are not immediately available, the Company shall have ten (10) business days to honor any demand for payment hereunder.
Periodic Statement reflecting accrued interest will be sent and interest will be payable in accordance with Section 2 hereof.

Payments shall be due at the Lender’s principal office in Chicago, Illinois, paid to the order of the Lender, and made by:	 	x By Fed Wire:	
	 	Pay to the order of BMO Harris Bank N.A., Chicago, IL	
	 	ABA 071000288	
	 	To the account of: BMO Harris Financing, Inc.	
	 	Account#: 181-506-7	
	 	Reference:	  	Kellwood Company	
	 	Attn.: Client Services Dept.	
If Letters of Credit may be requested, check here: x and attach Letter of Credit Rider following signature page hereof.
 
1.	Using the Account . All loans and advances from the Loan Account are referred to in this Agreement as “Loans”. Loan requests must be by telephone and confirmed in writing (including by facsimile and email) by the Company and Sun Capital Partners V, L.P. (“ Sun V ”) and shall be sent to the Company’s BMO Harris Financing, Inc. Account Officer or Client Services Officer no later than 1:00 p.m. (Chicago time) on the date of the proposed borrowing in order to be honored the same day. Loan proceeds shall be credited to the Company’s deposit account at BMO Harris Bank N.A. unless the Lender is directed otherwise by special written directions from the Company. The amount of each Loan requested shall be at least the minimum amount shown above, and the Lender shall have the right to refuse to honor any Loan requested by the Company which is less than that minimum amount, even if the Lender has previously honored a Loan request for less than the minimum amount. The Company shall not request any Loan or letter of credit which, when taken together with the Loans or principal amount of letters of credit then outstanding, would exceed the Maximum Credit. The Company shall furnish to the Lender certificates in the form of Exhibit A attached to the Guaranty of Sun V described in Section 5 hereof at the times set forth in such Guaranty, properly completed and duly certified by Sun V. If Loans or letters of credit are secured directly or indirectly by securities traded on a national exchange or by other “margin stock” (as defined by the Federal Reserve Board in Regulation U), then the Company promises to furnish the Lender a duly executed and completed Form U-1 statement and agrees that the proceeds of Loans or other extensions of credit from the Loan Account will not be used to purchase or carry stock, convertible bonds or warrants unless the Company has obtained the prior written consent of the Lender.	
Loans and letters of credit will be made available from the Loan Account subject to the Lender’s approval on a case-by-case basis as and when Loans and letters of credit are requested by the Company.
All Loans and letters of credit shall be made against and evidenced by the Company’s promissory note payable to the order of the Lender in the principal amount of $14,900,000, such note to be in the form of Exhibit A attached hereto (the “ Note ”). The Lender agrees that notwithstanding the fact that the Note is in the principal amount of $14,900,000, it shall evidence only the actual unpaid principal balance of Loans made under the Loan Account and stated amount of letters of credit issued pursuant hereto. All Loans and other extensions of credit made against the Note and the status of all amounts evidenced by the Note shall
 
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be recorded by the Lender on its books and records or, at its option in any instance, endorsed on a schedule to the Note and the unpaid principal balance and status and rates so recorded or endorsed by the Lender shall be prima facie evidence in any court or other proceeding brought to enforce the Note of the principal amount remaining unpaid thereon, the status of the Loans and other extensions of credit evidenced thereby and the interest rates applicable thereto, absent manifest error; provided that the failure of the Lender to record any of the foregoing shall not limit or otherwise affect the obligation of the Company to repay the principal amount of the Note together with accrued interest thereon. The Lender agrees that if it transfers or assigns the Note, the Lender will stamp thereon a statement of the actual principal amount evidenced thereby at the time of transfer. The Company agrees that in any action or proceeding instituted to collect or enforce collection of the Note, the amount shown as owing the Lender on its records shall be prima facie evidence of the unpaid balance of principal and interest on the Note, absent manifest error.
 
2.	Interest . The Company shall pay the Lender interest on the unpaid principal balance of Loans in accordance with the terms of this Agreement. Accrued interest will be billed quarterly, and is due by the last day of each fiscal quarter (each, an “ Interest Payment Date ”). Interest for each billing period is computed by applying a daily periodic rate based on the greater of (a) the Reference Bank’s Prime Rate plus the rate per annum of 2.00% or (b) the LIBOR Quoted Rate plus the rate per annum of 4.75% to each day’s ending Loan balance. Interest shall be computed on the basis of a year of 360 days for the actual number of days elapsed. The Reference Bank’s Prime Rate reflects market rates of interest as well as other factors, and it is not necessarily the Reference Bank’s best or lowest rate. The daily Loan balance shall be computed by taking the principal balance of Loans at the beginning of each day, adding any Loans posted to the Loan Account that day, and subtracting any principal payments posted to the Loan Account as of that day. Interest begins to accrue on the date a Loan is posted to the Loan Account. The principal balance of Loans which remains unpaid after demand for repayment shall bear interest until paid in full at a post-maturity rate determined by adding the rate of 2% per annum to the interest rate otherwise applicable to the Loans (determined as aforesaid). The interest rate payable under this Agreement shall be subject, however, to the limitation that such interest rate shall never exceed the highest rate which the Company may contract to pay under applicable law. Interest on the Loans shall, at the option of the Company and subject to the following terms and conditions, be payable either (i) in immediately available funds on each Interest Payment Date in accordance with this Section 2, or (ii) by adding such interest to the unpaid principal balance of the Loans through a Loan on each Interest Payment Date, in which event such interest shall become a like amount of the principal of the Note (a borrowing of a Loan of like amount) which the Company hereby promises to pay as hereinafter set forth, or (iii) by any combination of the methods described in the immediately preceding clauses (i) and (ii) selected by the Company which results in such methods being applied in the satisfaction in full of all interest due on the Loans on such Interest Payment Date:	
 
 	(A)	Unless the Company notifies the Lender by 11:00 a.m. Chicago time on the applicable Interest Payment Date that the Company intends to pay the interest due on the Loans on each Interest Payment Date with funds not borrowed under this Agreement, the Company shall be deemed to have irrevocably requested a Loan on each Interest Payment Date in the amount of the interest then due on the Loans, in each case subject to the provisions of this Agreement (other than the requirement that a Loan be in a certain minimum amount), which new Loan shall be applied to pay the interest then due on the Loans. In the event the Company has elected to pay the interest due on the Loans with funds not borrowed under this Agreement and the Company fails to make any such payment within twenty (20) days of the applicable Interest Payment Date, the Lender may in its sole discretion deem the Company to have irrevocably requested a Loan in the amount of the interest then due on the Loans, in each case subject to the provisions of this Agreement (other than the requirement that a Loan be in a certain minimum amount) which new Loans shall be applied to pay the interest then due on the Loans.	
 
-3-

 	(B)	Each payment of interest by a borrowing of a Loan shall be evidenced by the Note, shall bear interest from the date made at a rate per annum equal at all times to the rate then applicable to the Loans, payable on demand but if no demand on the last day of each calendar month (commencing on the first of such dates following such issuance) and, subject to the provisions of paragraph 10 herein, on demand.	
 
 	(C)	In no event shall the unpaid principal balance of all Loans and letters of credit, including, without limitation, each borrowing of a Loan to pay interest then due on the Loans, exceed the Maximum Credit.	
 
3.	Fees . The Company agrees to pay to the Lender a non-refundable Closing Fee in the amount of $22,350.	
 
4.	Security . The Loans (both for principal and interest) and the Company’s other obligations under this Agreement, the Note and any and all applications and indemnity agreements for letters of credit (“ Applications ”) delivered in connection with the issuance of letters of credit hereunder, shall from time to time be secured by certain property of the Company and certain of its subsidiaries pursuant to that certain Security Agreement of the Company and such subsidiaries in favor of the Lender and the Issuing Bank dated of even date herewith (as the same may be amended, modified, restated or supplemented from time to time, being herein referred to collectively as the “ Security Agreement ”, and together with any other security agreement, pledge agreement, mortgage or deed of trust executed and delivered in connection with this Agreement at any time, the “ Security Documents ”), and the Company and such subsidiaries shall at all times comply with the terms and conditions of the Security Documents. In addition, the Loans may also be secured by other collateral which secures other indebtedness which the Company may have outstanding from the Lender at the present time or in the future. The Loans, letters of credit and all other obligations of the Company to the Lender and the Issuing Bank may also from time to time be secured by other collateral granted by the Company or any of its subsidiaries. The Lender shall have the right to call for additional security satisfactory to the Lender should the value of the collateral decline or be deemed by the Lender inadequate or unsatisfactory.	
 
5.	Guaranty . Sun V shall at all times guarantee all Loans made and letters of credit issued pursuant to this Agreement under that certain Guaranty dated as of even date herewith from Sun V in favor of the Lender and the Issuing Bank (the “ Sun V Guaranty ”). The Company hereby acknowledges that the Sun V Guaranty being provided by Sun V is a material inducement to the Lender’s extension of credit hereunder and that in determining whether or not to extend additional credit to the Company and whether or not to demand repayment of this Loan, the Lender will be considering issues related to the continued creditworthiness and liquidity position of Sun V.	
 
6.	Maturity Date; Payments . The Company shall pay to the Lender the principal balance of outstanding Loans together with any accrued interest O N D EMAND , provided that to the extent funds are not immediately available, the Company shall have ten (10) business days to honor any demand for payment hereunder, and shall post cash collateral in an amount equal to 100% of the sum of the aggregate undrawn stated amount of the letters of credit and any unreimbursed draws thereunder O N D EMAND . Payments received by the Lender on the Loans shall be applied first to accrued interest and then to the principal balance of outstanding Loans unless otherwise directed. If any payment from the Company under this Agreement becomes due on a Saturday, Sunday, or a day which is a legal holiday for banks or other financial institutions in the State of Illinois, such payment shall be made on the next bank business day and any such extension shall be included in computing interest under this Agreement.	
 
-4-

7.	Periodic Statements . The Lender will furnish the Company with a quarterly statement for each billing period which has any transaction or balance.	
 
8.	Financial Statements . The Company agrees to furnish financial information of the Company to the Lender upon request of the Lender from time to time.	
 
9.	Representations and Warranties . In consideration of establishing and maintaining the Loan Account, the Company hereby represents and warrants to the Lender that: (a) the Company is a corporation, duly organized, validly existing, and in good standing under the laws of its state of incorporation; (b) the execution, delivery, and performance by the Company of this Agreement, the Note, the Security Documents to which it is a party, the Applications and any and all documents executed in connection with any of the foregoing (together, the “ Loan Documents ”) are within its powers, have been duly authorized by all necessary action, and do not contravene the Company’s certificate of incorporation or by-laws or any law or contractual restriction binding on or affecting the Company; (c) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the Company’s due execution, delivery, and performance of this Agreement or the other Loan Documents to which it is a party; (d) this Agreement is, and the other Loan Documents to which it is a party when executed and delivered by the Company will be, the Company’s legal, valid, and binding obligation enforceable against the Company in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies; (e) the Company is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of the Loans will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock; and (f) there is no pending or threatened action or proceeding affecting the Company before any court, governmental agency or arbitrator, which may materially adversely affect the Company’s financial condition or operations or which purports to affect the legality, validity, or enforceability of this Agreement or any other Loan Documents.	
 
10.	D EMAND O BLIGATION ; E NFORCEMENT . T HE L OANS ARE PAYABLE “O N D EMAND ”; PROVIDED THAT TO THE EXTENT FUNDS ARE NOT IMMEDIATELY AVAILABLE , THE C OMPANY SHALL HAVE TEN (10)  BUSINESS DAYS TO HONOR ANY DEMAND FOR PAYMENT HEREUNDER . A CCORDINGLY , THE L ENDER AND THE I SSUING B ANK CAN DEMAND PAYMENT IN FULL OF THE L OANS AND CAN DEMAND THE POSTING OF CASH COLLATERAL WITH RESPECT TO THE LETTERS OF CREDIT IN ACCORDANCE WITH S ECTION 6 OF THIS A GREEMENT AT ANY TIME IN ITS SOLE DISCRETION EVEN IF THE C OMPANY HAS COMPLIED WITH ALL OF THE TERMS OF THIS A GREEMENT .	
No delay by the Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Lender of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. The Company agrees to pay to the Lender all reasonable expenses incurred or paid by the Lender in connection with the establishment and maintenance of the Loan Account and the collection of the Loans and any amounts due with respect to letters of credit and any court costs and other reasonable amounts due under this Agreement, including, without limitation, reasonable attorneys’ fees. The Lender shall have the right at any time to set-off the balance of any deposit
 
-5-

account that the Company may at any time maintain with the Lender against any amounts at any time owing under this Agreement, whether or not the balance of Loans or reimbursement or other obligations with respect to letters of credit under this Agreement are then due.
 
11.	Termination; Renewal . The availability of additional Loans and letters of credit under this Agreement will automatically terminate O N D EMAND . The Lender and the Issuing Bank (with respect to letters of credit) reserve the right at any time without notice to terminate the Loan Account, suspend the Company’s borrowing privileges or refuse any Loan or letter of credit request even though the Company has complied with all of the terms under this Agreement. The Company may terminate this Agreement at any time effective upon receipt by the Lender of at least 15 days prior written notice. No termination under this Section shall affect the Lender’s rights or the Company’s obligations regarding payment or default under this Agreement. Such termination shall not affect the Company’s obligation to pay all Loans and other obligations and the interest accrued through the date of final payment. The Lender or the Issuing Bank may also elect to honor Loan and letter of credit requests after termination of this Agreement, and the Company agrees that any such payment by the Lender shall constitute a Loan to the Company or a letter of credit issued at the request of the Company under this Agreement.	
 
12.	Notices . The Lender may rely on instructions from the Company with respect to any matters relating to this Agreement or the Loan Account, including telephone loan requests confirmed in writing (including by facsimile or e-mail) which are made by persons whom the Lender reasonably believes to be the persons authorized by the Company to make such loan requests and acknowledged by persons whom the Lender reasonably believes to be the persons authorized by Sun V to confirm such loan requests. All notices and statements to be furnished by the Lender shall be sufficient if delivered to any such person at the billing address for the Loan Account shown on the records of the Lender and to Sun Capital Partners, Inc. at 5200 Town Center Circle, Suite 600, Boca Raton, Florida 33486, Attention: C. Deryl Couch, Jason Neimark and Aaron Wolfe. All notices from the Company shall be sent to the Lender at 115 South LaSalle Street, Chicago, Illinois 60603, Attention: Client Services, Department 17 West. The Company waives presentment and notice of dishonor. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. No amendment or waiver of any provision of this Agreement or the Note or any other Loan Document, nor consent to any departure by the Company therefrom, shall in any event be effective unless the same shall be in writing and signed by the Lender and the Company. If any part of this Agreement is unenforceable, that will not make any other part unenforceable. This Agreement shall be governed by the laws of the State of Illinois.	
 
13.	Consent to Jurisdiction . T HE C OMPANY SUBMITS TO THE NON - EXCLUSIVE JURISDICTION OF THE U NITED S TATES D ISTRICT C OURT FOR THE N ORTHERN D ISTRICT OF I LLINOIS AND OF ANY I LLINOIS S TATE C OURT SITTING IN C OOK C OUNTY , I LLINOIS , FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS A GREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY .	
 
14.	Jury Trial Waiver . T HE C OMPANY AND THE L ENDER WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS A GREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY .	
 
15.	Counterparts . This Agreement may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Agreement by signing any such counterpart and	
 
-6-

 	each of such counterparts shall for all purposes be deemed to be an original. Delivery of executed counterparts of this Agreement and the Loan Documents by telecopy or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as originals.	
 
16.	Costs and Expenses . The Company agrees to pay all reasonable expenses, legal and/or otherwise (including court costs and reasonable attorneys’ fees) paid or incurred by the Lender in endeavoring to collect obligations of the Company, in connection with transactions contemplated in or financed by this Agreement, the Loan Documents, or any other documents executed in connection herewith including any intercreditor agreements or subordination agreements (“ Ancillary Documents ”), or any part thereof, and in protecting, defending or enforcing this Agreement, any of the Loan Documents or any Ancillary Documents in any litigation, bankruptcy or insolvency proceedings or otherwise.	
 
17.	USA Patriot Act . The Lender hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Ac t ”), it is required to obtain, verify, and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Lender to identify the Company in accordance with the Act.	
[S IGNATURE P AGE TO F OLLOW ]
 
-7-

The Company agrees to the terms set forth above.
This Agreement is dated as of the date first written above.

K ELLWOOD C OMPANY	
		
By:	 		
	 	Printed Name:	 	Timothy M. Probst	
	 	Its:	 	Vice President and Controller	
Acknowledged and agreed to.

BMO H ARRIS F INANCING , I NC .	
		
By:	 	/s/ illegible	
	 	Printed Name:	 	 	
	 	Its:	 	 	
 
[Signature Page to Loan Authorization Agreement]

The Company agrees to the terms set forth above.
This Agreement is dated as of the date first written above.

K ELLWOOD C OMPANY	
		
By:	 	/s/ Adrian Kowalewski	
	 	Printed Name:	 	Adrian Kowalewski	
	 	Its:	 	Treasurer	
Acknowledged and agreed to.

BMO H ARRIS F INANCING , I NC .	
		
By:	 		
	 	Printed Name:	 	Brett Sanchez	
	 	Its:	 	Vice President	
 
[Signature Page to Loan Authorization Agreement]

Exhibit 10.19
AMENDMENT No. 4
TO
LOAN AUTHORIZATION AGREEMENT
This AMENDMENT No. 4 to LOAN AUTHORIZATION AGREEMENT (this “ Amendment ”) is made and entered into as of this 19th day of July, 2012, by and among Kellwood Holding Corp., a Delaware corporation (the “ Borrower ”) and SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (together with SCSF, the “ Payees ”).
WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as of April 9, 2012, the Payees became parties and replaced Bank of Montreal as a party to that certain Bank of Montreal Loan Authorization Agreement dated February 13, 2008 between the Borrower and Bank of Montreal (as the same has been and may further be amended, restated supplemented or other modified from time to time, the “ Loan Agreement ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement);
WHEREAS, the borrowings under the Loan Agreement are evidenced by that certain note attached hereto as Exhibit A .
WHEREAS, the maturity date in the Loan Agreement is August 6, 2009;
WHEREAS, notwithstanding such maturity date, the principal amount and all accrued and unpaid interest thereon under the Loan Agreement remain outstanding and unpaid by Borrower;
WHEREAS, the Borrower and the Payees desire to amend the Loan Agreement as provided in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:
1. Amendment of the Loan Authorization Agreement . Effective as of the date hereof, the Loan Agreement shall be hereby amended as follows:
1.1 The following text of the preamble:
“The interest rate applicable prior to the Maturity Date equals the rate per annum announced by the Bank from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the United States (the “Prime Rate”) minus 1%.”
shall be deleted in its entirety and shall be replaced with the following:
“The interest rate applicable prior to the Maturity Date equals the rate per annum announced by the Bank from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the United States (the “Prime Rate”) plus 2%.”

1.2 The second sentence of Section 2 shall be deleting in its entirety and shall be replaced with the following:
“Interest for each billing period is computed by applying a daily periodic rate based on the Bank’s Prime Rate plus 2% to each day’s ending Loan balance.”
1.3 The date “August 6, 2009” shall be deleted in each place it appears in the Loan Agreement and shall be replaced with the date “August 6, 2014”.
2. Miscellaneous .
2.1 From and after the date hereof, each reference in the Loan Agreement to “the Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, shall mean and be a reference to the Loan Agreement as amended hereby.
2.2 Neither Borrower nor any Payee is, by entering into this Amendment, waiving any rights or remedies available to such party under the Loan Agreement. Each of the rights and remedies of Borrower and Payees available to such party immediately prior to the execution of this Amendment shall remain available to such party subsequent to the execution of this Amendment (including Payees’ right to interest at the rate of 2% per annum above the interest rate otherwise applicable to the Loans pursuant to Section 2 of the Loan Agreement for the period beginning on August 6, 2009 and ending on the date hereof).
2.3 Except as specifically set forth above, the Loan shall remain unaltered and in full force and effect and the respective terms, conditions or covenants thereof are hereby in all respects ratified and confirmed.
2.4 This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
2.5 This Amendment shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year first above written.

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell C. Lentz	
			
Name:	 	Maxwell C. Lentz	
Title:	 	Vice President	

SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell C. Lentz	
			
Name:	 	Maxwell C. Lentz	
Title:	 	Vice President	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
			
Name:	 	Jill Granoff	
Title:	 	CEO and President	
Signature Page to Amendment to Loan Authorization Agreement

Exhibit A
(see attached)
Signature Page to Amendment to Loan Authorization Agreement

Exhibit 10.20
AGREEMENT REGARDING AMENDMENT No. 4
TO
LOAN AUTHORIZATION AGREEMENT
This AGREEMENT REGARDING AMENDMENT No. 4 to LOAN AUTHORIZATION AGREEMENT (this “ Agreement ”) is made and entered into as of this 28th day of December, 2012, by and among Kellwood Holding Corp., a Delaware corporation (the “ Borrower ”) and SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (together with SCSF, the “ Payees ”).
WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as of April 9, 2012, the Payees became parties and replaced Bank of Montreal as a party to that certain Bank of Montreal Loan Authorization Agreement dated February 13, 2008 between the Borrower and Bank of Montreal (as the same has been and may further be amended, restated supplemented or other modified from time to time, the “ Loan Agreement ”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement);
WHEREAS, the borrowings under the Loan Agreement are evidenced by that certain note attached hereto as Exhibit A (the “ Note ”).
WHEREAS, pursuant to Section 1 Amendment No. 4 to the Loan Agreement dated as of July 19, 2012 (“ Amendment No. 4 ”), the interest rate applicable under the Note prior to the Maturity Date was amended to equal the rate per annum announced by the Bank from time to time as its prime commercial rate, or equivalent, for U.S. dollar loans to borrowers located in the United States (the “Prime Rate”) plus 2%. (the “ Amended Interest Rate ”);
WHEREAS, at the time of Amendment No. 4 Borrower and the Payees intended to amend the Loan Agreement and the Note in such a manner as to waive, forgive and cancel all then accrued interest under the Loan Agreement and the Note as of the date of Amendment No. 4 and to provide that the Loan Agreement and the Note would accrue interest as of and after the date of Amendment No. 4 at the Amended Interest Rate.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Waiver, Forgiveness and Cancellation of Accrued Interest . All interest that accrued under the Loan Agreement and/or Note prior to July 19, 2012 is hereby waived, forgiven and cancelled.
2. Confirmation of Amount Owing . For the avoidance of doubt and notwithstanding any documentation of Borrower or the Payee to the contrary, Borrower and Payee hereby acknowledge and agree that, after giving effect to this Agreement, as of July 19, 2012 the total amount outstanding and owing under the Loan Agreement and Note was $69,485,198.86 and any accruals of interest prior to such date are hereby waived, forgiven and cancelled in their entirety ((it being agreed and understood that as of July 19, 2012 such $69,485,198.86 shall accrue interest in accordance with Section 1 of Amendment No. 1).

3. Miscellaneous .
3.1 This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one instrument.
3.2 This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Delaware, without giving effect to the conflict of laws rules thereof.
[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Title:	 	Vice President and Asst. Secretary	

SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael McConvery	
Name:	 	Michael McConvery	
Title:	 	Vice President and Asst. Secretary	

KELLWOOD HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
Name:	 	Jill Granoff	
Title:	 	CEO	
Signature Page to Agreement Regarding Amendment No. 4 to Loan Authorization Agreement

Exhibit A
(see attached)

Exhibit 10.21

KELLWOOD COMPANY
AND
EACH OF ITS DOMESTIC SUBSIDIARIES PARTY HERETO,
AS BORROWERS

CREDIT AGREEMENT
Dated as of October 19, 2011
$160,000,000

CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Joint Lead Arranger and Joint Bookrunner

UBS SECURITIES LLC
as Documentation Agent, Joint Lead Arranger and Joint Bookrunner

TABLE OF CONTENTS

 	  	 	  	 	  	Page	 	
			
Section 1.	  	DEFINITIONS; RULES OF CONSTRUCTION	  	 	1	 	
			
1.1.	  	Definitions	  	 	1	 	
			
1.2.	  	Accounting Terms	  	 	35	 	
			
1.3.	  	Uniform Commercial Code	  	 	35	 	
			
1.4.	  	Certain Matters of Construction	  	 	35	 	
			
Section 2.	  	CREDIT FACILITIES	  	 	36	 	
			
2.1.	  	Revolver Commitment	  	 	36	 	
				
	  	2.1.1.	  	Revolver Loans	  	 	36	 	
				
	  	2.1.2.	  	Revolver Notes	  	 	36	 	
				
	  	2.1.3.	  	Use of Proceeds	  	 	36	 	
				
	  	2.1.4.	  	Voluntary Reduction or Termination of Revolver Commitments	  	 	37	 	
				
	  	2.1.5.	  	Overadvances	  	 	37	 	
				
	  	2.1.6.	  	Protective Advances	  	 	37	 	
				
	  	2.1.7.	  	Revolver Increase	  	 	38	 	
			
2.2.	  	[Intentionally Omitted]	  	 	39	 	
			
2.3.	  	Letter of Credit Facility	  	 	39	 	
				
	  	2.3.1.	  	Issuance of Letters of Credit	  	 	39	 	
				
	  	2.3.2.	  	Reimbursement; Participations	  	 	41	 	
				
	  	2.3.3.	  	Cash Collateral	  	 	42	 	
			
Section 3.	  	INTEREST, FEES AND CHARGES	  	 	42	 	
				
3.1.	  	Interest.	  		  	 	42	 	
				
	  	3.1.1.	  	Rates and Payment of Interest	  	 	42	 	
				
	  	3.1.2.	  	Application of LIBOR to Outstanding Loans	  	 	43	 	
				
	  	3.1.3.	  	Interest Periods	  	 	44	 	
				
	  	3.1.4.	  	Interest Rate Not Ascertainable	  	 	44	 	
				
3.2.	  	Fees.	  		  	 	44	 	
				
	  	3.2.1.	  	Unused Line Fee	  	 	44	 	
				
	  	3.2.2.	  	LC Facility Fees	  	 	44	 	
				
	  	3.2.3.	  	Agent Fees	  	 	44	 	
			
3.3.	  	Computation of Interest, Fees, Yield Protection	  	 	44	 	
			
3.4.	  	Reimbursement Obligations	  	 	45	 	
			
3.5.	  	Illegality	  	 	45	 	
 
i

									
			
3.6.	  	Inability to Determine Rates	  	 	45	 	
			
3.7.	  	Increased Costs; Capital Adequacy	  	 	46	 	
				
	  	3.7.1.	  	Change in Law	  	 	46	 	
				
	  	3.7.2.	  	Capital Adequacy	  	 	46	 	
				
	  	3.7.3.	  	Compensation	  	 	47	 	
			
3.8.	  	Mitigation	  	 	47	 	
			
3.9.	  	Funding Losses	  	 	47	 	
			
3.10.	  	Maximum Interest	  	 	47	 	
			
Section 4.	  	LOAN ADMINISTRATION	  	 	48	 	
			
4.1.	  	Manner of Borrowing and Funding Revolver Loans	  	 	48	 	
				
	  	4.1.1.	  	Notice of Borrowing	  	 	48	 	
				
	  	4.1.2.	  	Fundings by Lenders	  	 	48	 	
				
	  	4.1.3.	  	Swingline Loans; Settlement	  	 	49	 	
				
	  	4.1.4.	  	Notices	  	 	49	 	
			
4.2.	  	Defaulting Lender	  	 	49	 	
			
4.3.	  	Number and Amount of LIBOR Revolver Loans; Determination of Rate	  	 	50	 	
			
4.4.	  	Borrower Representative	  	 	50	 	
			
4.5.	  	One Obligation	  	 	50	 	
			
4.6.	  	Effect of Termination	  	 	50	 	
			
Section 5.	  	PAYMENTS	  	 	51	 	
			
5.1.	  	General Payment Provisions	  	 	51	 	
			
5.2.	  	Repayment of Revolver Loans	  	 	51	 	
			
5.3.	  	Mandatory Prepayments	  	 	51	 	
			
5.4.	  	Payment of Other Obligations	  	 	53	 	
			
5.5.	  	Marshaling; Payments Set Aside	  	 	53	 	
			
5.6.	  	Post-Application Event Allocation of Payments	  	 	54	 	
				
	  	5.6.1.	  	Allocation	  	 	54	 	
				
	  	5.6.2.	  	Erroneous Application	  	 	55	 	
			
5.7.	  	Application of Payments	  	 	55	 	
			
5.8.	  	Loan Account; Account Stated	  	 	55	 	
				
	  	5.8.1.	  	Loan Account	  	 	55	 	
				
	  	5.8.2.	  	Entries Binding	  	 	55	 	
			
5.9.	  	Taxes	  	 	55	 	
				
	  	5.9.1.	  	Payments Free of Taxes	  	 	55	 	
				
	  	5.9.2.	  	Payment	  	 	56	 	
				
	  	5.9.3.	  	Refunds	  	 	56	 	
 
ii

									
			
5.10.	  	Lender Tax Information	  	 	56	 	
				
	  	5.10.1.	  	Status of Lenders	  	 	56	 	
				
	  	5.10.2.	  	Documentation	  	 	56	 	
				
	  	5.10.3.	  	Lender Obligations	  	 	57	 	
			
5.11.	  	Nature and Extent of Each Borrower’s Liability	  	 	57	 	
				
	  	5.11.1.	  	Joint and Several Liability	  	 	57	 	
				
	  	5.11.2.	  	Waivers	  	 	58	 	
				
	  	5.11.3.	  	Extent of Liability; Contribution	  	 	59	 	
				
	  	5.11.4.	  	Joint Enterprise	  	 	59	 	
				
	  	5.11.5.	  	Subordination	  	 	59	 	
			
Section 6.	  	CONDITIONS PRECEDENT	  	 	60	 	
			
6.1.	  	Conditions Precedent to Initial Loans	  	 	60	 	
			
6.2.	  	Conditions Precedent to All Credit Extensions	  	 	62	 	
			
6.3.	  	Limited Waiver of Conditions Precedent	  	 	62	 	
			
Section 7.	  	INTENTIONALLY OMITTED	  	 	62	 	
			
Section 8.	  	COLLATERAL ADMINISTRATION	  	 	62	 	
			
8.1.	  	Borrowing Base Certificates	  	 	62	 	
			
8.2.	  	Administration of Accounts	  	 	63	 	
			
8.3.	  	Administration of Inventory	  	 	63	 	
				
	  	8.3.1.	  	Records and Reports of Inventory	  	 	63	 	
				
	  	8.3.2.	  	Returns of Inventory	  	 	63	 	
				
	  	8.3.3.	  	Acquisition, Sale and Maintenance	  	 	64	 	
			
8.4.	  	[Intentionally Omitted]	  	 	64	 	
			
8.5.	  	Administration of Deposit Accounts and Securities Accounts	  	 	64	 	
			
8.6.	  	General Provisions	  	 	64	 	
				
	  	8.6.1.	  	Location of Collateral	  	 	64	 	
				
	  	8.6.2.	  	Insurance of Collateral	  	 	65	 	
			
Section 9.	  	REPRESENTATIONS AND WARRANTIES	  	 	65	 	
			
9.1.	  	General Representations and Warranties	  	 	65	 	
				
	  	9.1.1.	  	Organization and Qualification	  	 	65	 	
				
	  	9.1.2.	  	Power and Authority	  	 	65	 	
				
	  	9.1.3.	  	Enforceability	  	 	66	 	
				
	  	9.1.4.	  	Capital Structure	  	 	66	 	
				
	  	9.1.5.	  	Corporate Names; Locations	  	 	66	 	
 
iii

							
				
	  	9.1.6.	  	Title to Properties: Priority of Liens	  	66	
				
	  	9.1.7.	  	Accounts	  	66	
				
	  	9.1.8.	  	Financial Statements	  	67	
				
	  	9.1.9.	  	Surety Obligations	  	68	
				
	  	9.1.10.	  	Taxes	  	68	
				
	  	9.1.11.	  	Brokers	  	68	
				
	  	9.1.12.	  	Intellectual Property	  	68	
				
	  	9.1.13.	  	Governmental Approvals	  	68	
				
	  	9.1.14.	  	Compliance with Laws	  	68	
				
	  	9.1.15.	  	Compliance with Environmental Laws	  	69	
				
	  	9.1.16.	  	Burdensome Contracts	  	69	
				
	  	9.1.17.	  	Litigation	  	69	
				
	  	9.1.18.	  	No Defaults	  	69	
				
	  	9.1.19.	  	ERISA	  	69	
				
	  	9.1.20.	  	Trade Relations	  	70	
				
	  	9.1.21.	  	Labor Relations	  	70	
				
	  	9.1.22.	  	Payable Practices	  	70	
				
	  	9.1.23.	  	Not a Regulated Entity	  	70	
				
	  	9.1.24.	  	Margin Stock	  	70	
				
	  	9.1.25.	  	Plan Assets	  	70	
				
	  	9.1.26.	  	Immaterial Subsidiaries	  	70	
				
	  	9.1.27.	  	Patriot Act	  	71	
				
	  	9.1.28.	  	OFAC	  	71	
				
	  	9.1.29.	  	Eligible Inventory	  	71	
				
	  	9.1.30.	  	Nature of Business	  	71	
				
	  	9.1.31.	  	Use of Proceeds	  	71	
				
	  	9.1.32.	  	Material Contracts	  	71	
				
	  	9.1.33.	  	No Bankruptcy Filing	  	72	
				
	  	9.1.34.	  	Security Interests	  	72	
			
9.2.	  	Complete Disclosure	  	72	
			
Section 10.	  	COVENANTS AND CONTINUING AGREEMENTS	  	72	
			
10.1.	  	Affirmative Covenants	  	72	
				
	  	10.1.1.	  	Inspections; Appraisals	  	72	
				
	  	10.1.2.	  	Financial and Other Information	  	73	
				
	  	10.1.3.	  	Notices	  	75	
 
iv

							
				
	 	10.1.4.	  	Landlord and Storage Agreements	  	75	
				
	 	10.1.5.	  	Compliance with Laws	  	76	
				
	 	10.1.6.	  	Taxes	  	76	
				
	 	10.1.7.	  	Insurance	  	76	
				
	 	10.1.8.	  	Licenses	  	76	
				
	 	10.1.9.	  	Future Subsidiaries	  	76	
				
	 	10.1.10.	  	Additional Guarantors	  	76	
				
	 	10.1.11.	  	Preservation of Existence, Etc.	  	77	
				
	 	10.1.12.	  	Keeping of Records and Books of Account	  	77	
				
	 	10.1.13.	  	Maintenance of Properties, Etc.	  	77	
				
	 	10.1.14.	  	Obtaining of Permits, Etc.	  	77	
				
	 	10.1.15.	  	Further Assurances	  	77	
				
	 	10.1.16.	  	Post-Closing Covenants.	  	77	
			
10.2.	 	Negative Covenants	  	78	
				
	 	10.2.1.	  	Permitted Debt	  	78	
				
	 	10.2.2.	  	Permitted Liens	  	80	
				
	 	10.2.3.	  	[ Intentionally Omitted ]	  	81	
				
	 	10.2.4.	  	Distributions; Upstream Payments.	  	81	
				
	 	10.2.5.	  	Restricted Investments	  	81	
				
	 	10.2.6.	  	Disposition of Assets	  	81	
				
	 	10.2.7.	  	Loans; Extensions of Credit	  	81	
				
	 	10.2.8.	  	Restrictions on Payment of Certain Debt	  	82	
				
	 	10.2.9.	  	Fundamental Changes.	  	82	
				
	 	10.2.10.	  	Subsidiaries	  	83	
				
	 	10.2.11.	  	Organic Documents	  	83	
				
	 	10.2.12.	  	Tax Consolidation	  	83	
				
	 	10.2.13.	  	Accounting Changes	  	83	
				
	 	10.2.14.	  	Restrictive Agreements	  	83	
				
	 	10.2.15.	  	Hedging Agreements	  	83	
				
	 	10.2.16.	  	Conduct of Business	  	83	
				
	 	10.2.17.	  	Affiliate Transactions	  	83	
				
	 	10.2.18.	  	Plans	  	84	
			
	 	10.2.19.  Amendments to the Indenture, the 2009 Indenture, the 2009 Indenture Guaranty, Convertible Debenture, the Convertible Debenture Agreement, the Revolver Agreement or Subordinated Debt	  	84	
 
v

							
				
	  	10.2.20.	  	Immaterial Subsidiaries	  	84	
				
	  	10.2.21.	  	Fixed Charge Coverage Ratio	  	85	
				
	  	10.2.22.	  	Federal Reserve Regulations	  	85	
				
	  	10.2.23.	  	Investment Company Act of 1940	  	85	
				
	  	10.2.24.	  	2009 Debenture Intercreditor Agreement	  	85	
			
Section 11.	  	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	  	85	
			
11.1.  	  	Events of Default	  	85	
			
11.2.  	  	Remedies upon Default	  	87	
				
11.3.  	  	License	  		  	88	
				
11.4.  	  	Setoff	  		  	88	
			
11.5.  	  	Remedies Cumulative; No Waiver	  	88	
				
	  	11.5.1.	  	Cumulative Rights	  	88	
				
	  	11.5.2.	  	Waivers	  	88	
				
Section 12.	  	AGENT	  		  	89	
			
12.1.  	  	Appointment, Authority and Duties of Agent	  	89	
				
	  	12.1.1.	  	Appointment and Authority	  	89	
				
	  	12.1.2.	  	Duties	  	89	
				
	  	12.1.3.	  	Agent Professionals	  	90	
				
	  	12.1.4.	  	Instructions of Required Lenders	  	90	
			
12.2.  	  	Agreements Regarding Collateral and Field Examination Reports	  	90	
				
	  	12.2.1.	  	Lien Releases; Care of Collateral	  	90	
				
	  	12.2.2.	  	Possession of Collateral	  	90	
				
	  	12.2.3.	  	Reports	  	91	
			
12.3.  	  	Reliance By Agent	  	91	
			
12.4.  	  	Action Upon Default	  	91	
			
12.5.  	  	Ratable Sharing	  	91	
			
12.6.  	  	Indemnification of Agent Indemnitees	  	92	
				
	  	12.6.1.	  	Indemnification	  	92	
				
	  	12.6.2.	  	Proceedings	  	92	
			
12.7.  	  	Limitation on Responsibilities of Agent	  	92	
			
12.8.  	  	Successor Agent and Co-Agents	  	93	
				
	  	12.8.1.	  	Resignation; Successor Agent	  	93	
				
	  	12.8.2.	  	Separate Collateral Agent	  	93	
			
12.9.  	  	Due Diligence and Non-Reliance	  	94	
			
12.10.	  	Replacement of Certain Lenders	  	94	
 
vi

							
			
12.11.	  	Remittance of Payments and Collections	  	94	
			
	  	12.11.1. Remittances Generally	  	94	
				
	  	12.11.2.	  	Failure to Pay	  	95	
				
	  	12.11.3.	  	Recovery of Payments	  	95	
			
12.12.	  	Agent in its Individual Capacity	  	95	
			
12.13.	  	Agent Titles	  	95	
			
12.14.	  	No Third Party Beneficiaries	  	95	
			
Section 13.	  	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	  	96	
				
	  	13.1.1.	  	Successors and Assigns	  	96	
			
13.2.  	  	Participations	  	96	
				
	  	13.2.1.	  	Permitted Participants; Effect	  	96	
				
	  	13.2.2.	  	Voting Rights	  	96	
				
	  	13.2.3.	  	Benefit of Set-Off	  	97	
			
13.3.  	  	Assignments.	  	97	
				
	  	13.3.1.	  	Permitted Assignments	  	97	
				
	  	13.3.2.	  	Effect: Effective Date	  	97	
				
	  	13.3.3.	  	Tax Treatment	  	98	
				
	  	13.3.4.	  	Register	  	98	
			
Section 14.	  	MISCELLANEOUS	  	98	
			
14.1.  	  	Consents, Amendments and Waivers	  	98	
				
	  	14.1.1.	  	Amendment	  	98	
				
	  	14.1.2.	  	Limitations	  	99	
				
	  	14.1.3.	  	Payment for Consents	  	99	
			
14.2.  	  	Indemnity	  	99	
			
14.3.  	  	Notices and Communications	  	100	
				
	  	14.3.1.	  	Notice Address	  	100	
				
	  	14.3.2.	  	Electronic Communications; Voice Mail	  	100	
				
	  	14.3.3.	  	Non-Conforming Communications	  	100	
			
14.4.  	  	Performance of Borrowers’ Obligations	  	100	
			
14.5.  	  	Credit Inquiries	  	101	
			
14.6.  	  	Severability	  	101	
			
14.7.  	  	Cumulative Effect; Conflict of Terms	  	101	
			
14.8.  	  	Counterparts	  	101	
			
14.9.  	  	Entire Agreement	  	101	
			
14.10.	  	Relationship with Lenders	  	101	
 
vii

							
				
    	 	14.11.	  	Confidentiality	  	101	
				
	 	14.12.	  	GOVERNING LAW	  	102	
				
	 	14.13.	  	Consent to Forum	  	102	
				
	 		  	14.13.1. Forum	  	102	
				
	 	14.14.	  	Waivers by Obligors	  	102	
				
	 	14.15.	  	Patriot Act Notice	  	103	
				
	 	14.16.	  	Subordination	  	103	
				
	 	14.17.	  	Advertisement	  	104	
 
viii

LIST OF EXHIBITS AND SCHEDULES

Exhibit A	 	Revolver Note	
Exhibit B	 	Assignment and Acceptance	
Exhibit C	 	Assignment Notice	
Exhibit D	 	Compliance Certificate	
Exhibit E	 	Joinder Agreement	
		
Schedule 1.1	 	Commitments of Lenders	
Schedule 8.5	 	Deposit Accounts	
Schedule 8.6.1	 	Business Locations	
Schedule 9.1.4	 	Names and Capital Structure	
Schedule 9.1.5	 	Corporate Names; Locations	
Schedule 9.1.9	 	Surety Obligations	
Schedule 9.1.12	 	Patents, Trademarks, Copyrights and Licenses	
Schedule 9.1.15	 	Environmental Matters	
Schedule 9.1.16	 	Restrictive Agreements	
Schedule 9.1.17	 	Litigation	
Schedule 9.1.19	 	Pension Plans	
Schedule 9.1.21	 	Labor Contracts	
Schedule 9.1.32	 	Material Contracts	
Schedule 10.2.1	 	Existing Indebtedness	
Schedule 10.2.2	 	Existing Liens	
Schedule 10.2.5	 	Investments	
Schedule 10.2.17	 	Existing Affiliate Transactions	
 
ix

CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of October 19, 2011, among KELLWOOD COMPANY , a Delaware corporation (“ Borrower Representative ” or “ Parent ”) and its Domestic Subsidiaries from time to time a party hereto (each a “ Borrower ” and collectively with Borrower Representative, “ Borrowers ”), other Obligors (as defined below) party hereto, the financial institutions party to this Agreement from time to time as lenders (collectively, “ Lenders ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION , a national banking association, as agent for the Lenders (“ Agent ”).
WHEREAS , Borrowers, Bank of America, N.A., as agent, and certain financial institutions, as lenders, are parties to that certain Amended and Restated Loan and Security Agreement dated as of April 15, 2010, as amended (the “ Existing Credit Agreement ”);
WHEREAS , Borrowers have requested that Lenders make available a credit facility pursuant to this Agreement to refinance and replace the credit facility provided under the Existing Credit Agreement, and Lenders have agreed to do so subject to the terms and conditions of this Agreement; 
WHEREAS , the credit facility provided under this Agreement constitutes a “Credit Facility” (as defined in the 2009 Indenture);
NOW, THEREFORE , for valuable consideration hereby acknowledged, the parties agree as follows:
Section 1. DEFINITIONS ; RULES OF CONSTRUCTION
1.1. Definitions . As used herein, the following terms have the meanings set forth below:
2009 Debentures - the 2009 notes issued pursuant to the 2009 Indenture.
2009 Debenture Intercreditor Agreement - that certain Amended and Restated Intercreditor Agreement of even date herewith, by and between Wells Fargo (or such other Person reasonably acceptable to Agent), as collateral agent under the 2009 Indenture, Agent, Second Lien Agent and the Last-Out Term Loan Agent.
2009 Indenture - that certain indenture, dated as of July 23, 2009, by and between Parent and Wells Fargo (or such other Person reasonably acceptable to Agent), as trustee and collateral agent, pursuant to which Parent issued $120,590,000 in aggregate principal amount of 12.875% Second-Priority Senior Secured PIK Notes due December 31, 2014.
2009 Indenture Guaranty - that certain Guaranty Agreement (and including any guaranty agreement executed pursuant to the terms thereof and any replacement guaranty) dated as of July 23, 2009 by and among the Guarantors and Wells Fargo (or such other Person reasonably acceptable to Agent), as trustee, for the holders of the 2009 Debentures, as amended or supplemented from time to time.
 
1

Account - as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.
Account Debtor - a Person who is obligated under an Account, Chattel Paper or General Intangible.
Accounts Formula Amount - 85% of the amount by which the Value of Eligible Accounts exceeds the Dilution Reserve.
Acquisition - the acquisition of (a) a controlling Equity Interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such Equity Interest or upon exercise of an option or warrant for, or conversion of securities into, such Equity Interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.
Affiliate - with respect to any Person, another Person (a) who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person; (b) who beneficially owns 10% or more of the voting securities or any class of Equity Interests of such first Person; (c) at least 10% of whose voting securities or any class of Equity Interests is beneficially owned, directly or indirectly, by such first Person; or (d) who is an executive or financial officer, director, partner or managing member of such first Person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.
Agent Indemnitees - Agent and its officers, directors, employees, Affiliates, agents and attorneys.
Agent Professionals - attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.
Agreement - as defined in the preamble hereto.
Allocable Amount - as defined in Section 5.11.3 .
Anti-Terrorism Laws - any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law - all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
Applicable Letter of Credit Fee - (i) with respect to documentary Letters of Credit, 50% of the Applicable Margin for LIBOR Revolver Loans and (ii) with respect to all other Letters of Credit, the Applicable Margin for LIBOR Revolver Loans.
 
2

Applicable Margin - any date of determination, with respect to the interest rate of any Loan or any portion thereof:
(a) From the Closing Date until March 31, 2012 (the “ Initial Applicable Margin Period ”), the relevant Applicable Margin shall be set at (i) 2.75% for LIBOR Revolver Loans, and (ii) 1.50% for Base Rate Loans.
(b) After the Initial Applicable Margin Period, the relevant Applicable Margin for a Loan shall be adjusted to the respective level indicated below based upon the average daily Excess Availability set forth opposite thereto for the most recently ended Fiscal Month:

 	  	 	  	Applicable Margin	 	
Level	  	Monthly Average Daily Excess Availability	  	LIBOR Revolver
Loan	 	 	Base Rate Loan	 	
I	  	Less than or equal to $30,000,000	  	 	3.00	% 	 	 	1.75	% 	
II	  	Greater than $30,000,000 but less than or equal to $60,000,000	  	 	2.75	% 	 	 	1.50	% 	
III	  	Greater than $60,000,000	  	 	2.50	% 	 	 	1.25	% 	
(c) The adjustment of the Applicable Margin (if any) will occur on the first day of the Fiscal Month following the most recently ended Fiscal Month and average daily Excess Availability will be calculated by Agent for such most recently ended Fiscal Month.
Applicable Unused Line Fee - as of any date of determination, a rate equal to 0.375% per annum; provided , that, if the average Daily Balance of the Revolver Usage during the immediately preceding Fiscal Month is less than 50% of the Maximum Revolver Amount, the Applicable Unused Line Fee means 0.50% per annum as of such date of determination.
Application Event - the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Commitment Termination Date, or (b) an Event of Default and the election by Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 5.6.1 of the Agreement.
Approved Customs Broker - any reputable and creditworthy customs broker which has entered into a bailee agreement with Agent on terms reasonably acceptable to Agent regarding in-transit Inventory and which clears customs with respect to in-transit Inventory.
Approved Fund - any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of business and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.
Approved Shipper - any reputable and creditworthy shipper or freight forwarder which has entered into a bailee agreement with Agent on terms reasonably acceptable to Agent regarding in-transit Inventory and which transports raw materials and finished goods Inventory from overseas to an Obligor’s distribution centers.
 
3

Asset Disposition - a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.
Asset Loss Event - the loss, destruction or damage to or condemnation, requisition, seizure or taking of, any assets of any Obligor or any of its Subsidiaries (other than any Foreign Subsidiaries).
Assignment and Acceptance - an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B.
Availability - determined as of any date, the amount that Borrowers are entitled to borrow as Revolver Loans and Letters of Credit, being the Borrowing Base minus the principal balance of all Revolver Loans.
Availability Reserve - the sum (without duplication) of (a) the Inventory Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank Product Reserve; (e) with respect to Inventory, the manufacture, marketing or disposition of which is subject to a License, (i) if Agent has obtained an Inventory Disposition Agreement, all Royalties that would be payable in connection with the sale of Inventory on hand, as determined by Agent, and (ii) otherwise (i.e., if Agent has not obtained an Inventory Disposition Agreement with respect to a particular category of Inventory), the sum of (x) all Royalties that would be payable if all of that category of Inventory on hand were sold plus (y) all accrued and unpaid Royalties with respect to prior sales of that category of Inventory; (f) a reserve in respect of the aggregate amount of liabilities secured by Liens upon Collateral that are senior to Agent’s Liens (but the imposition of any such reserve shall not waive an Event of Default arising therefrom); (g) all customs duties and import charges (unless already accounted for in the inventory appraisal) payable in connection with intransit Inventory being transported from overseas to an Obligor’s distribution center; (h) reserves established by Agent in its reasonable Credit Judgment with respect to Accounts not payable in Dollars or Letters of Credit not payable in Dollars for currency exchange rate fluctuations; and (i) such additional reserves, in such amounts and with respect to such matters, as Agent in its reasonable Credit Judgment may elect to impose from time to time; it being understood that (i) with respect to any Availability Reserve imposed by Agent after the Closing Date, Agent will endeavor to consult with Borrower Representative in connection with the imposition thereof and (ii) Agent may elect not to impose Availability Reserves for not receiving Inventory Disposition Agreements or Lien Waivers during the period of 90 days following the Closing Date.
Bank Product - any of the following products, services or facilities extended to any Obligor by any Lender or any of its Affiliates: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) other banking products or services as may be requested by any Obligor, other than Letters of Credit; provided , however , that for any of the foregoing to be included as an “Obligation”, the applicable Secured Party (unless such Secured Party is Wells Fargo or one of its Affiliates) and Obligor must have previously provided written notice to Agent of (i) the existence of such Bank Product, (ii) the maximum dollar amount of obligations arising thereunder to be included as a Bank Product Reserve (“ Bank Product Amount ”), and (iii) the methodology to be used by such parties in determining the Bank Product Debt owing from time to time; provided , that if the Secured Party is Wells Fargo or one of its Affiliates, no written notice shall be required to be delivered to
 
4

Agent and Agent and such Secured Party, in consultation with Borrower Representative, shall determine the amount of the applicable Bank Product Amount. The Bank Product Amount may be changed from time to time upon written notice to Agent by the Secured Party and the applicable Borrower. No Bank Product Amount may be established or increased by a Lender or its Affiliates at any time when such Lender has been made aware that a Default or Event of Default exists, or that a reserve for such amount would cause an Overadvance.
Bank Product Amount - as defined in the definition of Bank Product.
Bank Product Debt - Debt and other obligations of an Obligor relating to Bank Products; provided, that Debt and other obligations of Obligors relating to Bank Products in excess of the Bank Product Reserves shall not constitute Bank Product Debt.
Bank Product Reserve - the aggregate amount of reserves established by Agent from time to time in its discretion in respect of Bank Product Debt, which shall be at least equal to the sum of all Bank Product Amounts.
Bankruptcy Code - Title 11 of the United States Code.
Base Rate - the greatest of (a) the Federal Funds Rate plus  1 / 2 %, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of 90 days and shall be determined on a daily basis), plus 1 percentage point, and (c) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate.
Base Rate Loan - any Loan that bears interest based on the Base Rate.
Base Rate Revolver Loan - a Revolver Loan that bears interest based on the Base Rate.
Board of Governors - the Board of Governors of the Federal Reserve System.
Borrower Representative - as defined in the preamble to this Agreement.
Borrowers - Borrower and its Domestic Subsidiaries (other than Immaterial Subsidiaries) from time to time parties hereto.
Borrowing - a group of Loans of one Type that are made on the same day or are converted into Loans of one Type on the same day.
Borrowing Base - on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver Commitments minus the sum of the LC Reserve and the Bank Product Reserves; or (b) the sum of the Accounts Formula Amount, plus the Inventory Formula Amount, minus the Availability Reserve.
Borrowing Base Certificate - a certificate, in form and substance satisfactory to Agent, by which Borrower Representative certifies the calculation of the Borrowing Base.
 
5

Business Day: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, Georgia, and if such day relates to a LIBOR Revolver Loan, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.
Canadian Dollars - means the lawful money of Canada.
Capital Adequacy Regulation - any law, rule, regulation, guideline, request or directive of any central bank or other Governmental Authority, whether or not having the force of law, regarding capital adequacy of a bank or any Person controlling a bank.
Capital Expenditures - all liabilities incurred, expenditures made or payments due (whether or not made) for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.
Capital Lease - any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP (but without giving effect to FASB ASC 840).
Capital Lease Obligations - with respect to any Person, obligations of such Person and its Subsidiaries under Capital Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP (but without giving effect to FASB ASC 840).
Cash Collateral - cash, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.
Cash Collateral Account - a demand deposit, money market or other account established by Agent at such financial institution as Agent may select in its discretion, which account shall be subject to Agent’s Liens for the benefit of Secured Parties.
Cash Collateralize - the delivery of cash to Agent, as security for the payment of Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to any inchoate or contingent Obligations (including Obligations arising under Bank Products), Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. “ Cash Collateralization ” has a correlative meaning.
Cash Dominion Period - as defined in Section 8.5 .
Cash Equivalents - (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the
 
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types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.
Cash Management Services - any services provided from time to time by any Lender or any of its Affiliates to any Obligor in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automatic clearinghouse, controlled disbursement, depository, e-payable, electronic funds transfer, information reporting, lockbox, stop payment, overdraft and/or wire transfer services.
CERCLA - the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et. seq.)
Change in Law - the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided , however , that for purposes of this definition, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith and (y) all requests, rules, guidelines 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, in each case, pursuant to Basell III, shall be deemed to have been adopted and gone into effect after the date of this Agreement.
Change of Control - the occurrence of any of the following events: (a) Sponsor ceases to own and control, beneficially and of record, directly or indirectly, more than 50.1% of the voting and economic Equity Interests in Parent on a fully diluted basis, or (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have acquired beneficial ownership on a fully diluted basis of the voting Equity Interests of Parent sufficient to (whether or not exercised) elect a majority of the members of the board of directors (or similar governing body) of Parent.
Chattel Paper - as defined in the UCC.
Claims - all liabilities, obligations, losses, damages, penalties, judgments, proceedings, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.
 
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Closing Date - the date the initial Revolver Loans are made under this Agreement.
Code - the Internal Revenue Code of 1986, as amended.
Collateral - all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations pursuant to the Security Agreement or other Loan Documents.
Collection Account - a special account established by Obligors at Wells Fargo or another bank acceptable to Agent, over which Agent has exclusive control for withdrawal purposes.
Commitment - for any Lender, the aggregate amount of such Lender’s Revolver Commitment. “ Commitments ” means the aggregate amount of all Revolver Commitments as reduced from time to time pursuant to the terms of this Agreement.
Commitment Termination Date - the earliest to occur of (a) the Revolver Termination Date, (b) 90 days prior to the scheduled maturity date of the 2009 Debentures (including any extension effective on or prior to such 90th day prior to such scheduled maturity date), and (c) 90 days prior to the scheduled maturity date of the Second Lien Debt (including any extension effective on or prior to such 90th day prior to such scheduled maturity date).
Compliance Certificate - a certificate, substantially in the form of Exhibit D and in substance reasonably satisfactory to Agent, by which Borrower Representative certifies the absence of any Default or Event of Default and sets forth a reasonably detailed calculation of the Fixed Charge Coverage Ratio for the 12 Fiscal Month period most recently ended (regardless of whether Fixed Charge Coverage Ratio is to be tested for such period).
Consolidated EBITDA - for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012
 
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shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred in Fiscal Years 2011 and 2012, in an aggregate amount for both years not to exceed $3,500,000, in each case, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 10.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBTIDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 10.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 10.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) costs and expenses incurred in connection with Acquisitions which are ultimately not consummated so long as such costs and expenses do not exceed $1,000,0000 during any trailing twelve month period included in the calculation of Consolidated EBITDA, (l) losses associated with the start up of the “Lamb & Flag”, “Chord” and “BLK DNM” brands not to exceed $2,750,000 in any trailing twelve month period included in the calculation of Consolidated EBITDA, and (m) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Agent.
Consolidated Net Income - for any period of computation thereof, the gross revenues from operations of Parent and its Subsidiaries (including payments received by Parent and its Subsidiaries of (a) interest income, and (b) Distributions made in the Ordinary Course of Businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP; but excluding (without duplication): (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of Parent or any Subsidiary, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up or write-down of any asset (provided, that write-downs of Accounts and/or Inventory shall not be so excluded), (v) any net gains resulting from repurchases of Debt, and (vi) any other net gain or loss of an extraordinary nature as determined in accordance with GAAP.
Consolidated Net Interest Expense - for any period, for Parent and its Subsidiaries on a consolidated basis, the sum of (a) all interest and similar expenses that are treated as interest in accordance with GAAP, and (b) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP. For each period of 12 consecutive Fiscal Months ending next following the date of each Acquisition (whether
 
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consummated before or after the Closing Date), Consolidated Net Interest Expense as a component of Consolidated EBITDA shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Obligations) incurred, acquired or assumed in connection with such Acquisition (“ Incremental Debt ”) calculated (A) as if all such Incremental Debt had been incurred as of the first day of such 12 consecutive Fiscal Month period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such 12 consecutive Fiscal Months, as the case may be.
Contingent Obligation - any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.
Control Agreement - a Deposit Account Control Agreement or a Securities Account Control Agreement.
Convertible Debentures - those certain $200,000,000 3.50% Convertible Senior Debentures maturing June 15, 2034, issued pursuant to that certain Indenture dated as of June 22, 2004 by and between the Parent and Union Bank of California, N.A. or any of its successors, as trustee (as amended or supplemented from time to time, the “ Convertible Debenture Agreement ”).
Copyright Security Agreement - each copyright security agreement pursuant to which an Obligor grants to Agent, for the benefit of the Secured Parties, a Lien on such Obligor’s interest in copyrights as security for the Obligations.
Covenant Testing Period - a period commencing on the last day of the most recent Fiscal Month ending on or prior to the Covenant Testing Trigger Date for which Agent has received Parent’s financial statements and ending on the date that the Borrowers have maintained Excess Availability of not less than 12.5% of the Maximum Revolver Amount for 60 consecutive days.
 
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Covenant Testing Trigger Date - Covenant Testing Trigger Date- means any day after the Closing Date that Excess Availability is less than 12.5% of the Maximum Revolver Amount.
Credit Judgment - Agent’s judgment exercised in good faith, based upon its consideration of any factor that it believes (a) could adversely affect, in any respect which is not de minimis, the quantity, quality, mix or value of Collateral (including any Applicable Law that may inhibit collection of an Account), the enforceability or priority of Agent’s Liens, or the amount that Agent and Lenders could receive in liquidation of any Collateral; (b) suggests that any collateral report or financial information delivered by any Obligor is incomplete, inaccurate or misleading in any material respect; (c) materially increases the likelihood of any Insolvency Proceeding involving an Obligor; or (d) creates or could result in a Default or Event of Default. In exercising such judgment, Agent may consider any factors that could increase the credit risk of lending to Borrowers on the security of the Collateral.
Currency Exchange Rate - with respect to a currency, the rate quoted by Wells Fargo as the spot rate for the purchase by Wells Fargo of such currency with another currency at approximately 10:30 a.m. (New York time) 1 Business Day prior to the date as of which the foreign exchange computation is made.
CWA - the Clean Water Act (33 U.S.C. §§ 1251 et seq.).
Debt - as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, credit documents or similar instruments, (c) all Capital Leases, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred and being paid in the Ordinary Course of Business, (e) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination, (f) all Contingent Obligations; (g) all reimbursement obligations in connection with (i) letters of credit, bank guarantees or bankers’ acceptances issued for the account of such Person or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the Ordinary Course of Business, (h) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse and (i) in the case of Borrowers, the Obligations. The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer. Notwithstanding anything herein to the contrary, the term “Debt” shall not include any operating leases that, as a result of changes in GAAP, would classify such operating leases as Capitalized Lease Obligations, required to be reflected on a consolidated balance sheet of Borrowers in accordance with GAAP.
Default - an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.
Default Rate - for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.
 
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Defaulting Lender - any Lender that (a) fails to make any payment or provide funds to Agent or any Borrower as required hereunder or fails otherwise to perform its obligations under any Loan Document, and such failure is not cured within one Business Day, or (b) is the subject of any Insolvency Proceeding.
Deposit Account - as defined in the UCC, but excluding the Excluded Accounts.
Deposit Account Control Agreements - the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower, in favor of Agent, for the benefit of Secured Parties, as security for the Obligations.
Dilution Reserve - the amount by which the general ledger reserve with respect to Accounts for any returns, rebates, discounts, credits or allowances that have been or could be claimed by any Account Debtor, exceeds 5% of the aggregate face amount of all Accounts.
Distribution - any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest; or any payment of management or advisory fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by any Borrower to any holder of any Equity Interest of Parent or any Affiliate of such holder.
Document - as defined in the UCC.
Dollar Equivalent - at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time on the basis of the Currency Exchange Rate for the purchase of Dollars with such currency.
Dollars - lawful money of the United States.
Domestic Subsidiary - a Subsidiary (other than an Immaterial Subsidiary) which is created or organized under the laws of the United States of America, any of its states or the District of Columbia.
Eligible Account - an Account owing to a Borrower that arises in the Ordinary Course of Business from the sale of goods or rendering of services, is payable in Dollars or Canadian Dollars; provided , however , that no Account shall be an Eligible Account if (a) it is unpaid for more than 60 days after the original due date or has stated terms of more than 90 days after the original invoice date (or in the case of Burlington Coat Factory, TJX, Sierra Trading Post, initial new store order’s from Kohl’s and any other additional store as Agent may decide to include from time to time, 120 days); (b) 50% or more of the Accounts owing by the Account Debtor are not Eligible Accounts under the foregoing clause; (c) when aggregated with other Accounts owing by the Account Debtor, it exceeds 15% of the aggregate Eligible Accounts (or such higher percentage as Agent may establish for the Account Debtor from time to time) or in the case of Macy’s, Kohl’s and Wal-Mart 35%; (d) it does not conform with a covenant or representation herein; (e) it is owing by a creditor or supplier, or is otherwise subject to an offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (f) to the knowledge of Borrower
 
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Representative or the Agent, (i) an Insolvency Proceeding has been commenced by or against the Account Debtor or (ii) the Account Debtor has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its affairs, or is not Solvent; (g) the Account Debtor is organized or has its principal offices or assets outside the United States or Canada or, if in respect to an Account Debtor organized outside of the United States or Canada, the parent company of which is organized under the laws of a state within the United States, such Account, along with all Accounts owing by similarly situated Account Debtors, exceeds $15,000,000; (h) it is owing by a Governmental Authority, unless the Account Debtor is the United States or any department, agency or instrumentality thereof and, if subject to the Assignment of Claims Act, the Account has been assigned to Agent in compliance with the Assignment of Claims Act (provided that at any time up to $1,000,000 in the aggregate of Accounts owing by the United States or any department, agency or instrumentality thereof shall not be ineligible solely as a result of non-compliance with the Assignment of Claims Act); (i) it is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any other Lien (other than Liens permitted under Sections 10.2.2(a) , (c) , (d) , (f)  and (1) ); (j) the goods giving rise to it have not been delivered to and accepted by the Account Debtor, the services giving rise to it have not been accepted by the Account Debtor, or it otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (1) its payment has been extended ( provided , that Borrower Representative may request from time to time that a specific Account whose payment has been extended not be excluded based on the ineligibility criterion in this clause (1), and Agent, in its sole discretion, may consent thereto), the Account Debtor has made a partial payment, or it arises from a sale on a cash-on-delivery basis; (m) it arises from a sale to an Affiliate, except for Affiliates of Sponsor (so long as such transaction is on an arm’s length basis), or from a sale on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment, or other repurchase or return basis; (n) it represents a progress billing or retainage; (o) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof; (p) it arises from a retail sale to a Person who is purchasing for personal, family or household purposes; or (q) it arises from sales related to discontinued operations (as defined in GAAP) except those discontinued operations that have formally been offered for sale and are not in wind down or liquidation. In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 60 days old will be excluded.
Eligible Assignee - a Person that is (a) a Lender, U.S.-based Affiliate of a Lender or Approved Fund; (b) any other financial institution approved by Agent and the Borrower Representative (which approval by the Borrower Representative shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within ten (10) Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset-based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Agent in its discretion; provided , that, no Obligor or any Affiliate of any Obligor shall qualify as an Eligible Assignee.
 
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Eligible In-Transit Inventory - either:
(x) Inventory which would otherwise constitute Eligible Inventory but is in-transit between locations where a Borrower stores Inventory or is in transit to a purchaser while title to the Inventory remains with, and the Inventory remains in the control of, a Borrower and is within the United States of America, or
(y) Inventory which would otherwise constitute Eligible Inventory but is in-transit finished goods and raw materials from a supplier located outside the continental United States of America which (A) is fully insured by marine cargo or other similar insurance, in such amounts, with such insurance companies and subject to such deductibles as are reasonably satisfactory to the Agent and in respect of which the Agent has been named as loss payee, (B) is in transit to a location in the United States of America that otherwise satisfies the requirements of the definition of the term “Eligible Inventory”, and (C) is the property of such Borrower at the time that such Inventory is delivered to the common carrier (or legal title passes to such Borrower upon such delivery to the common carrier in a manner which results in the Agent becoming the consignee of such property), 
provided in each case, such in-transit Inventory is subject to a first priority Lien upon such goods in favor of Agent through constructive possession by means of a bailee agreement with an Approved Shipper and Approved Customs Broker (except for any possessory lien upon such goods in the possession of a freight carrier or shipping company securing only the freight charges for the transportation of such goods to such Borrower or customs brokers fees and customary handling charges) and
(i) for documentary letter of credit transactions, (A) such in-transit Inventory has been paid for in full by Issuing Bank and reimbursed by such Borrower under sight documentary Letters of Credit issued by Issuing Bank; (B) such in-transit Inventory is evidenced by either (1) a full set of clean original tangible negotiable bills of lading consigned to the order of the Agent, or at Agent’s discretion, to the order of such Borrower or (2) a full set of clean original tangible non-negotiable bills of lading consigned to the Agent; (C) each such bill of lading with respect to such in-transit Inventory includes a clause stating that one original bill of lading must be surrendered in order to obtain goods at the port of disembarkation in the United States of America; and (D) unless otherwise agreed by the Agent, such documents are in the possession of the Agent or an Approved Customs Broker acting as the agent for the Agent from which the Agent has received an executed imported goods agreement in form and substance reasonably satisfactory to the Agent with respect to such Inventory; and
(ii) for open account transactions, (A) such in-transit Inventory is evidenced by a full set of clean, original tangible negotiable bills of lading consigned to the order of the Agent, or at Agent’s discretion, to the order of such Borrower, (B) such in-transit Inventory has been paid for by either such Borrower or the Agent has otherwise satisfied itself that a final sale of such intransit Inventory to such Borrower has occurred, (C) unless otherwise agreed by the Agent, all of the original bills of lading (i.e. the full set) plus one original of the invoice shall be delivered to the Agent from the foreign vendor to the satisfaction of the Agent, (D) unless otherwise agreed by the Agent, all of the original bills of lading and one original invoice shall be in the possession of the Agent or the Approved Customs Broker, (E) no default shall exist under any agreement in effect between the vendor of such in-transit Inventory and such Borrower that would permit such
 
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vendor under any applicable law (including the UCC) to divert, reclaim, reroute, or stop shipment of such Inventory, and (F) unless otherwise agreed by the Agent, Agent has received an executed agreement in form and substance reasonably satisfactory to the Agent with respect to such in-transit Inventory from the Approved Customs Broker.
Notwithstanding the foregoing clauses (i) and (ii), for a period of 150 days after the Closing Date, in-transit Inventory which does not constitute Eligible In-Transit Inventory in accordance with the foregoing provisions of this definition, but which would constitute Eligible Inventory if the criteria excluding Inventory from eligibility set forth in clause (h) of the definition of the term “Eligible Inventory” did not apply, shall be deemed to be Eligible Inventory.
Further notwithstanding the foregoing clauses (i) and (ii), Agent may include in Eligible In-Transit Inventory, Inventory which is evidenced by electronic or non-negotiable bills of lading; provided , that Agent may at any time, in its sole discretion, discontinue such practice of including such Inventory as Eligible In-Transit Inventory and Agent shall not be bound by any prior course of dealing.
Periodically, Borrower Representative, at Agent’s request, shall provide to Agent a summary listing the amounts of Eligible In-Transit Inventory evidenced by electronic bills of landing.
Eligible Inventory - Inventory owned by a Borrower, provided , that no Inventory shall be Eligible Inventory unless it (a) is finished goods or raw materials, and not work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, obsolete, unmerchantable or from discontinued operations (as defined in GAAP) except those discontinued operations that have formally been offered for sale and are not in wind down or liquidation, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien (other than Permitted Liens described in clauses (c), (d) and (1) of Section 10.2.2 , subject to Availability Reserves); (h) is within the continental United States, unless such Inventory is Eligible In-Transit Inventory; (i) except for Eligible In-Transit Inventory, is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Inventory Disposition Agreement or an appropriate Availability Reserve described in clause (e) of the definition of the term “Availability Reserve” has been established; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; and (1) is reflected in the details of a current perpetual inventory report, unless such Inventory is Eligible In-Transit Inventory.
Enforcement Action - any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).
 
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Environmental Laws - all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
Environmental Notice - a notice from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release - a release as defined in CERCLA or under any other Environmental Law.
Equipment - as defined in the UCC, including all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory), and all parts, accessories and special tools therefor, and accessions thereto.
Equity Interest - the interest of any (a) shareholder in a corporation, (b) partner in a partnership (whether general, limited, limited liability or joint venture), (c) member in a limited liability company, or (d) other Person having any other form of equity security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974.
Euro or € - the currency of participating member states of the European Union that adopt a single currency in accordance with the Treaty on European Union of February 7, 1992.
Event of Default - as defined in Section 11 .
Excess Availability - as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all trade payables of Obligor aged in excess of historical levels with respect thereto and all book overdrafts of Obligor in excess of historical practices with respect thereto, in each case as determined by Agent in its Credit Judgment.
Exchange Act - the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Exchange Offer - that certain offer by Borrower Representative, completed as of July 23, 2009, pursuant to which Borrower Representative exchanged $117,832,000 in aggregate principal amount of its 7.875% debentures maturing July 15, 2009 and $13,790,000 in aggregate principal amount of its 7.625% debentures maturing October 15, 2017 for $120,590,000 in aggregate principal amount of its 2009 Debentures.
Excluded Accounts - as defined in Section 8.5 .
Excluded Issuance - (a) sales or issuances of Equity Interests of Ultimate Parent to Sponsor or any other Person holding the Equity Interests of Ultimate Parent as of the Closing Date, (b) sales or issuances of Equity Interests of Borrower Representative or Ultimate Parent
 
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pursuant to any employee stock option or other equity-based compensation plan approved by the governing body of Borrower Representative or Ultimate Parent, respectively, and (c) any capital contribution by, or equity issuance to, any Person, the proceeds of which are used to make Permitted Investments or Permitted Acquisitions.
Excluded Tax - with respect to Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which any Borrower is a resident for tax purposes on the Closing Date; (c) any backup withholding Tax required by the Code to be withheld from amounts payable to a Payee that has failed or is unable to comply with Section 5.10 ; (d) in the case of a Foreign Payee, any United States withholding Tax that is (i) required pursuant to laws in force at the time such Payee becomes a Payee (or designates a new Lending Office) hereunder, or (ii) attributable to such Payee’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.10 , except to the extent that such Foreign Payee (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrowers with respect to such withholding Tax; and (e) any Taxes imposed on amounts payable by Borrowers under Sections 1471-1474 of the Code.
Extraordinary Expenses - all costs, expenses or advances that Agent or a Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Borrower (which shall be reasonable under the circumstances in which they are incurred), including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Borrower, any representative of creditors of a Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Agent or any Lender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; or (g) Protective Advances. Such costs, expenses and advances include transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Borrower or independent contractors in liquidating any Collateral, and travel expenses.
Extraordinary Receipts - any cash received by any Obligor or any of its Subsidiaries not in the ordinary course of business (and not consisting of Asset Loss Event proceeds described in Section 5.3(b) hereof), including, without limitation, (i) pension plan reversions, (ii) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of
 
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action, (iii) indemnity payments and (iv) any purchase price adjustment received in connection with any purchase agreement, net of any withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to an Obligor.
Federal Funds Rate - for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it.
Fee Letter - the fee letter agreement dated as of the date hereof between Agent and Borrower Representative.
Fiscal Month - one of the three fiscal periods in a Fiscal Quarter each of which is approximately one month in duration. There are 12 Fiscal Months in each Fiscal Year.
Fiscal Quarter - one of the four 13-week, or, if applicable, 14-week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on a Saturday of the thirteenth (or fourteenth, if applicable) week in such quarter.
Fiscal Year - the fiscal year of the Parent for financial accounting purposes. The current Fiscal Year will end on January 28, 2012.
Fixed Charge Coverage Ratio - the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except those financed with Permitted Debt other than Revolver Loans or the Second Lien Debt) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrower to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Fixed Charges - the sum, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated Net Interest Expense paid or payable in cash (and, for the avoidance of doubt, excluding those paid-in-kind or capitalized), plus (b) scheduled principal payments made on Debt in cash and earnout payments paid in cash (other than earnout payments made in Fiscal Year 2011 in an aggregate amount not to exceed $58,500,000 by Parent and its Subsidiaries with respect to the “Vince” brand).
FLSA - the Fair Labor Standards Act of 1938.
Foreign Lender - any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
 
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Foreign Payee - any Payee that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Plan - any employee benefit plan or arrangement maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States, or any employee benefit plan or arrangement mandated by a government other than the United States for employees of any Obligor or Subsidiary.
Foreign Subsidiary - a Subsidiary that is not a Domestic Subsidiary or an Immaterial Subsidiary.
Full Payment - with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); (b) if such Obligations are LC Obligations or inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral); and (c) a release of any Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before the payment date. No Loans shall be deemed to have been paid in full until all Commitments related to such Loans have expired or been terminated.
GAAP - generally accepted accounting principles in the United States in effect from time to time.
General Intangibles - as defined in the UCC, including choses in action, causes of action, company or other business records, inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer lists, permits, tax refund claims, computer programs, operational manuals, internet addresses and domain names, insurance refunds and premium rebates, all rights to indemnification, and all other intangible Property of any kind.
Governmental Approvals - all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.
Governmental Authority - any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.
Guarantor Payment - as defined in Section 5.11.3 .
Guarantors - each Person who guarantees payments or performance of any Obligations pursuant to Section 5.11 hereof and after the date hereof pursuant to a Joinder Agreement. It is understood that the Obligations shall not be guaranteed by any existing or future Foreign Subsidiary, including any Foreign Subsidiary of any Guarantor.
 
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Hedging Agreement - an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.
Immaterial Subsidiaries - American Recreation Products International, Inc., a Delaware corporation, The Kellwood Foundation, an Illinois charitable foundation, Kellwood Financial Services, Inc., a Delaware corporation, XCSI, Inc., a Delaware corporation, Kellwood Retail Group, Inc., a Delaware corporation, MJF Imports, Inc., a New York corporation, Tri-W Corporation, a North Carolina corporation, Halmode Apparel, Inc., a Delaware corporation, New Campaign, Inc., a Delaware corporation; and any other Domestic Subsidiary formed or acquired after the Closing Date (a) which is designated as such by the Borrower Representative in a written notice delivered to Agent from time to time and (b) which does not (i) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America and (ii) have revenues in any Fiscal Year in excess of $1,000,000 unless such Immaterial Subsidiary has become a Borrower pursuant to Section 10.2.20 or is an Obligor under the Second Lien Debt Documents.
Indemnified Taxes - all Taxes imposed on a Payee with respect to the Obligations other than Excluded Taxes.
Indemnitees - Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Wells Fargo Indemnitees.
Indenture - that certain Indenture dated September 30, 1997 by and between The Chase Manhattan Bank, as trustee, or any successor trustee and the Parent, as amended, supplemented or restated from time to time, pursuant to which certain debt securities have been issued by the Parent.
Insolvency Proceeding - any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for reorganization or other similar relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.
Instrument - as defined in the UCC.
Insurance Assignment - each collateral assignment of insurance pursuant to which an Obligor assigns to Agent, for the benefit of Secured Parties, such Obligor’s rights under business interruption or other insurance policies as Agent reasonably deems it appropriate to be assigned, as security for the Obligations.
Intellectual Property - all intellectual and similar Property of a Person, including inventions, designs, patents, patent applications, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, registrations and franchises; all books and records describing or used in connection with the foregoing; and all licenses or other rights to use any of the foregoing.
 
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Intellectual Property Claim - any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Domestic Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Intellectual Property or other Property violates another Person’s Intellectual Property.
Interest Period - as defined in Section 3.1.3 .
Inventory - as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in an Obligor’s business (but excluding Equipment).
Inventory Disposition Agreement - an inventory disposition agreement between Agent and the applicable Licensor granting Agent a right to dispose of Inventory subject to the applicable License, in form and substance reasonably satisfactory to Agent.
Inventory Formula Amount - the least of (i) 70% of the Value of Eligible Inventory; (ii) 85% of the NOLV Percentage of the Value of Eligible Inventory; or (iii) 50% of the Maximum Revolver Amount.
Inventory Reserve - reserves reasonably established by Agent (without duplication to the definition of Eligible Inventory) to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.
Investment - any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
Issuing Bank - Wells Fargo or an Affiliate of Wells Fargo or its successors or assigns.
Issuing Bank Indemnitees - Issuing Bank and its officers, directors, employees, Affiliates, agents and attorneys.
Joinder Agreement - an agreement substantially in the form of Exhibit E hereto by which a Domestic Subsidiary of Parent becomes a Borrower hereunder.
Last-Out Term Lenders - means SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC.
Last-Out Term Loan - the term loans made under the Last-Out Term Loan Agreement and subject to the Last-Out Term Loan Intercreditor Agreement.
Last-Out Term Loan Agent - SCSF Kellwood Finance, LLC or its successors or assigns.
Last-Out Term Loan Agreement - collectively, that certain Amended and Restated Term Loan Agreement, dated as of the date hereof and that certain Third Amended and Restated Term Loan Agreement, dated as of the date hereof, in each case, among the Borrower, certain of its Subsidiaries and the Last-Out Term Loan Agent and the Last-Out Term Loan Lenders.
 
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Last-Out Term Loan Documents - the “Loan Documents” as defined in the Last-Out Term Loan Agreement.
Last-Out Term Loan Intercreditor Agreement - the Intercreditor and Subordination Agreement dated as of the date hereof among the holders of the Last-Out Term Loan, the Last-Out Term Loan Agent, the Obligors, Agent and Second Lien Agent.
LC Application - an application by a Borrower to Issuing Bank for issuance of a Letter of Credit, in form and substance satisfactory to Issuing Bank.
LC Conditions - the following conditions necessary for issuance of a Letter of Credit: (a) each of the conditions set forth in Section 6 ; (b) after giving effect to such issuance, total LC Obligations do not exceed the Letter of Credit Sublimit, no Overadvance exists and, if no Revolver Loans are outstanding, the LC Obligations do not exceed the Borrowing Base (without giving effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is (i) no more than 365 days from issuance, in the case of standby Letters of Credit, (ii) no more than 180 days from issuance, in the case of documentary Letters of Credit, and (iii) at least 20 Business Days prior to the Revolver Termination Date; (d) the Letter of Credit and payments thereunder are denominated in Dollars (provided, that Letters of Credit may be denominated in Euros up to an aggregate amount not to exceed €50,000); and (e) the form (documentary or standby) of the proposed Letter of Credit is satisfactory to Agent and Issuing Bank in their discretion.
LC Documents - all documents, instruments and agreements (including LC Requests and LC Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.
LC Obligations - the sum (without duplication) of (a) all amounts owing by Borrowers for any drawings under Letters of Credit; (b) the aggregate undrawn amount of all outstanding Letters of Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.
LC Request - a request for issuance of a Letter of Credit, to be provided by a Borrower to Issuing Bank, in form satisfactory to Issuing Bank.
LC Reserve - the Dollar Equivalent of the aggregate of all LC Obligations, other than (a) those that have been Cash Collateralized and (b) if no Default or Event of Default exists, those constituting charges owing to the Issuing Bank.
Lender Indemnitees - Lenders and their officers, directors, employees, Affiliates (other than an Obligor or any Subsidiary of an Obligor), agents and attorneys.
Lenders - as defined in the preamble to this Agreement, including Agent in its capacity as a provider of Swingline Loans and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.
 
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Lending Office - the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Agent and Borrower Representative.
Letter of Credit - any standby or documentary letter of credit issued by Issuing Bank for the account of a Borrower, which shall include any indemnity, guarantee, exposure transmittal memorandum or similar form of credit support issued by an Issuing Bank.
Letter of Credit Sublimit - $40,000,000.
LIBOR - 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) 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Revolver Loan requested (whether as an initial LIBOR Revolver Loan or as a continuation of a LIBOR Revolver Loan or as a conversion of a Base Rate Revolver Loan to a LIBOR Revolver Loan) by Borrowers in accordance with the Agreement, which determination shall be conclusive in the absence of manifest error. If the Board of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing rate, divided by 1 minus the Reserve Percentage.
LIBOR Revolver Loan - a Revolver Loan that bears interest based on LIBOR.
License - any license or agreement under which a Borrower is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.
Licensor - any Person from whom a Borrower obtains the right to use any Intellectual Property.
Lien - any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.
Lien Waiver - an agreement, in form and substance reasonably satisfactory to Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.
 
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Loan - a Revolver Loan.
Loan Account - the loan account established by each Lender on its books pursuant to Section 5.8 .
Loan Documents - this Agreement, Other Agreements and Security Documents.
Loan Year - each calendar year commencing on the Closing Date and on each anniversary of the Closing Date.
Management Services Agreement - that certain Management Services Agreement dated as of May 29, 2008 by and between Parent and Sun Capital Partners Management V, LLC as in effect on the date hereof.
Margin Stock - as defined in Regulation U of the Board of Governors.
Material Adverse Effect - the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, or condition (financial or otherwise) of Borrowers taken as a whole (provided that actions or transactions permitted hereunder, including Permitted Acquisitions, that reduce Excess Availability shall not, in and of themselves, constitute a Material Adverse Effect), on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Agent’s Liens on any Collateral; (b) impairs the ability of Borrowers taken as a whole to repay the Obligations or materially impairs the ability of any Borrower to perform any other obligation under the Loan Documents, or (c) otherwise impairs the ability of Agent or any Lender to enforce or collect any Obligations or to realize upon any Collateral.
Material Contract - any agreement or arrangement to which an Obligor is party (other than the Loan Documents, the Second Lien Debt Documents or the Last-Out Term Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, or (b) that relates to Subordinated Debt, Debt under the 2009 Indenture, or Debt in an aggregate amount of $46,000,000 or more.
Maximum Revolver Amount - $160,000,000, increased by any Revolver Increase pursuant to Section 2.1.7 and decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.1.4(b) .
Moody’s - Moody’s Investors Service, Inc., and its successors.
Multiemployer Plan - any employee benefit plan or arrangement described in Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor.
 
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Net Proceeds - for any Person with respect to:
(a) any Asset Disposition, the aggregate cash proceeds (including cash proceeds received by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by such Person pursuant to such disposition, net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees); (ii) Taxes paid or reasonably estimated by such Person to be payable as a result thereof (after taking into account any available Tax credits or deductions and any Tax sharing arrangements and any Tax distributions reasonably expected to be made with respect thereto); (iii) withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to any Obligor or any of its Subsidiaries; (iv) amounts required to be applied to the repayment of any Debt secured by a Permitted Lien having priority over the Liens of Agent under and in accordance with the Loan Documents on the asset subject to such disposition (other than the Obligations); (v) the direct costs relating to or associated with the relocation of assets; and (vi) any amount required to be provided by such Person, as a reserve, in accordance with GAAP against any liabilities associated with such disposition including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with any such Asset Disposition; provided , however , that the amount of any such reserve, at the time that such reserve is no longer required in accordance with GAAP and to the extent that such amount is not actually applied to the liability for which it was reserved, shall be deemed to be part of the Net Cash Proceeds of such disposition and remitted to Agent for application to the Loans in accordance with the terms of Section 5.3 ;
(b) any Asset Loss Event or Extraordinary Receipts, the aggregate cash proceeds received by such Person in connection therewith (other than cash proceeds constituting business interruption insurance), net of (i) the direct costs incurred in collecting such amount, (ii) Taxes paid or reasonably estimated by such Person to be payable as a result thereof (after taking into account any available Tax credits or deductions and any Tax sharing arrangements and any Tax distributions reasonably expected to be made with respect thereto); provided , however , that the amount of such Taxes paid in excess of any such estimate shall be deemed to be part of the Net Cash Proceeds of such disposition and remitted to Agent for application to the Loans in accordance with the terms of Section 5.3 and (iii) withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to any Obligor or any of its Subsidiaries;
(c) any sale or issuance of Equity Interests of any Person (other than Excluded Issuances), the aggregate cash proceeds received (directly or indirectly) by such Person pursuant to such sale or issuance, net of the direct costs relating to such sale, or issuance (including legal, accounting and investment banking fees and underwriting discounts); and
(d) any sale, issuance or incurrence of Debt by any Person, the aggregate cash proceeds received (directly or indirectly) by such Person pursuant to such sale, issuance or incurrence, net of the direct costs relating to such sale, or issuance (including legal, accounting and investment banking fees).
 
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NOLV Percentage - the net orderly liquidation value of Inventory, expressed as a percentage of the Value of Borrowers’ Inventory, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of Borrowers’ Inventory performed by an appraiser and on terms reasonably satisfactory to Agent and after consultation with the Borrower Representative.
Notes - each Revolver Note, or other promissory note executed by a Borrower to evidence any Obligations.
Notice of Borrowing - a Notice of Borrowing to be provided by the Borrower Representative to request the funding of a Borrowing of Revolver Loans, in form satisfactory to Agent.
Notice of Conversion/Continuation - a Notice of Conversion/Continuation to be provided by the Borrower Representative to request a conversion or continuation of any Loans as LIBOR Revolver Loans, in form satisfactory to Agent.
Obligations - all (a) principal of and premium, if any, on the Loans, (b) LC Obligations and other obligations of Obligors with respect to Letters of Credit, (c) interest (which shall include any capitalized interest), expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product Debt, and (g) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
Obligor - each Borrower, any Guarantor and any other Person that is liable for payment of the Obligations or that has granted a Lien in favor of Agent on its assets to secure the Obligations.
OFAC - The Office of Foreign Assets Control of the U.S. Department of the Treasury.
Ordinary Course of Business - the ordinary course of business of any Borrower or Subsidiary and undertaken in good faith.
Organic Documents - with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
Other Agreement - each Note; LC Document, Fee Letter, Lien Waiver, Inventory Disposition Agreement, Borrowing Base Certificate, Compliance Certificate, financial statement
 
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or report delivered hereunder, 2009 Debenture Intercreditor Agreement, Last-Out Term Loan Intercreditor Agreement and Second Lien Debt Intercreditor Agreement; or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter executed by an Obligor or other Person in favor of Agent or a Lender in connection with any transactions relating hereto.
Other Taxes - all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
Overadvance - as defined in Section 2.1.5.
Overadvance Loan - a Base Rate Revolver Loan made when an Overadvance exists or is caused by the funding thereof.
Parent - as defined in the preamble to this Agreement.
Participant - as defined in Section 13.2.
Patent Security Agreement - each patent security agreement pursuant to which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in its patents, as security for the Obligations.
Patriot Act - the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56. 115 Stat. 272 (2001).
Payee - Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation.
Payment Intangible - as defined in the UCC.
Payment Item - each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.
Permitted Acquisition - any Acquisition effected with the consent and approval of the board of directors or other applicable governing body of the Person being acquired, and with the duly obtained approval of such shareholders or other holders of equity or other ownership interest as such Person may be required to obtain, so long as (a) immediately prior to and immediately after the consummation of such Acquisition, no Default or Event of Default has occurred and is continuing, (b) substantially all of the sales and operating profits generated by such Person (or assets) so acquired or invested are derived from a line or lines of business that are part of, or complementary, to the business as then conducted by Borrowers and Subsidiaries, (c) such Acquisition is otherwise permitted under the Second Lien Debt Documents, (d) Availability after giving effect to such Acquisition exceeds $35,000,000, (e) the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries after giving pro forma effect to such Acquisition, calculated as if the same had occurred at the beginning of the applicable period, is greater than the actual Fixed Charge Coverage Ratio for such period, (f) the consideration for
 
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any Acquisition shall not exceed $25,000,000 (unless otherwise consented to by Agent), and the total aggregate consideration for all such Acquisitions during the term of this Agreement shall not exceed $50,000,000 (unless otherwise consented to by Agent), and (g) Borrower Representative shall have furnished to Agent at least 5 Business Days prior to the consummation of such Acquisition (i) an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such Acquisition) and, thereafter, promptly after the request of Agent, such other information and documents that any Agent may reasonably request, including, without limitation, executed counterparts of the respective agreements, instruments or other documents 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, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith, (ii) pro forma financial statements of the Parent and its Subsidiaries after the consummation of such Acquisition, (iii) a certificate of the chief financial officer or the vice president and controller of the Parent, demonstrating on a pro forma basis compliance with all covenants set forth in Section 10.2.21 hereof after the consummation of such Acquisition, and (iv) copies of such other agreements, instruments or other documents (including, without limitation, the Other Documents required by Section 10.1.9 ) (unless otherwise agreed by Agent) as Agent shall reasonably request. Notwithstanding the foregoing, the Accounts and Inventory of the Person being acquired or comprising the assets that are being acquired shall not be included in Eligible Accounts and Eligible Inventory until a field audit of such assets or such Person has been completed to the satisfaction of Agent.
Permitted Asset Disposition - an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) one or more dispositions of Equipment or Real Estate so long as the net book value, as determined in accordance with GAAP, in the aggregate for all such dispositions does not to exceed $5,000,000 over the term of the Agreement; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) a termination of a lease of real or personal Property or License that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition of Investments of the type described in clause (c) of the definition of “Restricted Investments” in the ordinary course of management of the investment portfolio of Borrowers and Subsidiaries; (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens, (g) the sale of the Phat Farm business and related intellectual property, so long as no Event of Default exists and the gross cash proceeds from such sale are not less than $4,000,000, or (h) otherwise permitted under the Second Lien Debt Documents, as in effect on the date hereof, provided , however , that no Event of Default exists and all Asset Dispositions pursuant to this clause (h) shall not exceed $2,500,000 in the aggregate during any Fiscal Year or $5,000,000 in the aggregate over the term of the Agreement.
Permitted Contingent Obligations - Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or
 
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performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) guarantee obligations of a Borrower or any Domestic Subsidiary in respect of Debt or operating leases and other non-Debt obligations otherwise permitted under this Agreement of a Borrower or any wholly-owned Domestic Subsidiary.
Permitted Distributions - Distributions to the extent permitted under Section 10.2.17(g) , (h)  and (i).
Permitted Investment - investments described in clauses (a) - (i) of the definition of Restricted Investment.
Permitted Lien - as defined in Section 10.2.2.
Permitted Purchase Money Debt - Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, provided that the aggregate outstanding amount of such Purchase Money Debt shall not exceed $5,000,000 at any time.
Person - any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.
Plan - an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which an Obligor is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions.
Pro Rata - with respect to any Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined (a) while Revolver Commitments are outstanding, by dividing the amount of such Lender’s Revolver Commitment by the aggregate amount of all Revolver Commitments; and (b) at any other time, by dividing the amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans and LC Obligations.
Properly Contested - with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or such Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any Collateral of such Obligor with a value in excess of $250,000; (e) no Lien is imposed on Collateral of such Obligor, unless bonded and stayed to the satisfaction of Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.
 
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Property - any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Protective Advances - as defined in Section 2.1.6.
Purchase Money Debt - (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets which does not exceed on the date of acquisition the cost or fair market value, whichever is lower, of the Property being acquired on the date of acquisition; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) of items described in the preceding clauses (a) and (b).
Purchase Money Lien - a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.
RCRA - the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate - all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.
Refinancing Conditions - the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount (including, any capitalized interest with respect thereto that does not exceed the principal amount (to the extent such interest was permitted to be capitalized hereunder)) of the Debt being extended, renewed or refinanced; (b) if the original Debt was subordinated to the Obligations, it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (c) the representations, covenants and defaults applicable to it are no less favorable in any material respect to Obligors than those applicable to the Debt being extended, renewed or refinanced; (d) no Lien is granted to secure it other than Liens securing the original Debt; (e) if the original Debt was the obligation of a Foreign Subsidiary, no Obligor becomes obligated on such Debt; (f) upon giving effect to it, no Default or Event of Default exists; (g) (i) if the Stated Maturity of the Debt being extended, renewed or refinanced is earlier than the Stated Maturity of the Obligations, it has a Stated Maturity no earlier than the Stated Maturity of the Debt being extended, renewed or refinanced, or (ii) if the Stated Maturity of the Debt being extended, renewed or refinanced is later than the Stated Maturity of the Obligations, it has a Stated Maturity at least 91 days later than the Stated Maturity of the Obligations; and (h) it has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Debt being extended, renewed or refinanced.
Refinancing Debt - Debt that is the result of an extension, renewal or refinancing of Debt permitted under
Section 10.2.1(b) , (d)  or (j).
Reimbursement Date - as defined in Section 2.3.2.
Rent and Charges Reserve - the aggregate of (a) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper,
 
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freight forwarder or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at least equal to three months’ rent and other charges that could be payable to any such Person, unless it has executed a Lien Waiver.
Report - as defined in Section 12.2.3 .
Reportable Event - any event set forth in Section 4043(b) of ERISA.
Required Lenders - at any time, Lenders whose aggregate Pro Rata Shares exceed 50%; provided , however , that at any time there are 2 or more Lenders, “Required Lenders” must include at least 2 Lenders (who are not Affiliates of one another).
Reserve Percentage - the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/8th of 1%) applicable to member banks under regulations issued from time to time by the Board of Governors for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).
Responsible Officer - with respect to all certificates and financial matters hereunder, President, Chief Executive Officer, and Chief Financial Officer of a Borrower (the “ Principal Responsible Officers ”) and, with respect to all notices (including Notice of Borrowing) and other matters hereunder, any Principal Responsible Officer, the Vice President, Finance and Controller, Vice President, Treasurer or General Counsel of the Borrower Representative or any other officer expressly designated by the Board of Directors of the Borrower Representative (or the appropriate committee thereof) or a Principal Responsible Officer as a Responsible Officer of the Borrower Representative. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower Representative shall be conclusively presumed to have been authorized by all necessary corporate and/or other action on the part of the Borrower Representative and each other Borrower on whose behalf it is delivered and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower Representative and each such Borrower.
Restricted Investment - any Investment by an Obligor, other than (a) Investments (other than those permitted by clause (b) through (g) of this definition) that are existing on the Closing Date and are listed on Schedule 10.2.5 ; (b) Investments in Subsidiaries to the extent existing on the Closing Date; (c) cash and Cash Equivalents that are subject to Agent’s Liens and control; provided that, cash consisting of collected funds and Cash Equivalents held by the Obligors shall not exceed $10,000,000 in the aggregate (excluding amounts held in employee trust accounts) for more than three (3) consecutive Business Days so long as any Revolver Loan is outstanding; (d) loans, advances and credit extensions permitted under Section 10.2.7 ; (e) Investments of (i) any Subsidiary in a Borrower or (ii) any Obligor in another Obligor or (iii) any Subsidiary which is not an Obligor in another Subsidiary which is not an Obligor; (f) with respect to any Obligor, Permitted Acquisitions; (g) Investments permitted by Section 10.2.9 ; (h) other Investments and Acquisitions consummated after the Closing Date by any Subsidiary which is not an Obligor which Investments or Acquisitions do not contain any Contingent Obligations, or any direct or contingent liabilities, of any Obligor and which have not been financed in whole or in part by any Obligor and (i) any other Investment permitted under the Second Lien Debt Documents, as in effect on the date hereof so long as after giving effect to such Investment,
 
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Excess Availability is at least 12.5% of the Maximum Revolver Amount, provided that all such Investments made pursuant to this clause (i) shall not exceed $5,000,000 in the aggregate during the term of the Agreement.
Restrictive Agreement - an agreement (other than a Loan Document, Second Lien Debt Documents and Last-Out Loan Documents) that conditions or restricts the right of any Borrower, Domestic Subsidiary or other Obligor to incur or repay the Obligations, to grant Liens on the Collateral, to declare or make Distributions to an Obligor, to modify, extend or renew the Obligations, or to repay any intercompany Debt owed to an Obligor.
Revolver Commitment - for any Lender, its obligation to make Revolver Loans and to participate in LC Obligations up to the maximum principal amount shown on Schedule 1.1 , or as specified hereafter in the most recent Assignment and Acceptance to which it is a party.
Revolver Commitments - the aggregate amount of such commitments as reduced or increased from time to time pursuant to the terms of this Agreement, including pursuant to Section 2.2 .
Revolver Loan - a loan made pursuant to Section 2.1 , and any Swingline Loan, Overadvance Loan or Protective Advance.
Revolver Note - a promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit A , which shall be in the amount of such Lender’s Revolver Commitment and shall evidence the Revolver Loans made by such Lender.
Revolver Termination Date - October 19, 2016.
Royalties - all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.
S&P - Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Sanctioned Entity - (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.
Sanctioned Person - a person named on the list of Specially Designated Nationals maintained by OFAC.
Second Lien Agent - Cerberus Business Finance, LLC or its successors or assigns.
Second Lien Debt - indebtedness and other obligations evidenced by the Second Lien Debt Documents and subject to the Second Lien Debt Intercreditor Agreement.
Second Lien Debt Documents - Term Loan Agreement dated as of the date hereof, among the Borrower, certain of its Subsidiaries, the Second Lien Agent and lenders from time to time party thereto (the “Second Lien Term Loan Agreement”) and the “Loan Documents” as defined therein.
 
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Second Lien Debt Intercreditor Agreement - the Intercreditor Agreement dated as of the date hereof among Agent, Second Lien Agent and the Obligors.
Secured Parties - Agent, Issuing Bank, Lenders and their Affiliates that provide Bank Products.
Securities Account Control Agreements - the Securities Account control agreements to be executed by each securities intermediary maintaining a Securities Account for a Borrower, in favor of Agent, for the benefit of Secured Parties, as security for the Obligations.
Securities Account - as defined in the UCC.
Security Agreement - the security agreement dated as of the date hereof made by each Obligor in favor of Agent, for the benefit of Secured Parties, securing the Obligations.
Security Documents - the Security Agreement, the Copyright Security Agreement, the Patent Security Agreement, Trademark Security Agreements, Insurance Assignments, Control Agreements, and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.
Settlement Report - a report delivered by Agent to Lenders summarizing the Revolver Loans and participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on a Pro Rata basis in accordance with their Revolver Commitments.
Software - as defined in the UCC.
Solvent - as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any loan documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.
Sponsor - Sun Capital Partners, Inc. or any of its Affiliates.
Stated Maturity - with respect to any installment of interest or principal on any series of Debt, the date on which the payment of interest or principal was scheduled to be paid in the
 
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documentation governing such Debt as of the date of this Agreement, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
Statutory Reserves - the percentage (expressed as a decimal) established by the Board of Governors as the then stated maximum rate for all reserves (including those imposed by Regulation D of the Board of Governors, all basic, emergency, supplemental or other marginal reserve requirements, and any transitional adjustments or other scheduled changes in reserve requirements) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency Liabilities (or any successor category of liabilities under Regulation D).
Subordinated Debt - Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations in a manner and form satisfactory to Agent, and is unsecured and does not amortize prior to the Revolver Termination Date.
Subsidiary - any entity at least 50% of whose voting securities or Equity Interests is owned by an Obligor or any combination of Obligors (including indirect ownership by an Obligor through other entities in which such Obligor directly or indirectly owns 50% of the voting securities or Equity Interests).
Super Majority Lenders - at any time, Lenders whose aggregate Pro Rata Shares exceed 66.67%; provided , however , that at any time there are 2 or more Lenders, “Super Majority Lenders” must include at least 2 Lenders (who are not Affiliates of one another).
Swingline Loan - any Borrowing of Base Rate Revolver Loans funded with Agent’s funds, until such Borrowing is settled among Lenders pursuant to Section 4.1.3.
Taxes - all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Trademark Security Agreement - each trademark security agreement pursuant to which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in trademarks, as security for the Obligations.
Transferee - any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.
Type - any type of a Loan (i.e., Base Rate Loan or LIBOR Revolver Loan) that has the same interest option and, in the case of LIBOR Revolver Loans, the same Interest Period.
UCC - the Uniform Commercial Code as in effect in the State of Illinois or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.
Ultimate Parent - Kellwood Holding Corp., a Delaware corporation.
Upstream Payment - a Distribution by a Subsidiary of a Borrower to such Borrower.
 
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US Foreign Holdco - any Domestic Subsidiary that is a holding company and whose assets consist solely of Stock or other equity of a Foreign Subsidiary and other assets of de minimis value (it being understood that such Domestic Subsidiary does not own any Accounts or Inventory).
Value - (a) for Inventory, its value determined on the basis of the lower of cost or market, calculated on a first-in, first-out basis; and (b) for an Account, its face amount.
Weighted Average Life to Maturity - when applied to any Debt at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Debt, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Debt.
Wells Fargo - Wells Fargo Bank, National Association.
Wells Fargo Indemnitees - Wells Fargo and its officers, directors, employees, Affiliates, agents and attorneys.
1.2. Accounting Terms . Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements. If GAAP changes during the term of this Agreement, or if the Borrowers interpret or apply GAAP differently (and Borrowers’ certified public accountants concur in such interpretation or application) from how it was interpreted or applied in preparing the financial statements provided to the Agent prior to the Closing Date, such that any financial ratios or covenants contained herein would then be calculated in a different manner or with different components, then Borrowers shall provide Agent with prior written notice of any such changes and upon the request of either the Borrowers or the Agent, the Borrowers and the Agent agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those financial ratios or covenants as criteria for evaluating the Obligors’ financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided , however , that, until Borrowers, Required Lenders and Agent so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change.
1.3. Uniform Commercial Code . As used herein, the following terms are defined in accordance with the UCC in effect in the State of Illinois from time to time: “Chattel Paper,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles” and “Instrument.” 
1.4. Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including”
 
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and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Agent’s notice address under Section 14.3.1 ; or (g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute discretion of such Person. All calculations of Value, fundings of Loans, issuances of Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations (including calculations of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise reasonably satisfactory to Agent (and not necessarily calculated in accordance with GAAP). Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
Section 2. CREDIT FACILITIES
2.1. Revolver Commitment .
2.1.1. Revolver Loans . Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment, on the terms set forth herein, to make Revolver Loans to Borrowers from time to time through the Commitment Termination Date. The Revolver Loans may be repaid and reborrowed as provided herein. In no event shall Lenders have any obligation to honor a request for a Revolver Loan if the unpaid balance of Revolver Loans outstanding at such time (including the requested Loan) would exceed the Borrowing Base.
2.1.2. Revolver Notes . The Revolver Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall deliver a Revolver Note in the principal amount equal to such Lender’s Revolver Commitment to such Lender.
2.1.3. Use of Proceeds . The proceeds of Revolver Loans shall be used by Borrowers solely (a) to satisfy existing Debt (provided, however, that in no circumstances shall any proceeds of Revolver Loans be used by any Borrower to fund, either directly or indirectly, all or any portion of payments (other than interest and fees payable with respect thereto) on any notes issued under the Indenture or 2009 Indenture or make any payments prohibited by Section 10.2.8 hereof); provided , that up to $10,000,000 in the aggregate of Revolving Loans during the term of this Agreement may be used to fund payments to repurchase the currently issued and outstanding notes under the Indenture or 2009 Indenture in an amount not to exceed 80% of the par value thereof so long as either (A) the trailing 60 day average daily Availability, calculated
 
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after giving effect to such Revolving Loans and such payment to repurchase the notes, exceeds $30,000,000 or (B) Parent and its Subsidiaries have maintained a Fixed Charge Coverage Ratio of at least 1.0 to 1.00 calculated at the end of the most recent Fiscal Month for the period of 12 consecutive Fiscal Months then ending and the trailing 60 day average daily Availability exceeds $25,000,000, in each case calculated after giving effect to such Revolving Loans and such payment to repurchase the notes; (b) to pay fees and transaction expenses associated with the closing of this credit facility; (c) to pay Obligations in accordance with this Agreement; (d) to repay outstanding amounts under the Convertible Debentures in an aggregate amount not to exceed $300,000; and (e) for working capital and other lawful corporate purposes of Borrowers.
2.1.4. Voluntary Reduction or Termination of Revolver Commitments.
(a) The Revolver Commitments shall terminate on the Commitment Termination Date, unless sooner terminated in accordance with this Agreement. Upon at least 5 Business Days prior written notice to Agent, Borrower Representative may, at its option, terminate the Revolver Commitments and this credit facility. Any notice of termination given by Borrower Representative shall be irrevocable. On the termination date, Borrower Representative shall make Full Payment of all Obligations.
(b) Borrower Representative may permanently reduce the Revolver Commitments, on a Pro Rata basis for each Lender, from time to time upon written notice to Agent, which notice shall specify the amount of the reduction, shall be irrevocable once given, shall be given at least five Business Days prior to the end of a month and shall be effective as of the first day of the next month. Each reduction shall be in a minimum amount of $10,000,000, or an increment of $1,000,000 in excess thereof.
2.1.5. Overadvances . If the aggregate Revolver Loans exceed the aggregate Revolver Commitments or the Borrowing Base (an “ Overadvance ”) at any time, the excess amount shall be payable by Borrowers on demand by Agent, but all such Revolver Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents. Unless its authority has been revoked in writing by Required Lenders, Agent may require Lenders to honor requests for Overadvance Loans and to forbear from requiring Borrowers to cure an Overadvance, (a) when no other Event of Default is known to Agent, as long as (i) the Overadvance does not continue for more than 30 consecutive days (and no Overadvance may exist for at least five consecutive days thereafter before further Overadvance Loans are required), and (ii) the Overadvance is not known by Agent to exceed 5% of the Borrowing Base; and (b) without duplication of Overadvances permitted under clause (a), regardless of whether an Event of Default exists, if Agent discovers an Overadvance not previously known by it to exist, as long as from the date of such discovery the Overadvance (i) is not increased by more than $10,000,000, and (ii) does not continue for more than 30 consecutive days. In no event shall Overadvance Loans be required that would cause the outstanding Revolver Loans and LC Obligations to exceed the aggregate Revolver Commitments. Any funding of an Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event of Default caused thereby. In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section nor authorized to enforce any of its terms.
2.1.6. Protective Advances . Agent shall be authorized, in its discretion, at any time that a Default or Event of Default exists or any conditions in Section 6 are not satisfied,
 
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and without regard to the aggregate Commitments, to make Base Rate Revolver Loans (“ Protective Advances ”) (a) up to an aggregate amount of $5,000,000 outstanding at any time, if Agent deems such Loans necessary or desirable to preserve or protect any Collateral, or to enhance the collectibility or repayment of Obligations; or (b) to pay any other amounts chargeable to Obligors under any Loan Documents, including costs, fees and expenses. All Protective Advances shall be Obligations, secured by the Collateral, and shall be treated for all purposes as Extraordinary Expenses. Each Lender shall participate in each Protective Advance on a Pro Rata basis; provided , that in no event shall any Lender’s Pro Rata share of outstanding Revolver Loans, LC Obligations and Protective Advances exceed the Revolver Commitment of such Lender. Required Lenders may at any time revoke Agent’s authorization to make further Protective Advances by written notice to Agent. Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive. Following a Protective Advance hereunder, Agent will endeavor to provide the Borrower Representative notice thereof; provided , that the failure of Agent to provide such notice or any error therein shall not in any manner affect the obligation of Borrowers to repay the Loans or any other Obligations in accordance with the terms of this Agreement.
2.1.7. Revolver Increase . Borrowers may, by written notice to Agent (whereupon Agent shall promptly deliver a copy to each of the Lenders), request that the amount of the aggregate Revolver Commitment be increased by an amount of up to $40,000,000 (any such increase, a “ Revolver Increase ”); provided , that no such Revolver Increase shall be made if (i) at the time that such Revolver Increase is to be made (and after giving effect thereto) a Default or Event of Default shall exist or would occur as a result of such Revolver Increase, (ii) Agent has not received an opinion of Borrowers’ counsel reasonably satisfactory to Agent opining that the Revolver Increase does not conflict with, or result in a breach of, the Second Lien Debt Documents or the 2009 Indenture, or require that the Debt evidenced by the Second Lien Debt Documents or the 2009 Indenture be secured on an equal and ratable basis with any portion of the Obligations, (iii) Agent has not received a certificate of Parent reasonably satisfactory to Agent certifying that the Revolver Increase not conflict with, or result in a breach of, the Indenture, or require that the Debt evidenced by the Indenture be secured on an equal and ratable basis with any portion of the Obligations, (iv) the holders of the Second Lien Debt have not consented to the Revolver Increase and the Second Lien Debt Intercreditor Agreement has not been amended in a manner satisfactory to Agent to increase the “Maximum Priority First Lien Loan Amount” (as defined in the Second Lien Debt Intercreditor Agreement) by at least 110% of the Revolver Increase, or (v) Agent has not received commitments (reasonably satisfactory to Agent) from Lenders (or their Affiliates) or other Persons reasonably acceptable to Agent, within 90 days after receipt of Borrowers’ request and prior to such Revolver Increase, to provide Revolver Commitments which, in the aggregate, equal the amount of the requested Revolver Increase. Any such Revolver Increase shall be in a minimum amount of $5,000,000 and the aggregate amount of all Revolver Increases shall not exceed $40,000,000. Notwithstanding anything to the contrary herein, no Lender shall have any obligation to increase its Revolver Commitment to provide all or any portion of a Revolver Increase. In the event Agent receives satisfactory commitments for Revolver Commitments in excess of the requested Revolver Increase, Agent shall have the right, following consultation with Borrower Representative, to allocate the Revolver Increase among such commitments as Agent shall elect. The notice from Borrowers pursuant to this Section shall set forth the requested amount of such Revolver Increase. If Borrowers’ request for the Revolver Increase satisfies all of the terms and
 
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conditions set forth herein, Agent shall notify Borrower Representative and each Lender of the date such Revolver Increase is to be made, which date shall be on or after delivery to Agent of each of the following documents: (1) a joinder agreement signed by a duly authorized representative of any Person that becomes a Lender, (2) an officers’ certificate of Borrower Representative, in form and substance reasonably acceptable to Agent, confirming compliance with all conditions precedent set forth herein; (3) to the extent requested by any Lender, executed Notes issued by Borrowers; (4) an amendment to this Agreement, as appropriate, and the other Loan Documents, to effectuate the terms of this Section 2.1.7 and the Revolver Increase, executed by each Borrower, each Lender providing an increased or new Revolver Commitment, and Agent; and (5) any other customary documents (including opinions of counsel) reasonably requested by Agent, in each case all in form and substance reasonably acceptable to Agent (it being understood and agreed that, notwithstanding Section 14.1 , any such amendments and supplements shall be effective without further consent of any Lender (other than any Lender providing an increased or new Revolver Commitment).
2.2. [ Intentionally Omitted ].
2.3. Letter of Credit Facility .
2.3.1. Issuance of Letters of Credit . Issuing Bank agrees to issue Letters of Credit from time to time until 30 days prior to the Commitment Termination Date, on the terms set forth herein, including the following:
(a) Each Obligor acknowledges that Issuing Bank’s willingness to issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application (appropriately completed and executed by a Borrower or conforming with the electronic letter of credit system at the applicable Issuing Bank, as applicable) with respect to the requested Letter of Credit, as well as such other instruments and agreements as the Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount. The Issuing Bank shall have no obligation to issue any Letter of Credit unless (i) (A) Issuing Bank receives a LC Request with concurrent notice thereof to Agent and (B) Issuing Bank receives a LC Application, in each case, at least three Business Days prior to the requested date of issuance; provided , however , that if an application is received via the applicable Issuing Bank’s electronic letter of credit system on any Business Day, such Letter of Credit shall be issued on or prior to 5:00 p.m. the next succeeding Business Day (or at such later date and time as the applicable Issuing Bank may agree in a particular instance in its sole discretion); (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender exists, such Lender or Borrowers have entered into arrangements reasonably satisfactory to Agent and Issuing Bank to eliminate any funding risk associated with the Defaulting Lender. Upon receipt of notice of a LC Request in accordance with this section, the Agent shall notify the Issuing Bank as to whether the issuance of such Letter of Credit is authorized. The Issuing Bank shall not issue any Letter of Credit or amendment of a Letter of Credit increasing the amount thereof without first receiving such authorization. In addition, if the Issuing Bank receives written notice from a Lender at least one Business Day before issuance of a Letter of Credit that any LC Condition has not been satisfied, the Issuing Bank shall have no obligation to issue the requested Letter of Credit (or any other) until such notice is withdrawn in writing by that Lender or until Required Lenders have waived such condition in accordance with this Agreement. Prior to receipt of any such notice, the Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.
 
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(b) If a Borrower so requests in any applicable LC Application, the Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Bank, a Borrower shall not be required to make a specific request to the Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than thirty (30) days prior to the Revolver Termination Date; provided , however , that the Issuing Bank shall not permit any such extension if (A) the Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-Extension Notice Date (1) from the Agent that the Required Lenders have elected not to permit such extension or (2) from the Agent, any Lender or any Borrower that one or more of the applicable conditions specified in Section 6.2 is not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.
(c) Letters of Credit may be requested by a Borrower only (i) to support obligations of a Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent may approve from time to time in writing. The renewal or extension of any Letter of Credit shall be subject to LC Conditions.
(d) The Obligors assume all risks of the acts, omissions or misuses of any Letter of Credit by the beneficiary. In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any Documents; any differences or variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and an Obligor; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of the Issuing Bank, Agent or any Lender, including any act or omission of a Governmental Authority. The rights and remedies of Issuing Bank under the Loan Documents shall be cumulative. The Issuing Bank shall be fully subrogated to the rights and remedies of each beneficiary whose claims against Obligors are discharged with proceeds of any Letter of Credit.
 
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(e) In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, the Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, notice or other communication in whatever form believed by the Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. The Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts. The Issuing Bank may employ agents and attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and, subject to Section 2.3.2(d) , shall not be liable for the negligence or misconduct of any such agents or attorneys-in-fact selected and retained with reasonable care.
2.3.2. Reimbursement; Participations .
(a) If the Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall pay to the Issuing Bank, on the same day (“ Reimbursement Date ”), the amount paid by the Issuing Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Revolver Loans from the Reimbursement Date until payment by Borrowers. The obligation of Borrowers to reimburse the Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the beneficiary. Whether or not a Borrower submits a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate Revolver Loans in an amount necessary to pay all amounts due the Issuing Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata share of such Borrowing whether or not the Commitments have terminated, an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.
(b) Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from the Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of Credit. If the Issuing Bank makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one Business Day) and unconditionally pay to Agent, for the benefit of the Issuing Bank, the Lender’s Pro Rata share of such payment. Upon request by a Lender, the Issuing Bank shall furnish copies of any Letters of Credit and LC Documents in its possession at such time.
(c) The obligation of each Lender to make payments to Agent for the account of the Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or the existence of any setoff or defense that any Obligor may have with respect to any Obligations. The Issuing Bank does not assume any responsibility for any failure or delay in performance or any breach by any Obligor or other
 
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Person of any obligations under any LC Documents. The Issuing Bank does not make to Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, LC Documents or any Obligor. The Issuing Bank shall not be responsible to any Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any LC Documents; the validity, genuineness, enforceability, collectibility, value or sufficiency of any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor.
(d) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action taken or omitted to be taken in connection with any LC Documents except to the extent resulting from its actual gross negligence or willful misconduct. The Issuing Bank shall not have any liability to any Lender if the Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives written instructions from Required Lenders.
(e) The Issuing Bank agrees to provide Agent with periodic confirmation, upon Agent’s request, of all amounts owing by any Borrower for any drawings under any Letters of Credit issued by the Issuing Bank, the aggregate undrawn amount of all outstanding Letters of Credit issued by the Issuing Bank and all fees and other amounts owing with respect to any Letters of Credit issued by the Issuing Bank.
(f) With respect to any Letter of Credit not denominated in Dollars, at the option of Agent, Borrower shall satisfy its reimbursement obligations with respect thereto by paying to Agent either the amount thereof in the applicable currency or the Dollar Equivalent thereof.
2.3.3. Cash Collateral . If any LC Obligations, whether or not then due or payable, shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that Availability is less than zero, (c) after the Commitment Termination Date, or (d) within 20 Business Days prior to the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the amount of all other LC Obligations. Borrowers shall, on demand by Issuing Bank or Agent from time to time, Cash Collateralize the LC Obligations of any Defaulting Lender. If Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may (and shall upon direction of Agent) advance, as Revolver Loans, the amount of the Cash Collateral required (whether or not the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).
Section 3. INTEREST, FEES AND CHARGES
3.1. Interest .
3.1.1. Rates and Payment of Interest .
(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Loans; (ii) if a LIBOR Revolver Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin for LIBOR Revolver Loans; and (iii) if any other Obligation (including, to the extent permitted
 
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by law, interest not paid when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Loans. Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers. If a Loan is repaid on the same day made, one day’s interest shall accrue.
(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment). Each Borrower acknowledges that the cost and expense to Agent and each Lender due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate Agent and Lenders for such added cost and expense.
(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of each month and, for any LIBOR Revolver Loan, the last day of its Interest Period; provided , that interest payments on LIBOR Revolver Loans with an Interest Period in excess of 90 days shall be payable at the end of such 90 days and at the end of such Interest Period; (ii) on any date of prepayment, with respect to the principal amount of Loans being prepaid; and (iii) on the Commitment Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.
3.1.2. Application of LIBOR to Outstanding Loans .
(a) Borrower Representative may on any Business Day, subject to delivery of a Notice of Conversion/Continuation, elect to convert any portion of the Base Rate Loans to, or to continue any LIBOR Revolver Loan at the end of its Interest Period as, a LIBOR Revolver Loan. During any Default or Event of Default, Agent may (and shall at the direction of Required Lenders) declare that no Loan may be made, converted or continued as a LIBOR Revolver Loan.
(b) Whenever Borrower Representative desires to convert or continue Loans as LIBOR Revolver Loans, the Borrower Representative shall give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Days before the requested conversion or continuation date. Promptly after receiving any such notice, Agent shall notify each Lender thereof. Each Notice of Conversion/Continuation shall be irrevocable, and shall specify the aggregate principal amount of Loans to be converted or continued, the conversion or continuation date (which shall be a Business Day), and the duration of the Interest Period (which shall be deemed to be one month if not specified). If, upon the expiration of any Interest Period in respect of any LIBOR Revolver Loans, Borrower Representative shall have failed to deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate Loans.
 
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3.1.3. Interest Periods . In connection with the making, conversion or continuation of any LIBOR Revolver Loans, Borrower Representative shall select an interest period (“ Interest Period ”) to apply, which Interest Period shall be 30, 60, 90 or 180 days; provided , however , that:
(a) the Interest Period shall commence on the date the Loan is made or continued as, or converted into, a LIBOR Revolver Loan, and shall expire on the numerically corresponding day in the calendar month at its end;
(b) if any Interest Period commences on a day for which there is no corresponding day in the calendar month at its end or if such corresponding day falls after the last Business Day of such month, then the Interest Period shall expire on the last Business Day of such month; and if any Interest Period would expire on a day that is not a Business Day, the period shall expire on the next Business Day; and
(c) no Interest Period shall extend beyond the Revolver Termination Date.
3.1.4. Interest Rate Not Ascertainable . If Agent shall determine that on any date for determining LIBOR, due to any circumstance affecting the London interbank market, adequate and fair means do not exist for ascertaining such rate on the basis provided herein, then Agent shall immediately notify Borrowers of such determination. Until Agent notifies Borrower Representative that such circumstance no longer exists, the obligation of Lenders to make LIBOR Revolver Loans shall be suspended, and no further Loans may be converted into or continued as LIBOR Revolver Loans.
3.2. Fees .
3.2.1. Unused Line Fee . Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Unused Line Fee per annum times the amount by which the Revolver Commitments exceed the average daily balance of Revolver Loans and stated amount of Letters of Credit during any month. Such fee shall be payable in arrears, on the first day of each month and on the Commitment Termination Date.
3.2.2. LC Facility Fees . Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Letter of Credit Fee in effect times the average daily stated amount of Letters of Credit, which fees shall be payable monthly in arrears, on the first day of each month; and (b) to the Issuing Bank, for its own account, all customary charges associated with the issuance, amending, negotiating, payment, processing, transfer and administration of Letters of Credit (including a fronting fee of 0.25% per annum), which charges shall be paid as and when incurred. During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.
3.2.3. Agent Fees . Borrowers shall pay to Agent, for its own account, the fees described in the Fee Letter.
3.3. Computation of Interest , Fees , Yield Protection . All computations of interest based on LIBOR , as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 360 days; provided , that the unused line fee and Letter of Credit fees described in Sections 3.2.1 and 3.2.2 shall be calculated on the basis of a 365-day or 366-day year, as applicable. All computations of interest based on the Base Rate shall be computed for the actual days elapsed, based on a 365-day or 366-day year as applicable. Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error. All fees shall be fully
 
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earned when due and shall not be subject to rebate or refund, nor subject to proration except as specifically provided herein. All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money. A certificate as to amounts in reasonable detail and with supporting calculations payable by Borrowers under Section 3.4 , 3.6 , 3.7 or 3.9 , submitted to Borrower Representative by Agent or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes, absent manifest error.
3.4. Reimbursement Obligations . Borrowers shall reimburse Agent, without duplication, for all Extraordinary Expenses. Borrowers shall also reimburse Agent for all reasonable out-of-pocket and invoiced legal fees (which invoice may omit information that such counsel reasonably deems privileged) and all reasonable out-of-pocket accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b) , each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Agent’s professionals at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Agent, any Lender or any of their Affiliates may have with such professionals with respect to this or any other transaction. All amounts reimbursable by Borrowers under this Section shall constitute Obligations secured by the Collateral and shall be payable on demand.
3.5. Illegality . If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Revolver Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, any obligation of such Lender to make or continue LIBOR Revolver Loans or to convert Base Rate Loans to LIBOR Revolver Loans shall be suspended until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist. Upon delivery of such notice, Borrowers shall prepay or, if applicable, convert all LIBOR Revolver Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Revolver Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Revolver Loans. Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.
3.6. Inability to Determine Rates . If Required Lenders notify Agent for any reason in connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Revolver Loan that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (b) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for the requested Interest Period does not adequately and fairly reflect the
 
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cost to such Lenders of funding such Loan, then Agent will promptly so notify Borrower Representative and each Lender. Thereafter, the obligation of Lenders to make or maintain LIBOR Revolver Loans shall be suspended until Agent (upon instruction by Required Lenders) revokes such notice. Upon receipt of such notice, Borrower Representative may revoke any pending request for a Borrowing of, conversion to or continuation of a LIBOR Revolver Loan or, failing that, will be deemed to have submitted a request for a Base Rate Loan.
3.7. Increased Costs; Capital Adequacy .
3.7.1. Change in Law . If any Change in Law shall:
(a) impose modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in LIBOR) or Issuing Bank;
(b) subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document, Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to such Lender or Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.9 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or Issuing Bank); or
(c) impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense affecting any Loan, Loan Document, Letter of Credit or participation in LC Obligations;
and the result thereof shall be to increase the cost to such Lender of making or maintaining any LIBOR Revolver Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or Issuing Bank, Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.
3.7.2. Capital Adequacy . If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC Obligations, to a level below that which such Lender, Issuing Bank or holding company could have achieved but for such Change in Law (taking into consideration such Lender’s, Issuing Bank’s and holding company’s policies with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate it or its holding company for any such reduction suffered.
 
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3.7.3. Compensation . Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of its right to demand such compensation, but Borrowers shall not be required to compensate a Lender or Issuing Bank for any increased costs incurred or reductions suffered more than six months prior to the date that the Lender or Issuing Bank notifies Borrower Representative of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).
3.8. Mitigation . If any Lender gives a notice under Section 3.5 or requests compensation under Section 3.7 , or if Borrowers are required to pay additional amounts with respect to a Lender under Section 5.9 , then such Lender shall use reasonable efforts to designate a different Lending Office 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 (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to it. Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
3.9. Funding Losses . If for any reason (other than default by a Lender) (a) any Borrowing of, or conversion to or continuation of, a LIBOR Revolver Loan does not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any repayment or conversion of a LIBOR Revolver Loan occurs on a day other than the end of its Interest Period, or (c) Borrowers fail to repay a LIBOR Revolver Loan when required hereunder, then Borrowers shall pay to Agent its customary administrative charge and to each Lender all losses and expenses that it sustains as a consequence thereof, including any loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds. Lenders shall not be required to purchase Dollar deposits in the London interbank market or any other offshore Dollar market to fund any LIBOR Revolver Loan, but the provisions hereof shall be deemed to apply as if each Lender had purchased such deposits to fund its LIBOR Revolver Loans.
3.10. Maximum Interest . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (“ maximum rate ”). If Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers. In determining whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest; and (b) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
 
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Section 4. LOAN ADMINISTRATION
4.1 . Manner of Borrowing and Funding Revolver Loans .
4.1.1. Notice of Borrowing .
(a) Whenever Borrowers desire funding of a Borrowing of Revolver Loans, the Borrower Representative shall give Agent a Notice of Borrowing. Such notice must be received by Agent no later than 11:00 a.m. (i) on the Business Day of the requested funding date, in the case of Base Rate Loans, and (ii) at least three Business Days prior to the requested funding date, in the case of LIBOR Revolver Loans. Notices received after 11:00 a.m. shall be deemed received on the next Business Day. Each Notice of Borrowing shall be irrevocable and shall specify (A) the principal amount of the Borrowing, (B) the requested funding date (which must be a Business Day), (C) whether the Borrowing is to be made as Base Rate Loans or LIBOR Revolver Loans, and (D) in the case of LIBOR Revolver Loans, the duration of the applicable Interest Period (which shall be deemed to be one month if not specified).
(b) Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations (whether principal, interest, fees or other charges, including Extraordinary Expenses, LC Obligations, Cash Collateral and Bank Product Debt) shall be deemed to be a request for Base Rate Revolver Loans on the due date, in the amount of such Obligations. The proceeds of such Revolver Loans shall be disbursed as direct payment of the relevant Obligation.
(c) If Borrowers establish a controlled disbursement account with Agent or any Affiliate of Agent, then the presentation for payment of any check or other item of payment drawn on such account at a time when there are insufficient funds to cover it shall be deemed to be a request for Base Rate Revolver Loans on the date of such presentation, in the amount of the check and items presented for payment. The proceeds of such Revolver Loans may be disbursed directly to the controlled disbursement account or other appropriate account.
4.1.2. Fundings by Lenders . Each Lender shall timely honor its Revolver Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is properly requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed funding date for Base Rate Loans or by 3:00 p.m. at least three Business Days before any proposed funding of LIBOR Revolver Loans. Each Lender shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the account specified by Agent in immediately available funds not later than 2:00 p.m. on the requested funding date, unless Agent’s notice is received after the times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed by the Borrower Representative. Unless Agent shall have received (in sufficient time to act) written notice from a Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent may assume that such Lender has deposited or promptly will deposit its share with Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then Borrowers agree to repay to Agent on demand the amount of such share, together with interest thereon from the date disbursed until repaid, at the rate applicable to such Borrowing.
 
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4.1.3. Swingline Loans; Settlement .
(a) Agent may, but shall not be obligated to, advance Swingline Loans to Borrowers, up to an aggregate outstanding amount at any time not to exceed 10% of the Maximum Revolver Amount, unless the funding is specifically required to be made by all Lenders hereunder. Each Swingline Loan shall constitute a Revolver Loan for all purposes, except that payments thereon shall be made to Agent for its own account. The obligation of Borrowers to repay Swingline Loans shall be evidenced by the records of Agent and need not be evidenced by any promissory note.
(b) To facilitate administration of the Revolver Loans, Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that settlement among them with respect to Swingline Loans and other Revolver Loans may take place on a date determined from time to time by Agent, which shall occur at least once each week. On each settlement date, settlement shall be made with each Lender in accordance with the Settlement Report delivered by Agent to Lenders. Between settlement dates, Agent may in its discretion apply payments on Revolver Loans to Swingline Loans, regardless of any designation by a Borrower or any provision herein to the contrary. Each Lender’s obligation to make settlements with Agent is absolute and unconditional, without offset, counterclaim or other defense, and whether or not the Commitments have terminated, an Overadvance exists, or the conditions in Section 6 are satisfied. If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any Swingline Loan may not be settled among Lenders hereunder, then each Lender shall be deemed to have purchased from Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer the amount of such participation to Agent, in immediately available funds, within one Business Day after Agent’s request therefor.
4.1.4. Notices . Each Borrower authorizes Agent and Lenders to extend, convert or continue Loans, effect selections of interest rates, and transfer funds to or on behalf of Borrowers based on telephonic or e-mailed instructions from Borrower Representative. Borrower Representative shall confirm each such request by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs in any material respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent or any Lender to be a person authorized to give such instructions on a Borrower’s behalf.
4.2. Defaulting Lender . Agent may (but shall not be required to), in its discretion, retain any payments or other funds received by Agent that are to be provided to a Defaulting Lender hereunder, and may apply such funds to such Lender’s defaulted obligations or readvance the funds to Borrowers in accordance with this Agreement. The failure of any Lender to fund a Loan, to make any payment in respect of LC Obligations or to otherwise perform its obligations hereunder shall not relieve any other Lender of its obligations, and no Lender shall be responsible for default by another Lender. Lenders and Agent agree (which
 
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agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that, solely for purposes of determining a Defaulting Lender’s right to vote on matters relating to the Loan Documents and to share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a “Lender” until all its defaulted obligations have been cured; provided , that a Defaulting Lender shall retain the right to vote as a Lender on matters described in Section 14.1.1(c) .
4.3. Number and Amount of LIBOR Revolver Loans; Determination of Rate . For ease of administration, all LIBOR Revolver Loans having the same length and beginning date of their Interest Periods shall be aggregated together, and such Loans shall be allocated among Lenders on a Pro Rata basis. No more than 8 LIBOR Revolver Loans may be outstanding at any time, and each LIBOR Revolver Loan when made, continued or converted shall be in a minimum amount of $1,000,000, or an increment of $1,000,000 in excess thereof.
Upon determining LIBOR for any Interest Period requested by Borrower Representative, Agent shall promptly notify Borrower Representative thereof by telephone or electronically and, if requested by Borrower Representative, shall confirm any telephonic notice in writing.
4.4. Borrower Representative . Each Borrower hereby designates Parent (“ Borrower Representative ”) as its representative and agent for all purposes under the Loan Documents, including requests for Loans and Letters of Credit, designation of interest rates, delivery or receipt of communications with Agent, the Issuing Bank or any Lender, preparation and deliver of Borrowing Base and financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent, the Issuing Bank or any Lender. Borrower Representative hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Representative on behalf of any Borrower. Agent and Lenders may send any notice or communication with a Borrower hereunder to Borrower Representative on behalf of such Borrower. Each of Agent, Issuing Bank and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Representative for any or all purposes under the Loan Documents. Each Borrower agrees that any notice election, communication, representation, agreement or undertaking made on its behalf by Borrower Representative shall be binding upon and enforceable against it.
4.5. One Obligation . The Loans, LC Obligations and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Agent’s Lien upon all Collateral; provided , however that Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.
4.6. Effect of Termination . On the effective date of any termination of the Commitments, all Obligations shall be immediately due and payable, and any Lender may terminate its and its Affiliates’ Bank Products (including, with the consent of Agent, any Cash Management Services). All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding
 
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Full Payment of the Obligations, Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Agent receives (a) a written agreement, executed by Borrower Representative and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such damages; or (b) such Cash Collateral as Agent, in its discretion, deems necessary to protect against any such damages. The provisions of Sections 2.3 , 3.4 , 3.6 , 3.7 , 3.9 , 5.5 , 5.9 , 5.10 , 12 , 14.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.
Section 5. PAYMENTS
5.1. General Payment Provisions . All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Indemnified Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time shall be deemed made on the next Business Day. Borrower Representative may, at the time of payment, specify to Agent the Obligations to which such payment is to be applied, but Agent shall in all events retain the right to apply such payment in such manner as Agent, subject to the provisions hereof, may determine to be appropriate. If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees. Any payment of a LIBOR Revolver Loan prior to the end of its Interest Period shall be accompanied by all amounts due under Section  3.9 . Any prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR Revolver Loans.
5.2. Repayment of Revolver Loans . Revolver Loans shall be due and payable in full on the Commitment Termination Date, unless payment is sooner required hereunder. Revolver Loans may be prepaid from time to time, without penalty or premium. Notwithstanding anything herein to the contrary, if an Overadvance exists, Borrowers shall, on the sooner of Agent’s demand or the first Business Day after any Borrower has knowledge thereof, repay the outstanding Revolver Loans in an amount sufficient to reduce the principal balance of Revolver Loans to the Borrowing Base.
5.3. Mandatory Prepayments .
(a) Upon the occurrence of a Change of Control, the Borrowers shall make Full Payment of all Obligations.
(b) When an Obligor or any Subsidiary thereof (other than a Foreign Subsidiary) makes any Asset Disposition (other than a disposition described under clause (a), (b), (c), (d), (e), (f) or (g) of the definition of “Permitted Asset Disposition” hereof) or experiences any Asset Loss Event, the Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds thereof, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such Net Cash Proceeds shall be held in trust for Agent; provided , however , that the Net Cash Proceeds of the foregoing received since the Closing Date shall not be required to be
 
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applied to the prepayment of the Loans to the extent such proceeds are to be reinvested in or otherwise used to replace, repair or restore the properties or assets used in such Obligor’s or such Subsidiary’s, as applicable, business and so long as: (i) no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (ii) Borrower Representative delivers a certificate to Agent within three (3) Business Days after such Asset Disposition or ten (10) Business Days after the occurrence of Asset Loss Event (as applicable), stating that such Net Cash Proceeds shall be used (or committed to be used) to reinvest in new assets useful in the business, or otherwise replace, repair or restore any such properties or assets to be used in such Obligor’s or such Subsidiaries’ business, as the case may be, within a period specified in such certificate not to exceed 270 days (or such longer period as Agent may agree, but not to exceed 360 days without the Required Lenders’ consent) after the receipt of such proceeds (which certificate shall set forth estimates of the proceeds to be so expended and shall set forth in reasonable detail any plans for such replacement, repair or restoration, which shall be acceptable to Agent in its Credit Judgment) and (iii) such Net Cash Proceeds are deposited in a non-interest bearing account subject to the dominion and control of Agent which proceeds shall then be disbursed by Agent to such Obligor or such Subsidiary promptly upon Borrower Representative’s written request therefor setting forth in reasonable detail the use of such proceeds and certifying that such proceeds are being applied in the manner set forth in the certificate delivered to Agent in accordance with clause (ii); provided , further , that (A) if all or any portion of such Net Cash Proceeds not so applied to the prepayment of the Loans are not used (or committed to be used) in accordance with the foregoing proviso within 270 days (or such longer period as Agent may agree, but not to exceed 360 days without the Required Lenders’ consent) of receipt of such Net Cash Proceeds, such amount shall be applied to the Loans as otherwise set forth herein, on the last day of such specified period, (B) if such Obligor or such Subsidiary, as the case may be, is not permitted to reinvest or utilize such Net Cash Proceeds in accordance with this Section 5.3(b) as a result of the existence of a Default, Borrower Representative may request, and upon the written approval of Agent, such Net Cash Proceeds shall be deposited in a non-interest bearing account subject to the dominion and control of Agent until the earlier of (x) the date on which such Default is cured or waived in writing in accordance with the terms of this Agreement, in which case such amounts may be reinvested or utilized in accordance with the proviso above and (y) the date on which an Event of Default shall occur, in which case such Net Cash Proceeds shall be applied to the Loans in accordance with Section 5.3(f) on such date and (C) if such Obligor or such Subsidiary, as the case may be, is not permitted to reinvest or utilize such net cash proceeds as a result of a continuing Event of Default, such Net Cash Proceeds shall be applied in accordance with Section 5.3(f) . The foregoing shall not be deemed to be implied consent to any Asset Disposition or other event otherwise prohibited by the terms and conditions hereof.
(c) Upon the sale or issuance of any of the Equity Interests (other than Excluded Issuances) of Ultimate Parent or any of its Domestic Subsidiaries (other than a US Foreign Holdco), Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds of such sale or issuance, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such Net Cash Proceeds shall be held in trust for Agent.
(d) Upon the sale, issuance or incurrence of any Debt of any Obligor or any of its Domestic Subsidiaries, other than a US Foreign Holdco (other than Debt permitted under
 
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Section 10.2.1 ), Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds of such sale, issuance or incurrence, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such sale, issuance or incurrence otherwise prohibited by the terms and conditions hereof.
(e) When any Obligor or any Domestic Subsidiary thereof (other than a US Foreign Holdco) receives any Extraordinary Receipts, Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds thereof, such repayment to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds. The foregoing shall not be deemed to be implied consent to any event or condition giving rise to any Extraordinary Receipts which would otherwise constitute a Default or Event of Default under this Agreement.
(f) Each prepayment pursuant to Section 5.3(b), (c), (d) or (e)  shall (A) so long as no Application Event shall have occurred and be continuing, be applied, first , to the outstanding principal amount of the Loans (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments and the establishment of a permanent Availability Reserve in the amount of the prepayment; provided, that no such permanent reduction or permanent Availability Reserve shall be required if (A) no Default or Event of Default then exists, Excess Availability immediately before such prepayment equals or exceeds $45,000,000 and the Fixed Charge Coverage Ratio for the most recently ended 12 Fiscal Month for which Agent has received Parent’s financial statements is at least 1.00 to 1.00 or (B) Required Lenders elect not to require such permanent reduction and permanent Availability Reserve), until paid in full, and second , to provide Cash Collateralization for the Letters of Credit (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments and the establishment of a permanent Availability Reserve in the amount of the prepayment; provided, that no such permanent reduction or permanent Availability Reserve shall be required if (A) no Default or Event of Default then exists, Excess Availability immediately before such prepayment equals or exceeds $45,000,000 and the Fixed Charge Coverage Ratio for the most recently ended 12 Fiscal Month for which Agent has received Parent’s financial statements is at least 1.00 to 1.00 or (B) Required Lenders elect not to require such permanent reduction and permanent Availability Reserve ), and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 5.6 (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments and the establishment of a permanent Availability Reserve in the amount of the prepayment ).
5.4. Payment of Other Obligations . Obligations other than Loans, including LC Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.
5.5. Marshaling; Payments Set Aside . None of Agent or Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any payment by or on behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or Agent, Issuing Bank or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
 
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set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
5.6. Post-Application Event Allocation of Payments .
5.6.1. Allocation . Notwithstanding anything herein to the contrary, during an Application Event, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows:
(a)  first , to all costs and expenses, including Extraordinary Expenses, owing to Agent and Lenders;
(b)  second , to all amounts owing to Agent and Lenders on Swingline Loans or Protective Advances;
(c)  third , to all amounts owing to Issuing Bank on LC Obligations; fourth, to all Obligations constituting fees (excluding amounts relating to Bank Products);
(d)  fourth , to all Obligations constituting fees (excluding amounts relating to Bank Products);
(e)  fifth , to all Obligations constituting interest (excluding amounts relating to Bank Products);
(f)  sixth , pro rata to the Loans and to provide Cash Collateral for outstanding Letters of Credit;
(g)  seventh , to all other Obligations, other than Bank Product Debt; and
(h)  last , to Bank Product Debt.
Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a pro rata basis among the Obligations in the category. Amounts distributed with respect to any Bank Product Debt shall be the lesser of the applicable Bank Product Amount last reported to Agent or the actual Bank Product Debt as calculated by the methodology reported by the provider of such Bank Product to Agent for determining the amount due. Agent shall have no obligation to calculate the amount to be distributed with respect to any Bank Product Debt, but may rely upon written notice of the amount (setting forth a reasonably detailed calculation) from the applicable Secured Party. In the absence of such notice, Agent may assume the amount to be distributed is the Bank Product Amount last reported to it. The allocations set forth in this Section are solely to determine the rights and priorities of Agent and Lenders as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.
 
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5.6.2. Erroneous Application . Agent shall not be liable for any application of amounts made by it in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).
5.7. Application of Payments . During any Cash Dominion Period, amounts transferred to Agent from the Collection Account shall be applied upon receipt by Agent to the Obligations, subject to Section 5.1 . Each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and reapply same against the Obligations, in such manner as Agent deems advisable, notwithstanding any entry by Agent in its records. If, as a result of Agent’s receipt of Payment Items or proceeds of Collateral, a credit balance exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists.
5.8. Loan Account; Account Stated .
5.8.1. Loan Account . Agent shall maintain in accordance with its usual and customary practices an account or accounts (“ Loan Account ”) evidencing the Debt of Borrowers resulting from each Loan or issuance of a Letter of Credit from time to time. Any failure of Agent to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a single Loan Account in the name of the Borrower Representative, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.
5.8.2. Entries Binding . Entries made in the Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Account is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies Agent in writing within 60 days after receipt or inspection that specific information is subject to dispute.
5.9. Taxes .
5.9.1. Payments Free of Taxes . All payments by Obligors of Obligations shall be free and clear of and without reduction for any Indemnified Taxes. If Applicable Law requires any Obligor or any Payee to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be, to the extent permitted by applicable law, based on information provided pursuant to Section 5.10 and the applicable Obligor or Payee shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that the applicable Payee receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.
 
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5.9.2. Payment . Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) each Payee for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Payee, or paid by any Payee, with respect to any Obligations, whether or not such Indemnified Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto; provided , however , that Borrowers shall not be required to compensate Agent, any Lender or Issuing Bank for any Indemnified Taxes or Other Taxes incurred more than six months prior to the date that the applicable Payee notifies Borrower Representative of such Indemnified Taxes or Other Taxes and of such Payee’s intention to claim compensation therefor; provided, further, that, if the circumstances giving rise to such Indemnified Taxes or Other Taxes is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to the amount of any such payment or liability delivered to Borrower Representative by any Payee (with a copy to Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Indemnified Taxes by a Borrower, Borrower Representative shall deliver to Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Agent. This Section 5.9 shall survive the repayment of the Loans and the termination of this Agreement.
5.9.3. Refunds . So long as no Event of Default is then in existence, if Agent or any Lender determines, in its sole discretion acting in good faith, that is has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts hereunder, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by Borrowers hereunder with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses and without interest (other than any interest by the relevant Governmental Authority with respect to such refund); provided that the Borrowers, upon request of Agent or such Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent or such Lender in the event Agent or such Lender is required to repay such refund to such Governmental Authority. This Section 5.9.3 shall not be construed to require Agent or any Lender to make available its tax returns to the Borrowers or any other person.
5.10. Lender Tax Information .
5.10.1. Status of Lenders . Each Payee shall deliver documentation and information to Agent and Borrower Representative, at the times and in form required by Applicable Law or reasonably requested by Agent or Borrower Representative, sufficient to permit Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Payee’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Payee’s status for withholding tax purposes in the applicable jurisdiction.
5.10.2. Documentation . If a Borrower is resident for tax purposes in the United States, any Payee that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by
 
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Agent or Borrower Representative, but only if such Payee is legally entitled to do so) IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Agent or Borrower Representative to determine whether such Payee is subject to backup withholding or information reporting requirements. If any Foreign Payee is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Agent or Borrower Representative, but only if such Foreign Payee is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Payee claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, IRS Form W-8BEN and a certificate stating such Foreign Payee is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of Section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Agent and Borrowers to determine the withholding or deduction required to be made.
5.10.3. Lender Obligations . Each Payee shall promptly notify Borrower Representative and Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Payee shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Agent by any Governmental Authority due to such Payee’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Payee authorizes Agent to set off any amounts due to Agent under this Section against any amounts payable to such Payee under any Loan Document. The obligation of a Payee under this subsection to the Agent shall survive the payment of all Obligations and the resignation or replacement of Agent. This section shall survive the repayment of the Loans and the termination of this Agreement.
5.11. Nature and Extent of Each Borrower’s Liability .
5.11.1. Joint and Several Liability . Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any
 
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action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.
5.11.2. Waivers .
(a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Agent and Lenders that the provisions of this Section are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make Loans and issue Letters of Credit. Notwithstanding anything to the contrary in any Loan Document, and except as set forth in Section 5.11.3 , each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.
(b) Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.11 . If, in the exercise of any rights or remedies, Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action by Agent or such Lender and waives any claim based upon such action, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had but for such action. Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. If Agent bids at any foreclosure or trustee’s sale or at any private sale, Agent may bid all or a portion of the Obligations and the amount of such bid need not be paid by Agent but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11 , notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.
 
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5.11.3. Extent of Liability; Contribution .
(a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.
(b) If any Borrower makes a payment under this Section 5.11 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “ Allocable Amount ” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.11 without rendering such payment voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.
(c) Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC Obligations relating to Letters of Credit issued to support such Borrower’s business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder. Agent and Lenders shall have the right, at any time in their discretion, to condition Loans and Letters of Credit upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such Loans and Letters of Credit to such Borrower.
5.11.4. Joint Enterprise . Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent’s and Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.
5.11.5. Subordination . Each Borrower hereby subordinates any claims it may have as a result of this Section 5.11 , including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution and indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.
 
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Section 6. CONDITIONS PRECEDENT
6.1. Conditions Precedent to Initial Loans . In addition to the conditions set forth in Section 6.2 , Lenders shall not be required to fund any requested Loan, issue any Letter of Credit, or otherwise extend credit to Borrowers hereunder, until the date (“ Closing Date ”) that each of the following conditions (except to the extent that such conditions are permitted by Agent to be satisfied on a post-closing basis pursuant to a post-closing agreement) has been satisfied:
(a) Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.
(b) Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens.
(c) Agent shall have received duly executed deposit account control agreements with respect to each Deposit Account and related lockbox and Securities Account, in form and substance reasonably satisfactory to Agent, and with financial institutions, reasonably satisfactory to Agent.
(d) Agent shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Responsible Officer of Borrower Representative certifying that, after giving effect to the initial Loans and transactions hereunder, (i) each Obligor is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 are true and correct in all material respects; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(e) Agent shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown, (ii) that an attached copy of resolutions (to the extent necessary under Applicable Law or applicable Organic Documents) authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility, and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.
(f) Agent shall have received a written opinion of Kirkland & Ellis, as well as any local counsel to any Borrower or Borrower Representative, in form and substance reasonably satisfactory to Agent.
(g) Agent shall have received copies of the charter documents of each Obligor, certified as appropriate by the Secretary of State or another official of such Obligor’s
 
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jurisdiction of organization. Agent shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.
(h) Agent shall have received copies of policies or certificates of insurance for the insurance policies carried by Obligors, all in compliance with the Loan Documents.
(i) No material adverse change in the business, assets, properties, liabilities, financial condition or prospects of any Obligor shall have occurred since January 29, 2011.
(j) No action, suit, investigation, litigation or proceeding shall have been pending or threatened in any court or before any arbitrator or governmental instrumentality that in Agent’s judgment (i) could reasonably be expected to have a material adverse effect on Borrowers’ business, operations, properties, or condition (financial or otherwise) or could materially and adversely impair Borrowers’ ability to perform satisfactorily under this Agreement; or (ii) could reasonably be expected to materially and adversely affect this Agreement or the transactions contemplated hereby.
(k) Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the Closing Date.
(l) Agent shall have received a Borrowing Base Certificate prepared as of September 3, 2011. Upon giving effect to the initial funding of Loans and issuance of Letters of Credit, and the payment by Borrowers of all fees and expenses incurred in connection herewith as well as any payables stretched beyond their customary payment practices, Availability shall be at least $40,000,000.
(m) Agent shall have received an inventory appraisal, the results of which are reasonably satisfactory to Agent, it being understood that this condition may be satisfied by receiving a reliance letter in favor of Agent with respect to the existing Hilco appraisal.
(n) Borrowers shall have received, or shall receive substantially contemporaneously herewith, the proceeds of the Second Lien Debt in the amount of $55,000,000 pursuant to the terms of the Second Lien Debt Documents which shall be in form and substance reasonably satisfactory to Agent.
(o) Agent shall have entered into (i) a joinder to the 2009 Debenture Intercreditor Agreement, (ii) the Last-Out Term Loan Intercreditor Agreement, and (iii) the Second Lien Debt Intercreditor Agreement.
(p) Without duplication of the foregoing, Agent shall have received those documents, certificates and agreements set forth on the separate closing checklist delivered by Agent to Borrower Representative.
 
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6.2. Conditions Precedent to All Credit Extensions . Agent, Issuing Bank and Lenders shall not be required to fund any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation to or for the benefit of Borrowers, unless the following conditions are satisfied:
(a) No Default or Event of Default shall exist at the time of, or result from, such funding, issuance or grant;
(b) The representations and warranties of each Obligor in the Loan Documents shall be true and correct in all material respects on the date of, and upon giving effect to, such funding, issuance or grant (except for representations and warranties that expressly relate to an earlier date);
(c) No event shall have occurred or circumstance exist that has or could reasonably be expected to have a Material Adverse Effect; and
(d) With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied.
Each request (or deemed request) by Borrowers for funding of a Loan, issuance of a Letter of Credit or grant of an accommodation shall constitute a representation by Borrowers that the foregoing conditions are satisfied on the date of such request and on the date of such funding, issuance or grant. As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it reasonably deems appropriate in connection therewith.
6.3. Limited Waiver of Conditions Precedent . If Agent, Issuing Bank or Lenders fund any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation when any conditions precedent are not satisfied (regardless of whether the lack of satisfaction was known or unknown at the time), it shall not operate as a waiver of (a) the right of Agent, Issuing Bank and Lenders to insist upon satisfaction of all conditions precedent with respect to any subsequent funding, issuance or grant; nor (b) any Default or Event of Default due to such failure of conditions or otherwise.
Section 7. INTENTIONALLY OMITTED
Section 8. COLLATERAL ADMINISTRATION
8.1. Borrowing Base Certificates . By the 25th day following the end of each Fiscal Month, Borrower Representative shall deliver to Agent (and Agent shall promptly deliver same to Lenders) a Borrowing Base Certificate prepared as of the close of business of the previous Fiscal Month, as applicable, and at such other times as Agent may request; provided that, if at any time Excess Availability is less than 12.5% of the Maximum Revolver Amount and, thereafter, so long as Borrowers do not maintain an average daily Excess Availability (measured as of the close of business of each Business Day) in excess of 12.5% of the Maximum Revolver Amount for a period of two (2) consecutive fiscal months, Borrower Representative shall deliver to Agent (and Agent shall promptly deliver same to Lenders) on or before the third Business Day of each week during such period a Borrowing Base Certificate prepared as of the close of business of the last day of the immediately preceding week; provided that, notwithstanding the above, the Inventory Formula Amount and the Eligible Inventory and Eligible Account criteria of each Borrowing Base Certificate delivered hereunder shall only be required to be updated in connection with the Borrowing Base Certificate delivered for the last week of any Fiscal Month. All calculations of Availability in any Borrowing Base Certificate
 
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shall originally be made by Borrower Representative and certified by a Responsible Officer of Borrower Representative, provided that Agent may from time to time review and adjust any such calculation (a) to reflect its reasonable estimate of declines in value of any Collateral; (b) to adjust advance rates to reflect changes in dilution, quality, mix and other factors affecting Collateral; and (c) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Availability Reserve.
8.2. Administration of Accounts . Each Obligor shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Agent, on such periodic basis as Agent may request, an Account roll-forward, a sales and collections report, in form reasonably satisfactory to Agent. Borrower Representative shall also provide to Agent, concurrently with delivery of each Borrowing Base Certificate pursuant to Section 8.1 , a summary aged trial balance of all Accounts as of the end of the preceding Fiscal Month, and as Agent may reasonably request, information related to Accounts, including Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information. If Accounts in an aggregate face amount of $10,000,000 or more cease to be Eligible Accounts, Borrower Representative shall notify Agent of such occurrence promptly (and in any event within three Business Days) after any Obligor has knowledge thereof.
8.3. Administration of Inventory .
8.3.1. Records and Reports of Inventory . Each Obligor shall keep accurate and complete records of its Inventory, including costs, and shall submit to Agent inventory reports in form reasonably satisfactory to Agent, on such periodic basis as Agent may request, including Inventory perpetual reports. Each Obligor shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by Agent when an Event of Default exists) or periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Agent may request. Agent may participate in and observe each inventory or physical count. Borrower Representative shall also provide to Agent, concurrently with delivery of financial statements pursuant to Section 10.1.2(b) , (i) a summary of the Royalties payments owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) and (ii) as requested by Agent, a summary of charges owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) to shippers or freight forwarders for the overseas transportation of goods of Obligors and customs brokers which clear customs with respect thereto.
8.3.2. Returns of Inventory . No Obligor shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Agent is promptly notified if the aggregate Value of all Inventory returned in any Fiscal Month exceeds $2,500,000; and (d) any payment received by an Obligor for a return is promptly remitted to Agent for application to the Obligations.
 
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8.3.3. Acquisition, Sale and Maintenance . No Obligor shall acquire or accept any Inventory on consignment or approval, and shall take reasonable steps to assure that all Inventory is produced in accordance with Applicable Law, including, in the case of Inventory produced in the United States of America, the FLSA. No Obligor shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require an Obligor to repurchase such Inventory. Obligors shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.
8.4 . [Intentionally Omitted] .
8.5. Administration of Deposit Accounts and Securities Accounts . Schedule 8.5 sets forth all Deposit Accounts and Securities Accounts maintained by Obligors as of the Closing Date. Each Borrower shall take all actions necessary to establish Agent’s control of each such Deposit Account and Securities Account (other than an account exclusively used for payroll, payroll taxes or employee benefits, or trust or escrow accounts, or accounts containing not more than $500,000 in the aggregate for all such accounts at any time and not more than $25,000 in any single account at any time (collectively, the “ Excluded Accounts ”)). Each Obligor shall be the sole account holder of each Deposit Account and Securities Accounts and shall not allow any other Person (other than Agent) to have control (as defined in Article 9 of the UCC) over a Deposit Account, a Securities Account or any Property deposited therein. Borrower Representative shall promptly notify Agent of any opening, or closing of a Deposit Account or a Securities Account and, with the consent of Agent, will amend Schedule 8.5 to reflect same; provided, that the opening and closing of any Deposit or Securities Account shall be subject to the requirements of Section 10.1.16. Following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability is less than 12.5% of the Maximum Revolver Amount and until the last day of a period of ninety (90) consecutive days thereafter during which average daily Excess Availability is equal to or exceeds 12.5% of the Maximum Revolver Amount (each such period, a “ Cash Dominion Period ”), Agent may (subject to any notice requirements in the applicable Control Agreement) deliver written instructions to the depository banks and securities intermediaries at which such Deposit Accounts and Securities Accounts are maintained directing them to transfer on a daily basis all payments, deposits or other Property received in the Deposit Accounts or Securities Accounts to the Collection Account or as otherwise instructed by Agent; provided that upon the termination or expiration of all Cash Dominion Periods, Agent shall promptly rescind such instructions to such depository banks and securities intermediaries. At all times, other than during a Cash Dominion Period, Borrowers may withdraw cash or cash equivalents from Deposit Accounts and Securities Accounts and use such cash and cash equivalents for purposes not prohibited hereunder at such time.
8.6. General Provisions .
8.6.1. Location of Collateral . All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Obligors at the business locations set forth in Schedule 8.6.1 (as such schedule may be amended or modified from time to time), except that Obligors may (a) make sales or other dispositions of Collateral in accordance with Section 10.2.6 ; and (b) move Collateral to another location in the United States set forth on Schedule 8.6.1 (as such schedule may be amended or modified from time to time).
 
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8.6.2. Insurance of Collateral . Each Obligor shall maintain insurance with respect to the Collateral (other than Accounts and trademarks), covering casualty, hazard, public liability, theft, malicious mischief, and such other risks, in such amounts and with such endorsements as are in each case reasonably satisfactory to Agent, and with such insurers as are reasonably satisfactory to Agent or with any other insurers rated A+ or better by A.M. Best Rating Guide. All proceeds under each policy relating to Collateral shall be payable to Agent. From time to time upon reasonable request, Obligors, shall deliver to Agent the originals or certified copies of its insurance policies. Unless Agent shall agree otherwise, each policy shall include reasonably satisfactory endorsements (i) showing Agent as loss payee or additional insured, as appropriate; (ii) requiring 10 days prior written notice to Agent in the event of cancellation of the policy for non-payment of premium and requiring 30 days prior written notice to Agent in the event of cancellation of the policy for any other reason; and (iii) specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If any Obligor fails to provide and pay for such insurance, Agent may, at its option, but shall not be required to, procure the insurance and charge Obligors therefor. Each Obligor agrees to deliver to Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists and Availability exceeds $2,500,000, Obligors may settle, adjust or compromise any insurance claim. If an Event of Default exists or Availability is less than $2,500,000, only Agent shall be authorized to settle, adjust and compromise such claims.
Section 9. REPRESENTATIONS AND WARRANTIES
9.1. General Representations and Warranties . To induce Agent and Lenders to enter into this Agreement and to make available the Commitments, Loans and Letters of Credit, each Obligor represents and warrants that:
9.1.1. Organization and Qualification . Each Obligor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
9.1.2. Power and Authority . Each Obligor is duly authorized to execute, deliver and perform its Loan Documents and has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.
 
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9.1.3. Enforceability . Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
9.1.4. Capital Structure . Schedule 9.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following) shows, for each Obligor, its name and its jurisdiction of organization and its authorized and issued Equity Interests, and for each Domestic Subsidiary only, the holders of its Equity Interests and all agreements binding on such holders with respect to their Equity Interests. Each Obligor has good title to the Equity Interests of its Domestic Subsidiaries, free and clear of all Liens (other than Permitted Liens) and all such Equity Interests are duly issued, fully paid and non-assessable. Except as set forth on Schedule 9.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following), there are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any Obligor or Domestic Subsidiary.
9.1.5. Corporate Names; Locations . During the five years preceding the Closing Date, except as shown on Schedule 9.1.5 , no Person that is an Obligor as of the Closing Date has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person. The chief executive offices and other locations of Collateral of Obligors as of the Closing Date are shown on Schedule 8.6.1 (as such schedule may be amended or supplemented from time to time).
9.1.6. Title to Properties: Priority of Liens . Each Obligor has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each case free of Liens except Permitted Liens. Each Obligor has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.
9.1.7. Accounts . Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Obligors with respect thereto. Obligors warrant, with respect to each Account at the time it is shown as an Eligible Account in a Borrowing Base Certificate, that:
(a) it is genuine and in all respects what it purports to be, and is not evidenced by a judgment;
(b) it arises out of a completed, bona tide sale and delivery of goods or services in the Ordinary Course of Business, and substantially in accordance with any purchase order, contract or other document relating thereto;
(c) it is for a sum certain, maturing as stated in the invoice covering such sale, a copy of which has been furnished or is available to Agent on request;
 
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(d) it is not subject to any offset, Lien (other than Agent’s Lien and Liens set forth in Sections 10.2.2(c) , (d) , (f)  and (l) ), deduction, defense, dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of Business and disclosed to Agent; and it is absolutely owing by the Account Debtor, without contingency in any respect;
(e) no purchase order, agreement, document or Applicable Law restricts assignment of the Account to Agent (regardless of whether, under the UCC, the restriction is ineffective);
(f) no extension, compromise, settlement, modification, credit, deduction or return has been authorized with respect to the Account, except discounts or allowances granted in the Ordinary Course of Business that are reflected in the reports submitted to Agent hereunder;
(g) it is not excluded as ineligible by virtue of one or more of the eligibility criteria (other than Agent-discretionary criteria) set forth in the definition of Eligible Accounts; and
(h) to the Obligor’s knowledge, (i) there are no facts or circumstances that are reasonably likely to impair the enforceability or collectibility of such Account; (ii) the Account Debtor continues to meet the applicable Obligor’s customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there are no proceedings or actions threatened or pending against any Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s ability to pay the applicable Accounts.
9.1.8. Financial Statements .
(a) The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries and consolidating balance sheets and related statements of income for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries, copies of which have been delivered to Agent and each Lender prior to the Closing Date, fairly present in all material respects the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. Since January 29, 2011 there has been no change in the condition, financial or otherwise, of any Obligor or Domestic Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to the Agent or any Lender at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Obligor and Domestic Subsidiary is Solvent, both before and after giving effect to the transactions contemplated by this Agreement and the Loans.
(b) All projections furnished to Agent prior to the Closing Date are believed by the Borrower Representative at the time furnished to be reasonable, have been prepared on a reasonable basis and in good faith by the Borrower Representative, and have been based on assumptions believed by the Borrower Representative to be reasonable at the time made and upon the best information then reasonably available to the Borrower Representative, and the Borrower
 
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Representative is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material.
9.1.9. Surety Obligations . Except as set forth on Schedule 9.1.9 (as such schedule may be amended or supplemented from time to time), no Obligor is obligated as indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.
9.1.10. Taxes . Each Obligor has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested and except where the failure to file or pay the same could not reasonably be expected to have a Material Adverse Effect. The provision for Taxes on the books of each Obligor is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.
9.1.11. Brokers . There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents, except for the payment of transaction fees to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement.
9.1.12. Intellectual Property . Each Obligor owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others, except where the failure to own or have rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect. There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with respect to any Obligor or any of its Property (including any Intellectual Property, except for Intellectual Property Claims which could not reasonably be expected to have a Material Adverse Effect). Except as disclosed on Schedule 9.1.12 (as such schedule may be amended or supplemented from time to time), no Obligor pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Obligor is shown on Schedule 9.1.12 .
9.1.13. Governmental Approvals . Each Obligor has, is in compliance with, and is in good standing with respect to, all Governmental Approvals, licenses and permits necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance or failure to be in good standing could not reasonably be expected to have a Material Adverse Effect. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
9.1.14. Compliance with Laws . Each Obligor has duly complied, and its Properties and business operations are in compliance with all Applicable Laws, except where
 
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noncompliance could not reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, there have been no citations, notices or orders of material noncompliance issued to Obligor under any Applicable Law. No Inventory has been produced in the United States of America in violation of the FLSA, except for Inventory which Borrower Representative has promptly removed from the Borrowing Base after its receipt of notice thereof.
9.1.15. Compliance with Environmental Laws . Except as disclosed on Schedule 9.1.15 , no Obligor’s past or present operations, Real Estate or other Properties are subject to any on-going federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, no Obligor has received any Environmental Notice. As of the Closing Date, no Obligor has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.
9.1.16. Burdensome Contracts . No Obligor is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 9.1.16 (as such schedule may be amended or supplemented from time to time), none of which prohibit the execution or delivery of any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.
9.1.17. Litigation . Except as shown on Schedule 9.1.17 , there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor. No Obligor is in default with respect to any order, injunction or judgment of any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
9.1.18. No Defaults . No event or circumstance has occurred or exists that constitutes a Default or Event of Default. As of the Closing Date, no Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Debt in excess of $23,000,000. As of the Closing Date, there is no basis upon which any party (other than an Obligor or Domestic Subsidiary) could terminate a Material Contract prior to its scheduled termination date.
9.1.19. ERISA . Except as disclosed on Schedule 9.1.19 (as such schedule may be amended or supplemented from time to time), no Obligor has any Multiemployer Plan. Each Obligor is in full compliance with the requirements of all Applicable Law, including ERISA, relating to each Multiemployer Plan. As of the Closing Date, no Obligor has any obligations under a Foreign Plan. No fact or situation exists that could reasonably be expected to result in a Material Adverse Effect in connection with any Multiemployer Plan. No Obligor has any withdrawal liability in connection with a Multiemployer Plan or Foreign Plan. All employer and employee contributions to Foreign Plans, to the extent required by law or the terms of such
 
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plans, have been made or accrued in accordance with normal accounting principles. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance and/or the book reserve established for each Foreign Plan, together with any accrued contributions, are sufficient to provide the accrued benefit obligations of all participants in such plans according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles.
9.1.20. Trade Relations . There exists no actual or threatened termination, limitation or modification of any business relationship between any Obligor and any customer or supplier, or any group of customers or suppliers, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Obligor to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.
9.1.21. Labor Relations . Except as described on Schedule 9.1.21 (as such schedule may be amended or supplemented from time to time), no Obligor is party to or bound by any collective bargaining agreement. As of the Closing Date, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.
9.1.22. Payable Practices . No Obligor has made any material change in its historical accounts payable practices from those in effect on the Closing Date.
9.1.23. Not a Regulated Entity . No Obligor is an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.
9.1.24. Margin Stock . No Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit will be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
9.1.25. Plan Assets . As of the Closing Date, no Obligor is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code), and the execution of this Agreement is not a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
9.1.26. Immaterial Subsidiaries . No Immaterial Subsidiary (a) owns or generates any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (b) has revenues (other than from intercompany Accounts) in any Fiscal Year in excess of $1,000,000.
 
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9.1.27. Patriot Act . To the extent applicable, each Obligor is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Patriot Act. No part of the proceeds of the loans made hereunder will be used by any Obligor or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
9.1.28. OFAC . No Obligor nor any of its Subsidiaries is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Obligor nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
9.1.29. Eligible Inventory . As to each item of Inventory that is identified by Borrower as Eligible Inventory in a Borrowing Base Certificate submitted to Agent, such Inventory is (a) of good and merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more of the eligibility criteria (other than Agent-discretionary criteria) set forth in the definition of Eligible Inventory.
9.1.30. Nature of Business . No Obligor is engaged in any business other than the business it is engaged in on the Closing Date or any activities ancillary or related thereto, or logical extensions thereof.
9.1.31. Use of Proceeds . Subject to Section 2.1.3 , the proceeds of the Loans shall be used to (a) refinance the existing obligations (including the Debt under the Existing Credit Agreement), (b) pay fees and expenses in connection with the transactions contemplated hereby and (c) for general working capital purposes of the Borrowers (including the payments of certain earnouts and funding of Permitted Acquisitions).
9.1.32. Material Contracts . Set forth on Schedule 9.1.32 is a complete and accurate list as of the Closing Date of all Material Contracts of each Obligor, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (a) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the knowledge of such Obligor, all other parties thereto in accordance with its terms, (b) has not been otherwise amended or modified, and (c) is not in default due to the action of any Obligor or, to the best knowledge of any Obligor, any other party thereto.
 
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9.1.33. No Bankruptcy Filing . No Obligor is contemplating either an Insolvency Proceeding or the liquidation of all or a major portion of such Obligor’s assets or property, and no Obligor has any knowledge of any Person contemplating an Insolvency Proceeding against it.
9.1.34. Security Interests . Each Security Agreement creates in favor of Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral secured thereby. Upon the filing of the UCC-1 financing statements described in Section 6.1(b) and the recording of the Collateral Assignments for Security referred to in each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, such security interests in and Liens on the Collateral granted thereby shall be perfected, first priority security interests (to the extent perfection may be obtained by filing, and subject to Permitted Liens that are expressly allowed to have priority over Agent’s Liens under Applicable Law), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements in accordance with applicable law, (ii) the recording of the Collateral Assignments for Security pursuant to each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired U.S. patent and trademark applications and registrations and U.S. copyrights, (iii) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign intellectual property, and (iv) additional UCC filings to the extent new Obligors are acquired or existing Obligors change their states of organization.
9.2. Complete Disclosure . No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.
Section 10. COVENANTS AND CONTINUING AGREEMENTS
10.1. Affirmative Covenants . For so long as any Commitments or Obligations are outstanding, each Obligor shall, and shall cause each Domestic Subsidiary to:
10.1.1. Inspections; Appraisals .
(a) Permit Agent from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligors or Domestic Subsidiary, inspect, audit and make extracts from any Borrowers’ or Domestic Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Domestic Subsidiary’s business, financial condition, assets, prospects and results of operations. Lenders may participate in any such visit or inspection, at their own expense; provided , that upon the occurrence and during the continuation of an Event of Default, each Lender may participate in any visit or inspection conducted by the Agent and all charges, costs and expenses of such Lender shall be paid by Borrowers; provided , further , that the Lenders will use commercially reasonable efforts to coordinate amongst such Lenders to minimize duplicative costs. Neither Agent nor any Lender shall have any duty to any Obligors to make any inspection, nor to share any results of any
 
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inspection, appraisal or report with any Obligors. To the extent any appraisal or other information is shared by Agent or a Lender with any Obligor, such Obligors acknowledges that it was prepared by Agent and Lenders for their purposes and Obligors shall not be entitled to rely upon it.
(b) Reimburse Agent for all charges, costs and expenses of Agent in connection with (i) examinations of any Obligor’s books and records or any other financial or Collateral matters as Agent deems appropriate (A) up to one time per Loan Year if at all times during such Loan Year Excess Availability equals or exceeds 12.5% of the Maximum Revolver Amount and (B) up to two times per Loan Year if at any time during such Loan Year Excess Availability is less than 12.5% of the Maximum Revolver Amount; and (ii) appraisals of Inventory of (A) up to one time per Loan Year if at all times during such Loan Year Excess Availability equals or exceeds 12.5% of the Maximum Revolver Amount and (B) up to two times per Loan Year if at any time during such Loan Year Excess Availability is less than 12.5% of the Maximum Revolver Amount; provided , however , that if an examination or appraisal is initiated while a Default or Event of Default is continuing, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits. Subject to the foregoing, Obligors shall pay Agent’s $1,000 per person for each day that an employee or an agent of Agent or its Affiliates is engaged in any examination activities (including in connection with the implementation of an electronic reporting system). This Section shall not be construed to limit Agent’s right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use third parties for such purposes.
10.1.2. Financial and Other Information . Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to Agent and Lenders:
(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year, consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;
(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal
 
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Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month, unaudited consolidated balance sheet as of the end of such Fiscal Month and related consolidated profit and loss statement and cash flow statement (which cash flows statement need not be prepared in accordance with GAAP but instead may be prepared in a manner substantially similar to the cash flow statement presented to Agent with respect to the Fiscal Month ending on July 30, 2011) for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year-end adjustments and the absence of footnotes;
(c) concurrently with delivery of financial statements under clauses (a) and (b) above, or more frequently if requested by Agent while a Default or Event of Default exists, a Compliance Certificate executed by the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative;
(d) to the extent available and upon Agent’s request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements;
(e) not later than 30 days after the end of each Fiscal Year, projections of Borrowers’ consolidated balance sheets, results of operations and cash flow for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(f) at Agent’s request, a listing of each Obligor’s trade payables, specifying the trade creditor and balance due, all in form satisfactory to Agent;
(g) promptly after the sending or filing thereof, copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; provided , that each statement or report required to be delivered pursuant to this clause (g) shall be deemed to have been delivered on the date on which the Borrower Representative posts such document on the Borrower Representative’s website on the Internet at the website address www.kellwood.com , or when such document is posted on the Securities and Exchange Commission’s website at www.sec.gov (the “ SEC Website ”) or on an Internet website established by Agent with IntraLinks, Inc. or other similarly available electronic media (each of the foregoing an “ Informational Website ”); provided , further , that (i) the Borrower
 
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Representative shall deliver paper copies of all such documents to Agent or any Lender that requests the Borrower Representative to deliver such paper copies (without impairment of the effectiveness of any document previously delivered in electronic media form) until a request to cease delivering paper copies is given by Agent or such Lender and (ii) Agent and each Lender shall be notified by electronic mail of the applicable Informational Website and of the posting of each such document; it being understood and agreed that (x) Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this clause (g), and in any event shall have no responsibility to monitor compliance by the Borrower Representative with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents and (y) Borrowers shall be responsible for (other than with respect to the SEC Website) and shall incur all risks associated with (including with respect to the SEC Website) the security and confidentiality of the Informational Websites and its information posted thereon;
(h) [ Intentionally Omitted ];
(i) not later than 30 days after the end of each Fiscal Month, a reconciliation of Accounts, trade accounts payable, and Inventory of Obligors’ general ledger accounts to its monthly financial statements including any book reserves related to each category.
(j) such other reports and information (financial or otherwise) as Agent may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
10.1.3. Notices . Notify Agent and Lenders in writing, promptly (but in any event within 5 Business Days) after an Obligor obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if it is reasonably likely that an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any adverse judgment not covered by insurance in an amount exceeding $5,000,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice, which could reasonably be expected to have a Material Adverse Effect; (i) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; or (j) to Agent only, any opening of a new office or place of business where Collateral is located, within 30 days after such opening.
10.1.4. Landlord and Storage Agreements . Upon request, provide Agent with copies of all existing agreements, and promptly after execution thereof provide Agent with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral having a book value in excess of $1,000,000 in the aggregate at any time.
 
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10.1.5. Compliance with Laws . Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Domestic Subsidiary, it shall act promptly and diligently to investigate and report to Agent and, to the extent required by Applicable Law, all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.
10.1.6. Taxes . Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, except for Taxes which in the aggregate do not exceed $250,000 or unless such Taxes are being Properly Contested.
10.1.7. Insurance . In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers reasonably satisfactory to Agent or other insurers rated A+ or better by Best Rating Guide, (a) with respect to the Properties and business of the Obligors of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated, and (b) business interruption insurance with deductibles and subject to an Insurance Assignment reasonably satisfactory to Agent.
10.1.8. Licenses . Keep each License affecting any material portion of the Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors in full force and effect subject to non-renewal or termination by the applicable Obligor in the Ordinary Course of Business, or otherwise in its reasonable judgment; notify Agent of any proposed modification to any such License increasing the Royalties payable thereunder, or entry into any new License, in each case at least 10 days prior to the effective date of such License or modification, pay all Royalties when due; and notify Agent of any material default or breach asserted by any Person to have occurred under any License.
10.1.9. Future Subsidiaries . Promptly notify Agent upon any Person becoming a Domestic Subsidiary and cause any such Subsidiary to execute and deliver to Agent a Joinder Agreement and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Agent, as it shall deem appropriate; provided that prior to any Person becoming a Borrower hereunder, Borrower Representative shall provide at least 5 days written notice to Agent.
10.1.10. Additional Guarantors . In the event that any Person becomes party to the 2009 Indenture Guaranty or guaranties any part of the Second Lien Debt and such Person is not a Borrower hereunder, Borrower Representative shall immediately notify Agent thereof and cause such Person to execute and deliver to Agent a Joinder Agreement and to take such other
 
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actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance satisfactory to Agent, as it shall deem appropriate.
10.1.11. Preservation of Existence, Etc . Maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except as permitted by Section 10.2.9 or except to the extent failure to be so qualified or in good standing could not reasonably be likely to have a Material Adverse Effect.
10.1.12. Keeping of Records and Books of Account . Keep accurate records and books of account, with entries made to permit the preparation of financial statements in accordance with GAAP.
10.1.13. Maintenance of Properties, Etc . Maintain and preserve all of its properties which are necessary for the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation losses excepted.
10.1.14. Obtaining of Permits, Etc . Obtain, maintain and preserve and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except to the extent failure to do so could not reasonably be likely to have a Material Adverse Effect.
10.1.15. Further Assurances . Take such action and execute, acknowledge and deliver at its sole cost and expense, such agreements, instruments or other documents as Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected first priority Liens any of the Collateral, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Obligor (i) authorizes Agent to execute any such agreements, instruments or other documents in such Obligor’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Obligor, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Obligor prior to the date hereof, in each case to the extent such filings are necessary or desirable in order to perfect or maintain the perfection of Agent’s security interest in the Collateral.
10.1.16. Post-Closing Covenants .
(a) On or before the date that is one hundred twenty (120) days following the Closing Date (or such later date as agreed to by Agent in its sole discretion), Borrowers shall (i)
 
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open Deposit Accounts with Wells Fargo such that Obligors’ primary depository and treasury management relationships are with Wells Fargo, and (ii) enter into Control Agreements with respect to such accounts. Borrowers agree to maintain Obligors’ primary depository and treasury management relationships with Wells Fargo;
(b) On or before the date that is thirty (30) days following the Closing Date (or such later date as agreed to by Agent in its sole discretion), Borrowers shall use commercially reasonable efforts to provide Agent with: (a) all documents necessary to effect and reflect the release of the Lien in favor of Wells Fargo Bank, National Association (granted by Levi Strauss & Co.), recorded at the United States Patent and Trademark Office on November 5, 1985 at Reel 0509, Frame 218; (b) all documents necessary effect and reflect the release of the Lien in favor of Bankers Trust Company (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on December 18, 1986 at Reel 0547, Frame 322 and (c) all documents necessary to effect and reflect the release of the Lien in favor of BNY Financial Corp. (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on July 9, 1992 at Reel 0883, Frame 616; and
(c) On or before the date that is ten (10) days following the Closing Date (or such later date as agreed to by Agent in its sole discretion), Borrowers shall deliver to Agent duly executed Deposit Account Control Agreements in form and substance satisfactory to Agent with respect to Borrowers’ deposit accounts at Bank of America, N.A. and JPMorgan Chase Bank, N.A.
10.2. Negative Covenants . For so long as any Commitments or Obligations are outstanding, each Obligor shall not, and shall cause each Domestic Subsidiary not to:
10.2.1. Permitted Debt . Create, incur, guarantee or suffer to exist any Debt, except:
(a) the Obligations;
(b) Subordinated Debt;
(c) Permitted Purchase Money Debt;
(d) Debt (other than the Obligations, Subordinated Debt, Permitted Purchase Money Debt, the 2009 Debentures, the Second Lien Debt and the Last-Out Term Loan), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans and which is listed on Schedule 10.2.1 ;
(e) Bank Product Debt;
(f) Permitted Contingent Obligations, provided no Obligor or any Domestic Subsidiary thereof shall incur any Contingent Obligations in respect of the obligations of any Foreign Subsidiary;
(g) Refinancing Debt as long as each Refinancing Condition is satisfied in respect of such Refinancing Debt at the time such Refinancing Debt is incurred;
 
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(h) the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;
(i) unsecured intercompany Debt for loans and advances made by any Borrower or wholly owned Subsidiary to (i) a Borrower, (ii) any other Obligor or (iii) if such wholly owned Subsidiary making such loan or advance is not an Obligor, any other wholly owned Subsidiary, provided that such intercompany Debt of any Obligor is subordinated pursuant to Section 14.16;
(j) financing of insurance premiums;
(k) unsecured Debt in an amount not to exceed $5,000,000 at any time outstanding;
(l) other unsecured Debt of any Domestic Subsidiary which is not an Obligor, provided that, in connection with such Debt, no Obligor has incurred a Contingent Obligation or any direct or contingent liability with respect thereto unless such Contingent Obligation is unsecured and is expressly permitted hereunder;
(m) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date as long as in each case Excess Availability after giving effect thereto exceeds 12.5% of the Maximum Revolver Amount; and
(n) (i) the 2009 Debentures, as long as such Debt is subject to the 2009 Debenture Intercreditor Agreement; provided that , the principal amount of the Debt owing under the 2009 Debentures shall not exceed at any time an amount equal to the principal amount outstanding under the 2009 Debentures as of the date of the consummation of the Exchange Offer, plus any interest thereon that is paid-in-kind in accordance with the terms thereof and added to the outstanding principal thereof, (ii) the Second Lien Debt, as long as such Debt is subject to and permitted under the Second Lien Debt Intercreditor Agreement, and (iii) the Last-Out Term Loan, so long as such Debt is subject to the Last-Out Term Loan Intercreditor Agreement, provided that in the case of clauses (ii) and (iii), any such Second Lien Debt or Last-Out Term Loans advanced after the Closing Date shall be on terms and conditions that are no more favorable than the terms and conditions thereof as of the Closing Date (and in the case of the Second Lien Debt, such terms and conditions are permitted under the Second Lien Debt Intercreditor Agreement) and the proceeds thereof are only used for the purpose of (w) repurchasing the currently issued and outstanding notes under the Indenture and 2009 Indenture (including any such notes which are held or recently acquired by Sponsor and any of its Affiliates), (x) paying the consideration for a Permitted Acquisition, (y) working capital and general corporate purposes or (z) in the case of Second Lien Debt, to refinance Last-Out Term Debt.
Notwithstanding anything in this Section 10.2.1 to the contrary, Borrowers shall not incur any Debt that is not permitted to be incurred under the 2009 Indenture or the Indenture.
 
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10.2.2. Permitted Liens . Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “ Permitted Liens ”):
(a) Liens in favor of Agent securing the Obligations;
(b) Purchase Money Liens securing Permitted Purchase Money Debt;
(c) Liens for Taxes not yet due or being Properly Contested;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA but including carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;
(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt), statutory obligations (including in connection with workers’ compensation, unemployment insurance and other social security legislation (other than Liens for Taxes or imposed under ERISA)) and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Agent’s Liens;
(f) Liens securing judgments for the payment of money in an aggregate amount not in excess of $5,000,000 (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 10 consecutive days during which execution is not effectively stayed;
(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(h) normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;
(i) existing Liens shown on Schedule 10.2.2 and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby does not increase the maximum outstanding principal amount of such obligations;
(j) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as such Liens were existing at the time of such Acquisition by a Borrower or Subsidiary and were not incurred, extended or renewed in contemplation of such Acquisition; provided that (i) the Lien shall attach solely to the property acquired, and (ii) at the time of acquisition of such fixed assets, the aggregate amount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed by a Borrower or Subsidiary shall not exceed an amount equal to the lesser of the total purchase price or fair market value at the time of acquisition of such fixed assets;
 
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(k) other Liens that are created upon any of its Property (other than Collateral) after the Closing Date, so long as the fair market value of such Property subject to such Liens does not exceed $5,000,000 at any time outstanding;
(l) Liens on deposits and unearned insurance premiums securing Debt permitted under Section 10.2.1(j) ; and
(m) (i) Liens on Collateral securing the Debt owing under the 2009 Debentures, as long as such Liens are subject to the 2009 Debenture Intercreditor Agreement and such Debt is permitted under Section 10.2.1(n) , (ii) Liens on Collateral securing the Debt owing under the Last-Out Term Loan Agreement, as long as such Liens are subject to the Last-Out Term Loan Intercreditor Agreement and (iii) Liens on Collateral securing the Second Lien Debt as long as such Liens are subject to the Second Lien Debt Intercreditor Agreement and such Debt is permitted under Section 10.2.1(n) .
10.2.3. [ Intentionally Omitted ].
10.2.4. Distributions; Upstream Payments .
(a) Declare or make any Distributions, except (i) Permitted Distributions and (ii) Upstream Payments; or
(b) Create or suffer to exist any encumbrance or restriction on the ability of a Domestic Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Second Lien Debt Documents and the Last-Out Term Loan Documents and under Applicable Law or restrictions in effect on the Closing Date as shown on Schedule 9.1.16 .
10.2.5. Restricted Investments . Make any Restricted Investment.
10.2.6. Disposition of Assets . Make any Asset Disposition, except a Permitted Asset Disposition or a transfer of Property by a Subsidiary or Obligor to a Borrower.
10.2.7. Loans; Extensions of Credit . Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled Account Debtors to the extent reasonably necessary in the relevant Obligor’s reasonable business judgment to prevent or limit loss; (e) intercompany loans permitted by Section 10.2.1(i) ; and (f) other loans or extensions of credit made in the ordinary course of business after the Closing Date as long as (i) Excess Availability after giving effect to such loans or extensions of credit exceeds 12.5% of the Maximum Revolver Amount, (ii) they are permitted under the Second Lien Debt Documents as in effect on the date hereof, and (iii) the aggregate amount of such loans and extensions of credit outstanding at any time do not exceed $5,000,000.
 
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10.2.8. Restrictions on Payment of Certain Debt .
(a) Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (i) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Responsible Officer of Borrower Representative shall certify to Agent, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (ii) other Debt (other than the Obligations) prior to its due date under the agreements evidencing such Debt, except for (A) the prepayment of the Convertible Debentures in an amount not to exceed $300,000, (B) mandatory prepayments required under Section 2.1.6 of the Second Lien Term Loan Agreement (as in effect on the date hereof) and subject to the restrictions, if any, in the Second Lien Debt Intercreditor Agreement (it being understood that if Borrowers are not obligated to make any such prepayment as a result of Section 2.1.7 of the Second Lien Term Loan Agreement (as in effect on the date hereof) such mandatory prepayment shall not be required) and a refinance of the Second Lien Debt to the extent permitted under the Second Lien Debt Intercreditor Agreement, (C) any such prepayment with respect to the currently issued and outstanding notes under the Indenture or 2009 Indenture to the extent such prepayments (x) are permitted by, and are subject to, the satisfaction of the conditions set forth in Section 2.1.3 or (y) are funded with proceeds of the Second Lien Debt or Last-Out Term Loan, and (D) the Last-Out Term Loan to the extent funded with proceeds of the Second Lien Debt; or
(b) Exercise its option to make cash payments of interest in respect of the Last Out Term Loan if an Event of Default exists or would be caused thereby or make any cash payments of interest in respect of the Last Out Term Loan except as provided in the Last Out Term Loan Agreement as in effect on the date hereof.
10.2.9. Fundamental Changes .
(a) Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except:
(i) any Subsidiary may merge (x) with a Borrower, provided that such Borrower shall be the continuing or surviving Person, or (y) with any one or more Subsidiaries, provided that when any wholly-owned Subsidiary or Guarantor is merging with another Subsidiary, the wholly-owned Subsidiary or Guarantor shall be the continuing or surviving Person, or (z) with any other Person in connection with any Permitted Acquisition, provided that the continuing or surviving Person shall be a wholly-owned Subsidiary and, if such Subsidiary was a Guarantor or Borrower, also a Guarantor or Borrower;
(ii) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to a Borrower or to another Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary or a Guarantor, then the purchaser must also be a wholly-owned Subsidiary or Guarantor, respectively; or
 
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(iii) in connection with a Permitted Asset Disposition
(b) Except following thirty (30) days prior written notice to Agent, change its name or conduct business under any fictitious name; change its tax or other organizational identification number; or change its form or state of organization.
10.2.10. Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with Section 10.1.9 or Section 10.2.9 in connection with Permitted Acquisitions; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.
10.2.11. Organic Documents . Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except for any amendment, modification or other change that does not adversely affect Agent or any Lender or any duty to pay Obligations.
10.2.12. Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Ultimate Parent and its Subsidiaries.
10.2.13. Accounting Changes . Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2 ; or change its Fiscal Year.
10.2.14. Restrictive Agreements . Become a party to or permit any Subsidiary to become a party to any Restrictive Agreement, except a Restrictive Agreement as in effect on the Closing Date and shown on Schedule 9.1.16 , the 2009 Indenture, the 2009 Indenture Guaranty, the Convertible Debentures, the Indenture, the Second Lien Debt Documents or the Last-Out Term Loan Documents.
10.2.15. Hedging Agreements . Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.
10.2.16. Conduct of Business . Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.
10.2.17. Affiliate Transactions . Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 10.2.7 ; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Obligors; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 10.2.17 ; (f) transactions with Affiliates (other than those described in clause (g) below) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate, (g) payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners
 
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Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto, (ii) Availability after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment), and (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement, and (i) payment of dividends or other distributions to Ultimate Parent (whether made to Ultimate Parent directly or to any Person directly or indirectly owned by Ultimate Parent and ultimately remitted to Ultimate Parent) in an amount sufficient to permit Ultimate Parent to pay (A) franchise taxes and other fees required to maintain Ultimate Holding’s corporate existence and (B) to pay consolidated or combined federal, state or local taxes, including estimated taxes, which payments in the aggregate by each Obligor and Domestic Subsidiary are not in excess of the aggregate tax liabilities that would have been payable by each Obligor and Domestic Subsidiary calculated on a stand-alone basis.
10.2.18. Plans . Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date or assumed in connection with any Permitted Acquisition.
10.2.19. Amendments to the Indenture, the 2009 Indenture, the 2009 Indenture Guaranty, Convertible Debenture, the Convertible Debenture Agreement, the Revolver Agreement or Subordinated Debt .
(a) Amend, supplement or otherwise modify (i) the Indenture, the 2009 Indenture, or the 2009 Indenture Guaranty or (ii) any Convertible Debenture or Convertible Debenture Agreement, in each case, in a manner that directly or indirectly accelerates the time of payment, increases the principal amount of or interest rate applicable to indebtedness issued or provides for more restrictive terms that adversely affect Agent or the Lenders;
(b) Amend, supplement or otherwise modify any other document, instrument or agreement relating to any Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that adversely affects Agent or the Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof; or
(c) Amend, supplement or otherwise modify any document, instrument or agreement relating to any the Last-Out Term Loan to the extent prohibited in the Last-Out Term Loan Intercreditor Agreement or to the Second Lien Debt to the extent prohibited in the Second Lien Debt Intercreditor Agreement.
10.2.20. Immaterial Subsidiaries . Permit or suffer any Immaterial Subsidiary to (a) own or generate any Accounts (other than intercompany Accounts) or Inventory located in
 
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the United States of America or (ii) have revenues in any Fiscal Year in excess of $1,000,000, unless Borrower Representative causes such Immaterial Subsidiary to execute a Joinder Agreement and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Agent, as it shall deem appropriate.
10.2.21. Fixed Charge Coverage Ratio . At any time during a Covenant Testing Period, fail to have a Fixed Charge Coverage Ratio, measured on a month-end basis, of at least 1.00 to 1.00 for the 12 month period ending on the last day of each Fiscal Month.
10.2.22. Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock for any related purpose governed by Regulations T, U or X of the Board of Governors.
10.2.23. Investment Company Act of 1940 . Engage in any business, enter into any transaction, use any securities or take any other action that would cause any Obligor to become an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
10.2.24. 2009 Debenture Intercreditor Agreement . Incur Debt after the Closing Date pursuant to Section 4.09(b)(1) of the 2009 Indenture and designate the holders of such Debt as additional holders of “Priority Obligations” (as defined in the 2009 Indenture Intercreditor Agreement).
Section 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
11.1. Events of Default . Each of the following shall be an “ Event of Default ” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);
(b) Any representation, warranty or other written statement of any Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;
(c) Any Obligor breaches or fails to perform any covenant contained in Section 8.1 , 8.6.2 , 10.1.1 , 10.1.2 , 10.1.3 (other than Section 10.1.3(j) ) 10.1.7 , 10.1.11, 10.1.16 or 10.2, or Section 6 of the Security Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Responsible Officer of such Obligor has knowledge thereof or a Responsible Officer of Borrower Representative receives notice thereof from Agent, whichever is sooner; provided , however , that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;
 
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(e) Any Guarantor repudiates, revokes or attempts to revoke its guaranty hereunder; any Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by Agent and Lenders);
(f) Any breach or default of an Obligor occurs under the Second Lien Debt Documents; any breach or default of an Obligor occurs under any other document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations) in excess of $5,000,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;
(g) Any judgment or order for the payment of money remains outstanding for more than 30 days against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,000,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;
(h) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,000,000;
(i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting a portion of its business, which action could reasonably be expected to have a Material Adverse Effect; any Obligor suffers the loss, revocation or termination of one or more licenses, permits, leases or agreements, which loss, revocation or termination could reasonably be expected to have a Material Adverse Effect, except in connection with a Permitted Asset Disposition; there is a cessation of any part of an Obligor’s business for a period of time (other than in connection with a Permitted Asset Disposition), which cessation could reasonably be expected to have Material Adverse Effect; any Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs (other than in connection with a Permitted Asset Disposition); or any Obligor ceases to be Solvent;
(j) Any Insolvency Proceeding is commenced by any Obligor;
(k) Any Insolvency Proceeding is commenced against any Obligor and (i) such Obligor consents to the institution of the proceeding against it, (ii) the petition commencing the proceeding is not timely controverted by such Obligor, (iii) such petition is not dismissed within 60 days after its filing, or (iv) an order for relief is entered in the proceeding;
(l) A trustee (including an interim trustee) is appointed to take possession of any substantial Property of or to operate any of the business of any Obligor; or any Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally;
(m) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for
 
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any Multiemployer Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;
(n) Any Obligor or any of its Responsible Officers is criminally indicted or convicted for (i) a felony committed in the conduct of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Collateral;
(o) A Change of Control occurs; or
(p) The Obligations at any time fail to constitute “Priority Obligations” under and as defined in the 2009 Debenture Intercreditor Agreement.
11.2. Remedies upon Default . If an Event of Default described in Section 11.1(j) and/or Section 11.1(k) occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Commitments shall terminate, without any action by Agent or notice of any kind. In addition, or if any other Event of Default exists, Agent may in its discretion (and shall upon written direction of Required Lenders) do any one or more of the following from time to time:
(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law;
(b) terminate, reduce or condition any Commitment, or make any adjustment to the Borrowing Base;
(c) require Obligors to Cash Collateralize LC Obligations, Bank Product Debt and other Obligations that are contingent or not yet due and payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as Revolver Loans (whether or not an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied); and
(d) exercise any other rights or remedies afforded under any Loan Document, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Agent at a place designated by Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days’ notice of any proposed sale or other disposition of Collateral by Agent shall be reasonable. Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and
 
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such sales may be adjourned from time to time in accordance with Applicable Law. Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations.
11.3. License . Agent is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Property of Obligors, including, without limitation, all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels and packaging materials, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral if and for so long as such non-exclusive license or other right to use, license or sub-license would not constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Obligor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such non-exclusive license or other right to use, license or sublicense, provided , however , that at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, such grant shall include immediately and automatically any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (i) or (ii) above. Each Obligor’s rights and interests under Intellectual Property shall inure to Agent’s benefit.
11.4. Setoff . Agent, Lenders and their Affiliates are each authorized by Obligors at any time during an Event of Default, without notice to Obligors or any other Person, to set off and to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities or other Debt at any time held or owing by Agent, any Lender or any such Affiliate to or for the account of any Obligor against any Obligations, whether or not demand for payment of such Obligation has been made, any Obligations have been declared due and payable, are then due, or are contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is adequate; it being understood and agreed, as between Agent, Lenders and their Affiliates, that all such deposits, funds or other moneys to be applied against any Obligations pursuant to this Section 11.4 shall be allocated in accordance with Section 5.6.
11.5. Remedies Cumulative; No Waiver .
11.5.1. Cumulative Rights . All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of Obligors contained in the Loan Documents are cumulative and not in derogation or substitution of each other. In particular, the rights and remedies of Agent and Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and shall not be exclusive of any other rights or remedies that Agent and Lenders may have, whether under any agreement, by law, at equity or otherwise.
11.5.2. Waivers . The failure or delay of Agent or any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a course of dealing. All rights and remedies shall continue in full force and effect until Full Payment of all Obligations. No modification of any terms of any Loan
 
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Documents (including any waiver thereof) shall be effective, unless such modification is specifically provided in a writing directed to Obligors and executed by Agent or the requisite Lenders, and such modification shall be applicable only to the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of any other Default or Event of Default that may exist at such time, unless expressly stated. If Agent or any Lender accepts performance by any Obligor under any Loan Documents in a manner other than that specified therein, or during any Default or Event of Default, or if Agent or any Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or exercise shall not operate to waive any Default or Event of Default nor to preclude exercise of any other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.
Section 12. AGENT
12.1. Appointment, Authority and Duties of Agent .
12.1.1. Appointment and Authority . Each Lender appoints and designates Wells Fargo as Agent hereunder. Agent may, and each Lender authorizes Agent to, enter into all Loan Documents (including, without limitation, the 2009 Debenture Intercreditor Agreement, Last-Out Term Loan Intercreditor Agreement, the Second Lien Debt Intercreditor Agreement, any amendments thereto, and any and all other subordination and/or intercreditor agreements required under the terms of this Agreement) to which Agent is intended to be a party and accept all Loan Documents, for Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor or other Person; (c) act as collateral agent for Secured Parties for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) exercise all rights and remedies given to Agent with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Agent shall be ministerial and administrative in nature, and Agent shall not have a fiduciary relationship with any Lender, Secured Party, Participant or other Person, by reason of any Loan Document or any transaction relating thereto. Agent alone shall be authorized to determine whether any Accounts or Inventory constitute Eligible Accounts or Eligible Inventory, or whether to impose or release any reserve, and to exercise its Credit Judgment in connection therewith, which determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to any Lender or other Person for any error in judgment.
12.1.2. Duties . Agent shall not have any duties except those expressly set forth in the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the extent directed to do so by Required Lenders while an Event of Default exists. The conferral upon Agent of any right shall not imply a duty on Agent’s part to exercise such right, unless instructed to do so by Required Lenders in accordance with this Agreement.
 
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12.1.3. Agent Professionals . Agent may perform its duties through agents and employees. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.
12.1.4. Instructions of Required Lenders . The rights and remedies conferred upon Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Agent may request instructions from Required Lenders with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.6 against all Claims that could be incurred by Agent in connection with any act. Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of all Lenders shall be required in the circumstances described in Section 14.1.1 , and in no event shall Required Lenders, without the prior written consent of each Lender, direct Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans, nor to terminate the Commitments of one Lender without terminating the Commitments of all Lenders. In no event shall Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Documents or could subject any Agent Indemnitee to personal liability.
12.2. Agreements Regarding Collateral and Field Examination Reports .
12.2.1. Lien Releases; Care of Collateral . Lenders authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations, (b) that is the subject of an Asset Disposition which Borrower Representative certifies in writing to Agent is a Permitted Asset Disposition or a Lien which Borrower Representative certifies is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry), (c) that is within the limitations set forth in Section 14.1(d)(ii) , or (d) with the written consent of all Lenders; provided , further , upon request of Borrower Representative, Agent will provide Borrower Representative with a release of the Agent’s security interest in any assets or Collateral in conjunction with a Permitted Asset Disposition. Agent shall have no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected, insured or encumbered, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.
12.2.2. Possession of Collateral . Agent and Lenders appoint each other Lender as agent for the purpose of perfecting Liens (for the benefit of Secured Parties) in any Collateral that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains possession of any such Collateral, it shall notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral to Agent or otherwise deal with such Collateral in accordance with Agent’s instructions.
 
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12.2.3. Reports . Agent shall promptly, upon receipt thereof, forward to each Lender copies of the results of any field audit or other examination or any appraisal prepared by or on behalf of Agent with respect to any Obligor or Collateral (“ Report ”). Each Lender agrees (a) that neither Wells Fargo nor Agent makes any representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Obligors books and records as well as upon representations of Obligors officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as any Claims arising in connection with any third parties that obtain all or any part of a Report through such Lender.
12.3. Reliance By Agent . Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.
12.4. Action Upon Default . Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Agent and the other Lenders thereof in writing. Each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.
12.5. Ratable Sharing . If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.6.1 , as applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1 , as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
 
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12.6. Indemnification of Agent Indemnitees .
12.6.1. Indemnification . EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGOR (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ANY AND ALL LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ALL REASONABLE FEES AND EXPENSES OF COUNSEL TO SUCH AGENT INDEMNITEES), ADVANCES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE AGENT INDEMNITEES UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS other than liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the gross negligence or willful misconduct of Agent Indemnitees. If Agent is sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by Lenders to the extent of each Lender’s Pro Rata share.
12.6.2. Proceedings . Without limiting the generality of the foregoing, if at any time (whether prior to or after the Commitment Termination Date) any proceeding is brought against any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for any act taken or omitted by Agent in connection with any Obligations, Collateral, Loan Documents or matters relating thereto, or otherwise to obtain any other relief of any kind on account of any transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required to pay under any judgment or other order entered in such proceeding or by reason of any settlement, including all interest, costs and expenses (including attorneys’ fees) incurred in defending same other than damages resulting from the gross negligence or willful misconduct of Agent Indemnitees. In Agent’s discretion, Agent may reserve for any such proceeding, and may satisfy any judgment, order or settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to Lenders.
12.7. Limitation on Responsibilities of Agent . Agent shall not be liable to Lenders for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Agent’s gross negligence or willful misconduct. Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor
 
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or Lender of any obligations under the Loan Documents. Agent does not make to Lenders any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.
12.8. Successor Agent and Co-Agents .
12.8.1. Resignation; Successor Agent . Subject to the appointment and acceptance of a successor Agent as provided below, Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Representative. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a commercial bank that is organized under the laws of the United States or any state or district thereof, has a combined capital surplus of at least $500,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrower Representative; provided , that if any such successor Agent is not a United States person within the meaning of Code Section 7701(a)(30), such appointment shall be subject to approval by the Borrower Representative. If no successor agent is appointed prior to the effective date of the resignation of Agent, then Agent may appoint a successor agent from among Lenders. Upon acceptance by a successor Agent of an appointment to serve as Agent hereunder, such successor Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent without further act, and the retiring Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 12.6 and 14.2 . Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Agent. Any successor by merger or acquisition of the stock or assets of Wells Fargo shall continue to be Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.
12.8.2. Separate Collateral Agent . It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Agent. Lenders shall execute and deliver such documents as Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or
 
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co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Agent until appointment of a new agent.
12.9. Due Diligence and Non-Reliance . Each Lender acknowledges and agrees that it has, independently and without reliance upon Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund Loans and participate in LC Obligations hereunder. Each Lender has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and agrees that the other Lenders and Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Lender will, independently and without reliance upon the other Lenders or Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making Loans and participating in LC Obligations, and in taking or refraining from any action under any Loan Documents. Except for notices, reports and other information expressly requested by a Lender, Agent shall have no duty or responsibility to provide any Lender with any notices, reports or certificates furnished to Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Agent or any of Agent’s Affiliates.
12.10. Replacement of Certain Lenders . If a Lender (a) is a Defaulting Lender, or (b) fails to give its consent to any amendment, waiver or action for which consent of all Lenders or Super Majority Lenders, as applicable, was required and Required Lenders consented, (c) cannot make a LIBOR Revolver Loan in accordance with Section 3.5 or (d) requests reimbursement for increased costs pursuant to Section 3.6 , for increased costs pursuant to Section 3.7 , or Taxes pursuant to Section 5.9 then, in addition to any other rights and remedies that any Person may have, Agent may, and at the request of Borrower Representative, shall, by notice to such Lender within 120 days after such event, require such Lender to assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s) specified by Agent, pursuant to appropriate Assignment and Acceptance(s) and within 20 days after Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and Acceptance if the Lender fails to execute same. Such Lender shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents, including all principal, interest and fees through the date of assignment (but excluding any prepayment charge).
12.11. Remittance of Payments and Collections .
12.11.1. Remittances Generally . All payments by any Lender to Agent shall be made by the time and on the day set forth in this Agreement, in immediately available funds. If no time for payment is specified or if payment is due on demand by Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender not later than 2:00 p.m. on such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on the next Business Day. Payment by Agent to any Lender shall be made by wire transfer, in the type of funds received by Agent. Any such payment shall be subject to Agent’s right of offset for any amounts due from such Lender under the Loan Documents.
 
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12.11.2. Failure to Pay . If any Lender fails to pay any amount when due by it to Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid at the rate determined by Agent as customary in the banking industry for interbank compensation. In no event shall Borrowers be entitled to receive credit for any interest paid by a Lender to Agent, nor shall any Defaulting Lender be entitled to interest on any amounts held by Agent pursuant to Section 4.2 .
12.11.3. Recovery of Payments . If Agent pays any amount to a Lender in the expectation that a related payment will be received by Agent from an Obligor and such related payment is not received, then Agent may recover such amount from each Lender that received it. If Agent determines at any time that an amount received under any Loan Document must be returned to an Obligor or paid to any other Person pursuant to Applicable Law or otherwise, then, notwithstanding any other term of any Loan Document, Agent shall not be required to distribute such amount to any Lender. If any amounts received and applied by Agent to any Obligations are later required to be returned by Agent pursuant to Applicable Law, Lenders shall pay to Agent, on demand, such Lender’s Pro Rata share of the amounts required to be returned.
12.12. Agent in its Individual Capacity . As a Lender, Wells Fargo shall have the same rights and remedies under the other Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders” or any similar term shall include Wells Fargo in its capacity as a Lender. Each of Wells Fargo and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Wells Fargo were any other bank, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the other Lenders. In their individual capacity, Wells Fargo and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Lender agrees that Wells Fargo and its Affiliates shall be under no obligation to provide such information to Lenders, if acquired in such individual capacity and not as Agent hereunder.
12.13. Agent Titles . UBS Securities LLC shall be designated as Documentation Agent. Each Lender (including UBS Securities LLC as Documentation Agent), other than Wells Fargo, that is designated (on the cover page of this Agreement or otherwise) by Wells Fargo as an “Agent” or “Arranger” of any type shall not have any right, power, responsibility or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event be deemed to have any fiduciary relationship with any other Lender or with any Obligor.
12.14. No Third Party Beneficiaries . This Section 12 is an agreement solely among Lenders and Agent, and does not confer any rights or benefits upon Obligor or any other Person. As between Obligors and Agent, any action that Agent may take under any Loan Documents shall be conclusively presumed to have been authorized and directed by Lenders as herein provided.
 
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Section 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
13.1.1. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Obligors, Agent and Lenders and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents and any such assignment shall be absolutely void ab initio, and (b) any assignment by a Lender must be made in compliance with Section 13.3 . Agent may treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 13.3 . Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.
13.2. Participations .
13.2.1. Permitted Participants; Effect . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a Person (“ Participant ”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans and Commitments for all purposes, all amounts payable by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in writing and unless such Participant shall have agreed to be treated as a Lender for purposes of, and subject to, Sections 5.9 and 5.10 and the definition of “Excluded Taxes”. In the event that a Lender sells participations in a Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Loan held by it (and the principal amount (and stated interest thereon) of the portion of the Loan that is subject to such participations) (the “ Participant Register ”). No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Borrower or any other Person (including the existence or identity of any participant or any information relating to a participant’s interest in the Loans or other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Loans or other obligations are in registered form under Treas. Reg. Section 5f.103-1(c). A Loan (and the Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each note shall expressly so provide). Any participation of such Loan (and the note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
13.2.2. Voting Rights . Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loan or Commitment in which such Participant has an interest, postpones the Commitment Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan or Commitment, or releases any Borrower, Guarantor or substantial portion of the Collateral.
 
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13.2.3. Benefit of Set-Off . Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant were a Lender.
13.3. Assignments .
13.3.1. Permitted Assignments . A Lender may assign to any Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000 (unless otherwise agreed by Agent in its discretion) and integral multiples of $1,000,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Commitments retained by the transferor Lender be at least $5,000,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such assignment shall execute and deliver to Agent, for its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans; provided , however , that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.
13.3.2. Effect: Effective Date . Upon delivery to Agent of an assignment notice in the form of Exhibit C and a processing fee of $3,500 (unless otherwise agreed by Agent in its discretion), such assignment shall become effective as specified in the notice, if it complies with this Section 13.3 . From the effective date of such assignment, (a) the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder, and (b) the transferor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to any indemnification provisions provided for the benefit of the Lenders hereunder or under the other Loan Documents or any other rights of the Lenders that are to survive the termination of this Agreement or any other Loan Documents) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of a transferor Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto). Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as appropriate. The transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative questionnaire satisfactory to Agent.
 
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13.3.3. Tax Treatment . If any interest in a Loan Document is transferred to an Eligible Assignee that is organized under the laws of any jurisdiction other than the United States or any state or district thereof, the Eligible Assignee, concurrently with the effectiveness of such transfer, shall have complied with the provisions of Section 5.10.
13.3.4. Register . Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “ Register ”) on which it enters the name and address of each Lender as the registered owner of the Obligations (and the principal amount and stated interest thereon) held by such Lender (each, a “ Registered Loan ”). Other than in connection with an assignment by a Lender of all or any portion of its portion of the Obligations to an Affiliate of such Lender (i) a Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Commitments to an Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register. Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register to the extent it has one) available for review by Borrowers from time to time during normal business hours as Borrowers may reasonably request. It is intended that any Register and Participant Register comply with the requirements of Sections 163(f), 871(h), 881(c) and 4701 of the Code and the Treasury Regulations promulgated thereunder and shall be applied in a manner consistent therewith.
Section 14. MISCELLANEOUS
14.1. Consents, Amendments and Waivers .
14.1.1. Amendment . No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of Agent, with the written consent of Required Lenders, and each Obligor party to such Loan Document; provided , however , that
(a) without the prior written consent of Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Agent;
 
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(b) without the prior written consent of Issuing Bank affected thereby, no modification shall be effective with respect to any LC Obligations or Section 2.3;
(c) without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the Commitment of such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;
(d) without the prior written consent of all Lenders (except a Defaulting Lender as provided in Section 4.2 ), no modification shall be effective that would (i) extend the Commitment Termination Date; (ii) except as currently contemplated by the Loan Documents (including, without limitation, in connection with a Permitted Asset Disposition or as provided in Section 12.2.1) release Collateral with a book value greater than $40,000,000 during any calendar year; (iii) except in connection with a Permitted Asset Disposition, release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release; or (iv) alter Sections 5.6 or 14.1.1 or amend the definitions of Pro Rata, Required Lenders or Super Majority Lenders;
(e) without the prior written consent Super Majority Lenders (except a Defaulting Lender as provided in Section 4.2 ), no modification shall be effective that would (i) amend the definitions of Borrowing Base, Eligible Accounts and Eligible Inventory (and the defined terms used in such definitions); or (ii) increase any advance rate; and
(f) With the written acknowledgment (without implying a requirement of consent) of Agent, Borrower Representative, and (if applicable) the signature of a Domestic Subsidiary becoming a Borrower, Joinder Agreements may be entered into and Schedules 8.5 , 8.6.1 , 9.1.4 , 9.1.9 , 9.1.12 , 9.1.16 , 9.1.19 , and 9.1.21 may be modified.
14.1.2. Limitations . The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the parties to the Fee Letter or any agreement relating to a Bank Product shall be required for any modification of such agreement, and no Affiliate of a Lender that is party to a Bank Product agreement shall have any other right to consent to or participate in any manner in modification of any other Loan Document. The making of any Loans during the existence of a Default or Event of Default shall not be deemed to constitute a waiver of such Default or Event of Default, nor to establish a course of dealing. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing, and then only in the specific instance and for the specific purpose for which it is given.
14.1.3. Payment for Consents . No Obligors will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.
14.2. Indemnity . EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING
 
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FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.
14.3. Notices and Communications .
14.3.1. Notice Address . Subject to Section 4.1.4 , all notices, requests and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Representative’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 14.3 . Each such notice, request or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4 , 2.3 , 3.1.2 , 4.1.1 or 5.3.3 shall be effective until actually received by the individual to whose attention at Agent such notice is required to be sent. Any written notice, request or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by the Borrower Representative shall be deemed received by all Obligors.
14.3.2. Electronic Communications; Voice Mail . Electronic mail and internet websites may be used only for routine communications, such as financial statements, Borrowing Base Certificates and other information required by Section 10.1.2 , administrative matters, distribution of Loan Documents for execution, and matters permitted under Section 4.1.4 . Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.
14.3.3. Non-Conforming Communications . Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of an Obligor.
14.4. Performance of Borrowers’ Obligations . Agent may, in its discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers, on demand, with interest from the date incurred to the date of payment
 
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thereof at the Default Rate applicable to Base Rate Revolver Loans. Any payment made or action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.
14.5. Credit Inquiries . Each Obligor hereby authorizes Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary in connection with the establishment of credit lines and/or trade credit or any verification of any Obligor’s Accounts.
14.6. Severability . Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.
14.7. Cumulative Effect; Conflict of Terms . The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise specifically provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.
14.8. Counterparts . Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
14.9. Entire Agreement . Time is of the essence of the Loan Documents. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
14.10. Relationship with Lenders . The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Commitments of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Borrower.
14.11. Confidentiality . During the term of this Agreement and for 12 months thereafter, Agent and Lenders agree to take reasonable precautions to maintain the confidentiality of any information that Borrowers deliver to Agent and Lenders and identify as confidential at the time of delivery, except that Agent and any Lender may disclose such information (a) to their respective officers, directors, employees, Affiliates and agents, including
 
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legal counsel, auditors and other professional advisors; (b) to any party to the Loan Documents from time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the request of any Governmental Authority exercising regulatory authority over Agent or such Lender; (e) which ceases to be confidential, other than by an act or omission of Agent or any Lender, or which becomes available to Agent or any Lender on a nonconfidential basis; (f) to the extent reasonably required in connection with any litigation relating to any Loan Documents or transactions contemplated thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the exercise of any rights or remedies under the Loan Documents; (h) to any actual or proposed party to a Bank Product or to any Transferee, as long as such Person agrees to be bound by the provisions of this Section; (i) to the National Association of Insurance Commissioners or any similar organization, or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to any investor or potential investor in an Approved Fund that is a Lender or Transferee, but solely for use by such investor to evaluate an investment in such Approved Fund, or to any manager, servicer or other Person in connection with its administration of any such Approved Fund; or (k) with the consent of Borrower Representative. Notwithstanding the foregoing, Agent and Lenders may issue and disseminate to the public general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ names in advertising and other promotional materials.
14.12. GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
14.13. Consent to Forum .
14.13.1. Forum . EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES OF AMERICA LOCATED IN COOK COUNTY, ILLINOIS, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Agent or any Lender to bring proceedings against any Obligor in any other court. Nothing in this Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.
14.14. Waivers by Obligors . To the fullest extent permitted by Applicable Law, Obligors waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, contract rights, documents, instruments, chattel paper and
 
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guaranties at any time held by Agent on which Obligors may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a material inducement to Agent and Lenders entering into this Agreement and that Agent and Lenders are relying upon the foregoing in their dealings with Obligor. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
14.15. Patriot Act Notice . Agent and Lenders hereby notify Obligor that pursuant to the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor’s management and owners, such as legal name, address, social security number and date of birth.
14.16. Subordination . Each Obligor covenants and agrees that the payment of all indebtedness, principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of any Obligor), fees, charges, expenses, reasonable attorneys’ fees and any other sum, obligation or liability owing by any other Obligor to such Obligor, including any intercompany trade payables or royalty or licensing fees (collectively, the “ Intercompany Obligations ”), is subordinated, to the extent and in the manner provided in this Section 14.16 , to the prior payment in full of all Obligations (herein, the “ Senior Obligations ”) and that the subordination is for the benefit of Agent and Lenders, and Agent may enforce such provisions directly (it being understood that nothing in this Section 14.16 shall prohibit any payment on any Intercompany Obligations so long as no Default or Event of Default has occurred and is continuing).
(a) Each Obligor hereby (i) authorizes Agent to demand specific performance of the terms of this Section 14.16 whether or not any other Obligor shall have complied with any of the provisions hereof applicable to it, at any time when such Obligor shall have failed to comply with any provisions of this Section 14.16 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.
 
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(b) Upon any distribution of assets of any Obligor in any dissolution, winding-up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) and subject to the provisions of Section 14.16 :
(i) Agent and Lenders shall first be entitled to receive payment in full in cash of the Senior Obligations before any Obligor is entitled to receive any payment on account of the Intercompany Obligations.
(ii) Any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, to which any other Obligor would be entitled except for the provisions of Section 14.16 , shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to Agent, to the extent necessary to make payment in full of all Senior Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to Agent and Lenders.
(iii) In the event that notwithstanding the foregoing provisions of Section 14.16 , any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, shall be received by any other Obligor on account of the Intercompany Obligations before all Senior Obligations are paid in full, such payment or distribution shall be received and held in trust for and shall be paid over to Agent for application to the payment of the Senior Obligations until all of the Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to Agent and Lenders.
(c) No right of Agent and Lenders or any other present or future holders of any Senior Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Obligor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Obligor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
14.17. Advertisement . Each Obligor hereby authorizes Agent to publish the names of Borrowers and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Agent elects to publish.
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signatures begin on following page]
 
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IN WITNESS WHEREOF , this Agreement has been executed and delivered as of the date set forth above.

BORROWERS:	
	
KELLWOOD COMPANY	
KELLWOOD FINANCIAL RESOURCES, INC.	
(formerly known as Newkell, Inc.)	
KWD HOLDINGS, INC.	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
ZOBHA, LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, INC.	
SIERRA DESIGNS ACQUISITION CORPORATION	
ROYAL ROBBINS, INC.	

By:	 		
Name:	 	Adrian Kowalewski	
Title:	 	Treasurer	
Signature Page to Credit Agreement

	
AGENT AND LENDERS:	
	
WELLS FARGO, NATIONAL ASSOCIATION,
as Agent and a Lender	

By:	 		
Name:	 	Samantha Alexander	
Title:	 	Director	

Address:	 	1100 Abernathy Road, Suite 1600	
	 	Atlanta, GA 30328	
	 	Attn: Portfolio Manager	
	 	Fax: (770) 804-0785	

With a copy to:	
	
Goldberg Kohn Ltd.	

Address:	 	55 East Monroe Street, Suite 3300	
	 	Chicago, IL 60603	
	 	Attn: Gary Zussman	
	 	Fax: (312) 332-2196	
Signature Page to Credit Agreement

			
UBS LOAN FINANCE LLC , as Documentation Agent and a Lender	
		
By:	 		
Name:	 	Mary E. Evans	
Title:	 	Associate Director	
		
By:	 		
Name:	 	Irja R. Otsa	
Titele:	 	Associate Director	

Address:	 	677 Washington Blvd.	
	 	Stamford, CT 06901	
	 	Attn: Jitesh Hotwani	
	 	Fax: 203-719-3888	
Signature Page to Credit Agreement

			
PNC BANK, N.A. , as Lender	
		
By:	 		
Name:	 	Mark Herdman	
Title:	 	Vice President	

Address:	 	600 Galleria Parkway, Suite 890	
	 	Atlanta, GA 30339	
	 	Attn: Mark Herdman	
	 	Fax: (770) 953-6046	
	
With a copy to:	

Address:	 	1600 Market Street	
	 	Philadelphia, PA 19103
Attn: Ellen Goodman	
Signature Page to Credit Agreement

Exhibit 10.22
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of March 23, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Borrower Representative ”), the Domestic Subsidiaries of Borrower Representative party hereto as Borrowers (together with Borrower Representative, “Borrowers”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Credit Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested (i) that Agent and Lenders temporarily modify the Covenant Testing Trigger Date and (ii) that Agent and Lenders waive the application of certain provisions of the Credit Agreement as they may apply to the execution and delivery of a Guaranty by SK Financial Services Corp. (“ SK ”), dated as of the date hereof (the “SK/Cerberus Guaranty ”) in favor of the Second Lien Agent;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 7 below, the Credit Agreement is hereby amended as follows:
(a) The definition of “Covenant Testing Trigger Date” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Covenant Testing Trigger Date - means any day that Excess Availability is less than 12.5% of the Maximum Revolver Amount (other than during the Availability Modification Period).
(b). The definition of “Permitted Acquisition” appearing in Section 1.1 of the Credit Agreement is hereby amended to delete the phrase “any Acquisition effected with the consent and approval of the board of directors” appearing therein and replace it with the following: “any Acquisition (other than an Acquisition effected during the Availability Modification Period) effected with the consent and approval of the board of directors”.

(c) Section 1.1 of the Credit Agreement is hereby amended to insert the following definitions in the proper order alphabetically:
Availability Modification Period - the period commencing on March 26, 2012 and ending upon the earliest of (i) the occurrence of any Event of Default, (ii) any date on which Excess Availability is less than $5,000,000, (iii) any termination or cancellation of, or reduction in the amount available to be drawn on (as a result of a draw or otherwise), the Sun Letter of Credit, (iv) any date on which the Sun Guaranty ceases to be in full force and effect or any party thereto challenges the validity thereof and (v) April 28, 2012.
Sun Guaranty - that certain Guaranty dated as of March 23, 2012 made by SK Financial Services Corp. in favor of Agent.
Sun Letter of Credit - a standby letter of credit with an expiration date of no earlier than May 31, 2012 and a face amount of $20,000,000 issued by Bank of Montreal to Agent on behalf of SK Financial Services Corp.
(d) The first sentence Section 2.1.7 of the Credit Agreement is hereby amended to delete the phrase “ Borrowers may, by written notice to Agent” appearing therein and replace it with the following: “Borrowers may, at any time other than during the Availability Modification Period, by written notice to Agent”
(e) The first sentence of Section 8.1 of the Credit Agreement is hereby amended to delete the phrase: “ provided that, if at any time Excess Availability is less than 12.5% of the Maximum Revolver Amount and, thereafter, so long as Borrowers do not maintain an average daily Excess Availability (measured as of the close of business of each Business Day) in excess of 12.5% of the Maximum Revolver Amount for a period of two (2) consecutive fiscal months” and replace it with the following:
“ provided that, (i) if at any time Excess Availability is less than 12.5% of the Maximum Revolver Amount and, thereafter, so long as Borrowers do not maintain an average daily Excess Availability (measured as of the close of business of each Business Day) in excess of 12.5% of the Maximum Revolver Amount for a period of two (2) consecutive fiscal months and (ii) at all times during the Availability Modification Period,”
(f) Section 10.2.8(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(b) Exercise its option to make cash payments of interest in respect of the Last Out Term Loan at any time during the Availability Modification Period or if an Event of Default exists or would be caused thereby or make any cash payments of interest in respect of the Last Out Term Loan except as provided in the Last Out Term Loan Agreement as in effect on the date hereof.”
 
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(g) Section 10.2.17 of the Credit Agreement is hereby amended to amend and restate clauses (g) and (h) thereof in their entirety as follows:
“(g) at any time other than during the Availability Modification Period, payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto and (ii) Availability after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment), and (h) at any time other than during the Availability Modification Period, payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement; provided that this clause (h) shall not limit reimbursement of Sun Capital Partners Management V, LLC or its affiliates for compensation paid by Sun Capital Partners Management V, LLC or its affiliates to the “performance improvement team” assisting the Borrower Representative in an amount not to exceed $500,000 in any Fiscal Year”.
3. Waiver.
(a) Subject to the terms and conditions contained herein, the Agent and the Lenders hereby waive application of Section 10.1.10 of the Credit Agreement, as such section may apply to the execution and delivery of the SK/Cerberus Guaranty in favor of the Second Lien Agent, provided that the conditions to the effectiveness of this Waiver described in Section 6 below are satisfied.
(b) By its signature below, SK agrees that any and all subrogation rights of SK under the SK/Cerberus Guaranty following any payment by SK to the Second Lien Agent thereunder are fully subordinated to the prior payment in full in cash of all Obligations under the Credit Agreement. Accordingly, to the extent SK is entitled to exercise any subrogation rights under the SK/Cerberus Guaranty, SK agrees that it shall not take any action in respect of such subrogation rights until all Obligations (other than contingent indemnity obligations for which a claim has not been asserted) have been paid in full in cash.
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by
 
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bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. The Loan Parties agree that during the Availability Modification Period they shall provide collateral reporting on a weekly basis. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
6. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received the Sun Letter of Credit, in the form attached hereto as Exhibit A;
(c) Agent shall have received the Sun Guaranty, in the form attached hereto as Exhibit B, together with an opinion of counsel in form and substance satisfactory to Agent and a copy of the corresponding guaranty executed in favor of the Second Lien Agent;
(d) Agent shall have received payment of an amendment fee in the amount of $50,000 in immediately available funds; and
(e) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
7. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
 
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8. Other Agreements.
(d) Application of LC Draws. If Agent receives any payment in respect of the Sun Guaranty, including any proceeds from a draw on the Sun Letter of Credit, such payment shall be applied as set forth in Section 5.6 of the Credit Agreement.
(e) Cash Dominion. The Loan Parties acknowledge and agree that, as a result of Excess Availability being less than 12.5% of the Maximum Revolver Amount, as of the date hereof there exists a Cash Dominion Period pursuant to Section 8.5 of the Credit Agreement, which shall remain in effect until the time that such Cash Dominion Period ends pursuant to the terms of Section 8.5 of the Credit Agreement.
(f) Limit on Cash-Pay Interest. Each Loan Party and each Last-Out Term Lender agree and acknowledge that the Loan Parties shall not exercise their option to make cash payments of interest in respect of the Last Out Term Loan at any time during the Availability Modification Period.
9. Miscellaneous .
(a) Expenses. The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. The Loan Parties further agree to reimburse Agent for expenses incurred by Agent in connection with a collateral audit of the Loan Parties to be conducted in April, 2012, notwithstanding any limitations on such reimbursement set forth in Section 10.1.l(b) of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law. This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.
(c) Counterparts. This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
10. Release.
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of
 
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and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no feet, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

BORROWERS:
 
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION CORPORATION
ROYAL ROBBINS, INC.		

		

		

		

		

		

		

		

			
By:	 			
Name:	 	Adrian Kowalewski		
Title:	 	Senior Vice President		
Amendment No. 1 to Credit Agreement

				
AGENT AND LENDERS:
 
WELLS FARGO, NATIONAL ASSOCIATION,
as Agent and a Lender 		

By:	 			
 
Name:	 	 
ROBERT BERNIER		
Title:	 	VICE PRESIDENT		
Amendment No. 1 to Credit Agreement

			
PNC BANK, N.A., as Lender 	
		
By:	 		
 
Name:	 	 
Mark Herdman	
Title:	 	Vice President	
Amendment No. 1 to Credit Agreement

			
UBS LOAN FINANCE LLC, as a Lender 	
		
By:	 		
Name:	 	Mary E. Evans	
Title:	 	Associate Director	
		
By:	 		
Name:	 	Irja R. Otsa	
Title:	 	Associate Director	
Amendment No. 1 to Credit Agreement

			
Agreed and acknowledged with respect to Section 7(c):	
	
SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCIAL, LLC	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Amendment No. 1 to Credit Agreement

			
Agreed and acknowledged with respect to Section 3(b):	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Amendment No. 1 to Credit Agreement

EXHIBIT A
See attached.

Exhibit 10.23
CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of April 20, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Borrower Representative ”), the Domestic Subsidiaries of Borrower Representative party hereto as Borrowers (together with Borrower Representative, “Borrowers”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Credit Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested that Agent and Lenders (i) consent to an amendment to the Last-Out Term Loan Agreement to increase the Last-Out Term Loan in an amount of $30,000,000 (the “ Additional Sun Debt ”) and (ii) consent to the delivery of the financial statements required pursuant to Section 10.1.2(a) of the Credit Agreement for the Fiscal Year ending January 28, 2012 (the “ FY 2011 Audit ”) on or before May 5, 2012, and (iii) temporarily modify the Covenant Testing Trigger Date;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Consent . The Agent and the Lenders party hereto hereby consent to (i) the incurrence by Borrowers of the Additional Sun Debt, pursuant to the terms of the Fourth AR Sun Loan Agreement and (ii) the delivery of the FY 2011 Audit on or before May 5, 2012. The foregoing consent shall not be deemed to be a consent to any other deviation from the express terms of the Credit Agreement.
3. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 7 below, the Credit Agreement is hereby amended as follows:
(a) The definition of “Availability Modification Period” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Availability Modification Period - the period commencing on March 26, 2012 and ending upon the earliest of (i) the occurrence of any Event of Default, (ii) any termination, expiration or cancellation of, or reduction in the amount available to be

drawn on (as a result of a draw or otherwise), the Sun Letter of Credit (including a release of the Sun Letter of Credit by Agent upon satisfaction of the Release Conditions), (iii) any date on which the Sun Guaranty ceases to be in full force and effect (including a release of the Sun Guaranty by Agent upon satisfaction of the Release Conditions) or any party thereto challenges the validity thereof and (iv) March 21, 2014.
(b) The definition of “Consolidated EBITDA” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Consolidated EBITDA - for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, in each case to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 10.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 10.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 10.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha
 
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acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (1) to the extent deducted in the calculation of Consolidated Net Income, severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) to the extent deducted in the calculation of Consolidated Net Income, payment associated with the escheatment audit not to exceed $2,100,000 in aggregate, (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses incurred in Fiscal Year 2012 solely in connection with the audit of the Vince business in an amount not to exceed $350,000; provided that for the purpose of this definition, “Consolidated EBITDA” of the Parent and its subsidiaries shall be deemed to be: $5,832,000 for the fiscal quarter ended July 31, 2011, $15,604,000 for the fiscal quarter ended October 31, 2011 and $6,604,000 for the fiscal quarter ended January 31, 2012. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Agent.”
(c) The definition of “Covenant Testing Trigger Date” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Covenant Testing Trigger Date - any day that Excess Availability is less than Target Availability (other than during the Availability Modification Period).
(d) The definition of “Covenant Testing Period” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Covenant Testing Period - a period commencing on the last day of the most recent Fiscal Month ending on or prior to the Covenant Testing Trigger Date for which Agent has received Parent’s financial statements and ending on the date that the Borrowers have maintained Excess Availability (measured as of the close of business on each Business Day) of not less than Target Availability for 60 consecutive days.
 
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(e) The definition of “Permitted Acquisition” appearing in Section 1.1 of the Credit Agreement is hereby amended to delete the phrase “any Acquisition (other than an Acquisition effected during the Availability Modification Period) effected with the consent and approval of the board of directors” appearing therein and replace it with the following: “any Acquisition (other than an Acquisition effected during the Guaranty Period) effected with the consent and approval of the board of directors”.
(f) The definition of “Restricted Investment” appearing in Section 1.1 of the Credit Agreement is hereby amended to delete the phrase “Excess Availability is at least 12.5% of the Maximum Revolver Amount” appearing therein and replace it with the following: “Excess Availability is at least equal to Target Availability”.
(g) Section 1.1 of the Credit Agreement is hereby amended to insert the following definitions in the proper order alphabetically:
Availability Forecast – projections of Excess Availability including such detail as reasonably requested by Agent and in form and substance consistent with the availability forecast delivered to Agent on April 11, 2012.
Availability Trigger Event – Borrowers have maintained Excess Availability (measured as of the close of business on each Business Day) in excess of Target Availability for a period of ninety (90) consecutive days.
Guaranty Period - the period commencing on the date hereof and ending on the date on which Agent releases the Sun Letter of Credit pursuant to Section 14.18.
Sun Letter of Credit - the standby letter of credit No. BMCH363834OS with an expiration date of March 21, 2013 and a face amount of $20,000,000 issued by Bank of Montreal to Agent on behalf of SK Financial Services Corp, as amended.
Target Availability - an amount equal to the greater of (i) 12.5% of the Maximum Revolver Amount and (ii) $20,000,000.
Release Conditions - as defined in Section 14.18.
(h) The first sentence Section 2.1.7 of the Credit Agreement is hereby amended to delete the phrase “Borrowers may, at any time other than during the Availability Modification Period, by written notice to Agent” appearing therein and replace it with the following: “Borrowers may, at any time other than during the Guaranty Period, by written notice to Agent”
(i) The first sentence of Section 8.1 of the Credit Agreement is hereby amended to delete the phrase: “ provided that, (i) if at any time Excess Availability is less than 12.5% of the Maximum Revolver Amount and, thereafter, so long as Borrowers do not maintain an average daily Excess Availability (measured as of the close of business of each Business Day) in excess of 12.5% of the Maximum Revolver Amount for a period of two (2) consecutive fiscal months and (ii) at all times during the Availability Modification Period,” and replace it with the following:
 
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“ provided that, (i) if at any time Excess Availability is less than Target Availability and, thereafter, so long as Borrowers do not maintain Excess Availability in excess of Target Availability at all times during a period of two (2) consecutive fiscal months and (ii) at all times during the Guaranty Period (unless an Availability Trigger Event has occurred),”
(j) The third sentence of Section 8.5 of the Credit Agreement is hereby amended to delete the phrase: “Following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability is less than 12.5% of the Maximum Revolver Amount and until the last day of a period of ninety (90) consecutive days thereafter during which average daily Excess Availability is equal to or exceeds 12.5% of the Maximum Revolver Amount (each such period, a “ Cash Dominion Period ”)” and replace it with the following:
“Following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability is less than Target Availability and thereafter until an Availability Trigger Event has occurred (each such period, a “ Cash Dominion Period ”)”
(k) Section 10.1.1(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(b) Reimburse Agent for all charges, costs and expenses of Agent in connection with (i) examinations of any Obligor’s books and records or any other financial or Collateral matters as Agent deems appropriate (A) up to one time per Loan Year if at all tunes during such Loan Year Excess Availability equals or exceeds Target Availability and (B) up to two times per Loan Year if at any time during such Loan Year Excess Availability is less than Target Availability; provided, that the Obligors shall reimburse Agent for any such examinations up to three times per Loan Year during the Guaranty Period (unless an Availability Trigger Event has occurred); and (ii) appraisals of Inventory of (A) up to one time per Loan Year if at all times during such Loan Year Excess Availability equals or exceeds Target Availability and (B) up to two times per Loan Year if at any time during such Loan Year Excess Availability is less than Target Availability; provided, that the Obligors shall reimburse Agent for any such appraisals up to two times per Loan Year during the Guaranty Period (unless an Availability Trigger Event has occurred); provided , further , that if an examination or appraisal is initiated while a Default or Event of Default is continuing, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits. Subject to the foregoing, Obligors shall pay Agent’s $1,000 per person for each day that an employee or an agent of Agent or its Affiliates is engaged in any examination activities (including in connection with the implementation of an electronic reporting system). This Section shall not be construed to limit Agent’s right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use third parties for such purposes.
 
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(1) Section 10.1.2(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, within 180 days of the close of such Fiscal Year), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;”
(m) Section 10.1.2(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) (x) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (y) commencing with the Fiscal Quarter ending April 30, 2012, unaudited balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month, (A) unaudited consolidated balance sheets as of the end of such Fiscal Month and related consolidated profit and loss statement and cash flow statement (which
 
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cash flows statement need not be prepared in accordance with GAAP but instead may be prepared in a manner substantially similar to the cash flow statement presented to Agent with respect to the Fiscal Month ending on July 30, 2011) for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) commencing with the Fiscal Month ending May 31, 2012, unaudited balance sheets as of the end of such Fiscal Month and a related profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year (it being understood that with respect to clause (i)(A)(y) above and this clause (ii)(B), delivery of the profit and loss statement and statements of working capital, accounts payable and accounts receivable for the Vince business on a standalone basis shall satisfy the requirements set forth in such clauses (i)(A)(y) and (ii)(B) for the Fiscal Months and Fiscal Quarters ending prior to July 31, 2012) and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year-end adjustments and the absence of footnotes;”
(n) Section 10.1.2(d) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(d) to the extent available and upon Agent’s request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements, including any such management letters and material reports with respect to the Vince business on a standalone basis;”
(o) Section 10.1.2(e) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(e) not later than 30 days after the end of each Fiscal Year, projections of (i) Borrowers’ consolidated balance sheets, results of operations and cash flow and (ii) the Vince business’ balance sheets, results of operations and cash flow on a standalone basis, in each case for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
 
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(p) Section 10.1.2(h) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(h) not later than 15 days after the Agent’s request, such information regarding actions undertaken and/or completed to ensure that the Vince business is working towards reporting its financial performance on a standalone basis such that it could be marketed and sold on a standalone basis; and”
(q) Section 10.2(m) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(m) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date as long as in each case Excess Availability after giving effect thereto exceeds Target Availability; and”
(r) Section 10.2.7(f) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(f) other loans or extensions of credit made in the ordinary course of business after the Closing Date as long as (i) Excess Availability after giving effect to such loans or extensions of credit exceeds Target Availability, (ii) they are permitted under the Second Lien Debt Documents as in effect on the date hereof, and (iii) the aggregate amount of such loans and extensions of credit outstanding at any time do not exceed $5,000,000.”
(s) Section 10.2.8(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:
“(b) Exercise its option to make cash payments of interest in respect of the Last Out Term Loan at any time during the Guaranty Period or if an Event of Default exists or would be caused thereby or make any cash payments of interest in respect of the Last Out Term Loan except as provided in the Last Out Term Loan Agreement as in effect on the date hereof.”
(t) Section 10.2.17 of the Credit Agreement is hereby amended to amend and restate clauses (g) and (h) thereof in their entirety as follows:
“(g) payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto and (ii) Availability after giving effect to such payment is greater than $25,000,000 (it being
 
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understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment); provided , that this clause (g) shall not limit reimbursement of Sun Capital Partners Management V, LLC or its affiliates for compensation paid by Sun Capital Partners Management V, LLC or such affiliates to the “performance improvement team” assisting the Borrower Representative, in an aggregate amount not to exceed $500,000 in any Fiscal Year, and (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement.”
(u) The Credit Agreement is hereby amended to add the following Section 14.18 at the end thereof:
“14.18. Sun Letter of Credit .
(a) Each party hereto agrees that Agent may draw on the Sun Letter of Credit upon the occurrence of any of the following: (i) one or more Events of Default exists, (ii) Excess Availability is less than $5,000,000 on any one or more days, or (iii) as of January 23, 2013, the expiration date of the Sun Letter of Credit has not been extended to a date that is on or after March 21, 2014. Any draw under clause (ii) above shall be made in an amount not to exceed the amount by which Excess Availability is less than $20,000,000 (as of any date selected by Agent that Excess Availability is less than $5,000,000). Any draw under clause (i) or clause (iii) above may be made in an amount up to the undrawn amount of the Sun Letter of Credit. Nothing contained herein shall limit the number of separate draws Agent may make on the Sun Letter of Credit.
(b) Each party hereto agrees that Agent shall, upon request of SK Financial Services Corp. on any date, promptly (x) return the Sun Letter of Credit for cancellation and (y) release the Sun Guaranty if, on the date of such request the following conditions are satisfied (such conditions, the “ Release Conditions ”): (i) no Event of Default exists, (ii) Excess Availability is more than $35,000,000 and has been more than $35,000,000 at all times during the ninety (90) day period immediately preceding such date, and (iii) Borrowers have delivered to Agent an Availability Forecast demonstrating that Excess Availability will be no less than $25,000,000 at all times during the period beginning on the date of such request and ending on October 19, 2016.”
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a
 
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waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. The Loan Parties agree that during the Guaranty Period they shall provide collateral reporting on a weekly basis. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
6. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received an amendment to the Sun Letter of Credit, in the form attached hereto as Exhibit A;
(c) Agent shall have received a fully executed copy of an amendment to the Second Lien Debt Documents, consenting to the issuance to Agent of the Sun Guaranty and the Sun Letter of Credit and the incurrence by Borrowers of the Additional Sun Debt;
(d) Agent shall have received a fully executed copy of the Fourth Amended and Restated Term Loan Agreement among Borrowers, the other Obligors party thereto, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC (the “ Fourth AR Sun Loan Agreement ”):
(e) Borrower shall have received proceeds of the Additional Sun Debt in the amount of $30,000,000, and such proceeds shall have been used to reduce the outstanding amount of the Revolver Loans;
(f) Agent shall have received payment of an amendment fee in the amount of $50,000 in immediately available funds (which such fee shall be distributed by Agent to the Lenders Pro Rata); and
(g) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
 
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7. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally; and
(d) The incurrence of the Additional Sun Debt will not cause the principal amount of the Priority Obligations (as defined in the 2009 Debenture Intercreditor Agreement) incurred under Section 4.09(b)(l) of the Indenture to exceed the greater of (i) $225,000,000 less the aggregate amount of all Net Proceeds (as defined in the Indenture) of Asset Sales (as defined in the Indenture) applied by any Borrower since the date of the Indenture to repay any Indebtedness under the Priority Lien Documents (as defined in the 2009 Debenture Intercreditor) and to permanently reduce the commitments thereunder and (ii) the amount of the Borrowing Base (as defined in the 2009 Debenture Intercreditor).
8. Other Agreements .
(e) Application of LC Draws . If Agent receives any payment in respect of the Sun Guaranty, including any proceeds from a draw on the Sun Letter of Credit, such payment shall be applied as set forth in Section 5.6 of the Credit Agreement.
(f) Cash Dominion . The Loan Parties acknowledge and agree that, as a result of Excess Availability being less than 12.5% of the Maximum Revolver Amount, as of the date hereof there exists a Cash Dominion Period pursuant to Section 8.5 of the Credit Agreement, which shall remain in effect until the time that such Cash Dominion Period ends pursuant to the terms of Section 8.5 of the Credit Agreement (as such Section 8.5 is amended hereby).
(g) Limit on Cash-Pay Interest . Each Loan Party and each Last-Out Term Lender agree and acknowledge that the Loan Parties shall not exercise their option to make cash payments of interest in respect of the Last Out Term Loan at any time during the Guaranty Period.
(h) Reaffirmation . Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”), and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011, made by the Sun Guarantors in favor
 
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of the Agent remain in full force and effect and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
9. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
10. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
 
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(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

	  	BORROWERS:
 
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.) 
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION CORPORATION
ROYAL ROBBINS, INC.	
			
	  	By:	 		
	  	Name:	 	Adrian Kowalewski	
	  	Title:	 	Senior Vice President	
Second Amendment

			
Agreed and acknowledged with respect to Section 8(a):	
	
SUN KELLWOOD FINANCE, LLC	
		
By:	 	
 	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCIAL, LLC	
		
By:	 	
 	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
	
Agreed and acknowledged with respect to Section 8(b):	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 	 	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Second Amendment

			
Agreed and acknowledged with respect to Section 8(a):	
	
SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell Curtis Lentz	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCIAL, LLC	
		
By:	 	/s/ Maxwell Curtis Lentz	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
	
Agreed and acknowledged with respect to Section 8(b):	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 	
 	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Second Amendment

			
AGENT AND LENDERS:	
	
WELLS FARGO, NATIONAL ASSOCIATION, as Agent and a Lender 	
		
By:	 	
 	
Name:	 	ROBERT BERNIER	
Title:	 	VICE PRESIDENT	
Second Amendment

			
UBS LOAN FINANCE LLC, as a Lender 	
		
By:	 	
 	
Name:	 	Mary E. Evans	
Title:	 	Associate Director	
		
By:	 	
 	
Name:	 	Joselin Fernandes	
Title:	 	Associate Director	
Amendment No. 2 to Credit Agreement

			
PNC BANK, N.A., as Lender 	
		
By:	 	
 	
Name:	 	Mark Herdman	
Title:	 	Vice President	
Second Amendment

EXHIBIT A
See attached.

			
	  	Bank of Montreal, Chicago, Illinois	
	  	STANDBY/LETTERS OF CREDIT
C/O 234 Simcoe Street
3rd Floor
Toronto, Ontario M5T 1T4
Canada
Tel: 1-877-801-0414
Fax: 1-877-801-7787
SWIFT: BOFMUS4X	
Irrevocable
Standby Letter of Credit
No. BMCH363834OS
Amendment no. 1
Dated April 12, 2012

Beneficiary:	  	Applicant:	
WELLS FARGO BANK, N.A.	  	SK FINANCIAL SERVICES CORP.	
AS ADMINISTRATIVE AGENT	  	5200 TOWN CENTER CIRCLE, SUITE	
2450 COLORADO AVENUE, SUITE 3000W	  	600	
SANTA MONICA.CA 90404, ATTN:LC DEPT, United States	  	BOCA RATON, FL 33486 United States	
We amend our Standby Letter of Credit subject to the following terms and conditions. This amendment forms an Integral part of the original instrument. All other terms and conditions remain unchanged.
Amended Terms:
DRAFT ONLY
Document no. 2 is deleted in its entirety and replaced with the following:
2. A dated statement purportedly signed by an authorized representative or officer of the Beneficiary stating the following:
“The undersigned being a duly authorized representative or officer of Wells Fargo Bank, N.A., a national banking association (“Beneficiary”), hereby represents and warrants that the Beneficiary is permitted to request a draw under the Letter of Credit pursuant to the terms of that certain Credit Agreement, dated as of October 19, 2011 (as amended from time to time, the “Credit Agreement”), among Kellwood Company and certain of its subsidiaries, the lenders party thereto, and the Beneficiary as administrative agent for such lenders.”
 
Page 1 of 2

			
	  	Bank of Montreal, Chicago	
On 3rd page, 1st paragraph commencing with “This Letter of Credit shall be deemed automatically extended .....” “unless at least thirty (30) days” is deleted and replaced with “unless at least sixty (60) days”.
Unless otherwise instructed herein, all correspondence and inquiries regarding this transaction should be directed to our Customer Service Center at the above address, telephone: 1-877-801-0414. Please indicate our reference number in all your correspondence or telephone inquiries.
Regards,

/s/ illegible	
Authorized Signature(s)	
 
Page 2 of 2

Exhibit 10.24
AMENDMENT NO. 3 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of July 25, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Credit Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”)
WHEREAS, the Loan Parties have requested that Agent and Lenders amend the Credit Agreement to extend the period of time to deliver financial statements in respect of the Vince business for the Fiscal Year ending January 31, 2012 until 225 days after the close of such Fiscal Year;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 10.1.2(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, within 225 days of the close of such Fiscal Year,), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year

and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;”
(b) Section 10.2.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“10.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with (i)  Section 10.1.9 or (ii) in connection with Permitted Acquisitions, Section 10.2.9 ; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qua1ifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.”
3. Continuing Effect . Except as expressly set forth in Section 2 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
4. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
5. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
 
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(b) Agent shall have received a fully executed copy of an amendment to the Second Lien Debt Documents;
(c) Agent shall have received a fully executed copy of an amendment to the Last Out Term Loan Agreement; and
(d) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
6. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
7. Reaffirmation . Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”), and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011 (the “ Guaranty ”), made by the Sun Guarantors in favor of the Agent remain in full force and effect and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
8. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
 
-3-

(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
9. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
-4-

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

BORROWERS:		
		
KELLWOOD COMPANY		
KELLWOOD FINANCIAL RESOURCES, INC.		
(formerly known as Newkell, Inc.)		
KWD HOLDINGS, INC.		
PHAT FASHIONS LLC		
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION
CORPORATION
ROYAL ROBBINS, INC.		

		

		

By:	 	
 		
Name:	 	Adrian Kowalewski		
Title:	 	Senior Vice President		
Signature Page to Amendment No. 3

			
AGENT AND LENDERS:	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Agent and a Lender 	
		
By:	 		
 
Name:	 	 
ROBERT BERNIER	
Title:	 	VICE PRESIDENT	
Signature Page to Amendment No. 3

			
UBS LOAN FINANCE LLC, as a Lender	
		
By:	 	
 	
	 	Name: Irja R. Otsa	
	 	Title:   Associate Director	
		
By:	 	
 	
	 	Name: David Urban	
	 	Title:   Associate Director	
Signature Page to Amendment No. 3

Agreed and acknowledged with respect to Section 7:

SUN KELLWOOD FINANCE, LLC	
		
By:	 	
 	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCE, LLC	
		
By:	 	
 	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 	
 	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Signature Page to Amendment No. 3

Exhibit 10.25
CONSENT AND AMENDMENT NO. 4 TO CREDIT AGREEMENT
THIS CONSENT AND AMENDMENT NO. 4 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of December 31, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Borrower Representative ”), the Domestic Subsidiaries of Borrower Representative party hereto as Borrowers (together with Borrower Representative, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Credit Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have notified Agent and the Lenders that Borrower Representative and Canadian Recreation Products Inc. (“ Canadian RR Sub ”) desire to enter into a Purchase Agreement in the form of Exhibit A hereto (the “ Royal Robbins Purchase Agreement ”) pursuant to which Parent will sell all of the issued and outstanding equity interests of Royal Robbins, LLC (“ Royal Robbins ” and all such issued and outstanding equity interests of Royal Robbins the “ Royal Robbins Transferred Equity Interests ”) to RR Acquisition Corporation (“ US RR Purchaser ”) and Canadian RR Sub will sell the assets described on Exhibit B hereto (the “ RR Transferred Assets ”) to RR Canada, Inc. (“ Canadian RR Purchaser ”);
WHEREAS, the Loan Parties have also notified Agent and the Lenders that Phat Fashions LLC (“ Phat Fashions ”) has entered into a Purchase Agreement in the form of Exhibit C hereto (the “ Phat Fashions Purchase Agreement ”) pursuant to which Phat Fashions will sell the assets described on Exhibit D hereto (the “ PF Transferred Assets ”) to Baby Phat Holding Company, LLC (“ PF Purchaser ”);
WHEREAS, the Loan Parties have requested that Agent and the Lenders consent to (i) the sale by Parent of all of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement, (iii) the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case upon receipt of the Initial RR Consideration (as defined below), (iv) the release of Agent’s Lien on the PF Transferred Assets upon receipt of the Initial PF Consideration (as defined below), and (v) the prepayment of the Second Lien Debt in an aggregate amount not to exceed $10,000,000, with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement;
WHERAS, the Agent and Lenders are willing to provide such consent on the terms provided herein;

WHEREAS, the Loan Parties, Agent and Lenders have also agreed to amend the Credit Agreement in certain respects on the terms provided herein;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Consent . In reliance on the representations and warranties of the Loan Parties set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, Agent and the Lenders consent to (i) the sale by Parent of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Royal Robbins Purchase Agreement) for the Royal Robbins Transferred Equity Interests (such amount, the “ Initial RR Consideration ”) is at least $17,500,000 and (C) $10,000,000 of Initial RR Consideration is remitted directly to Second Lien Agent and the remaining portion of the Initial RR Consideration is remitted directly to Agent for application to the outstanding Revolving Loans, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement and the release of Agent’s Lien on the PF Transferred Assets, in each case, so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of the Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Phat Fashions Purchase Agreement) for the PF Transferred Assets (such amount, the “ Initial PF Consideration ”) is at least $5,000,000 and (C) the Initial PF Consideration is remitted directly to Agent for application to the outstanding Revolving Loans, and (iii) the prepayment of the Second Lien Debt in an aggregate amount not to exceed $10,000,000 with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement. The foregoing consent shall not be deemed to be a consent to any other deviation from the express terms of the Credit Agreement and the Loan Documents.
3. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Borrower set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended to add the following definitions in appropriate alphabetical order, as follows:
Initial RR Consideration – as defined in the Fourth Amendment.
Initial PF Consideration – as defined in the Fourth Amendment.
PF Transferred Assets – as defined in the Fourth Amendment.
 
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Phat Fashions Purchase Agreement – as defined in the Fourth Amendment.
Royal Robbins Investment – collectively, the “Seller Notes” (as defined in the Royal Robbins Purchase Agreement) and the “Earnout Cash” (as defined in the Royal Robbins Purchase Agreement).
Royal Robbins Purchase Agreement – as defined in the Fourth Amendment.
Royal Robbins Transferred Equity Interests – as defined in the Fourth Amendment.
Fourth Amendment – that certain Consent and Amendment No. 4 to Credit Agreement dated as of December 31, 2012 among Agent, Lenders and Loan Parties.
(b) The definition of “Permitted Investment” in Section 1.1 of the Credit Agreement is hereby amended to replace the reference to “(i)” with a reference to “(j)”.
(c) The definition of “Restricted Investment” in Section 1.1 of the Credit Agreement is hereby amended to (i) replace the “and” after the clause (h) with “,”, (ii) reletter clause “(i)” as “(j)”, and (iii) add the following clause (i):
(i) the Royal Robbins Investment, and
(d) The definition of “Net Proceeds” set forth in Section 1.1 of the Credit Agreement is amended to replace the capitalized term “Net Proceeds” with “Net Cash Proceeds”.
(e) A new sentence is added at the end of Section 5.3(b) of the Credit Agreement as follows:
Notwithstanding anything contained in this Section 5.3(b) to the contrary, (i) the Net Cash Proceeds from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement shall be used as follows: (A) $10,000,000 shall be used by Obligors to prepay the Second Lien Debt, (B) $5,000,000 shall be applied to the prepayment of the Loans in accordance with Section 5.3(f) , and (C) the remaining portion of such Net Cash Proceeds shall pay down the Loans (without a permanent reduction in the Maximum Revolver Amount or Revolver Commitments, it being understood that such Net Cash Proceeds shall not be required to be reinvested in or otherwise used to repair, replace or restore any properties or assets as provided above in this Section 5.3(b) so long as “Excess Proceeds” (as defined in the 2009 Indenture) do not at any time exceed $10,000,000), and (ii) the Net Cash Proceeds from the sale of the PF Transferred Assets pursuant to the Phat Fashions Purchase Agreement shall pay down the Loans (without a permanent reduction in the Maximum Revolver Amount or Revolver Commitments, it being understood that such Net Cash Proceeds shall not be required to be reinvested in or otherwise used to repair, replace or restore any properties or assets as provided above in this Section 53(b) ).
 
-3-

(f) A new sentence is added at the end of Section 5.3(f) of the Credit Agreement as follows:
Notwithstanding anything contained in this Section 5.3(f) to the contrary, (x) any prepayment arising under clause (i)(B) of the last sentence of Section 5.3(b) from the Net Cash Proceeds from the sale of the Royal Robbins Transferred Equity Interests shall (A) so long as no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount of the Loans (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments but no establishment of a permanent Availability Reserve shall be required), until paid in full, and second, to provide Cash Collateralization for the Letters of Credit (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments but no establishment of a permanent Availability Reserve shall be required), and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 5.6 (with a corresponding permanent reduction in the Maximum Revolver Amount and Revolver Commitments and, at the election of the Required Lenders, the establishment of a permanent Availability Reserve in the amount of the prepayment (it being understood that once applied, no permanent Availability Reserve may be retroactively applied)), (y) any pay down of the Loans arising under clause (i)(C) of the last sentence of Section 5.3(b) from the Net Cash Proceeds from the sale of the Royal Robbins Transferred Equity Interests shall not require a permanent reduction of the Maximum Revolver Amount or Revolver Commitments or the establishment of a permanent Availability Reserve, and (z) any pay down of the Loans arising under clause (ii) of the last sentence of Section 5.3(b) from the Net Cash Proceeds from the sale of the PF Transferred Assets shall not require a permanent reduction of the Maximum Revolver Amount or Revolver Commitments or the establishment of a permanent Availability Reserve.
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reaffirmation and Confirmation; Covenant .
(a) Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights
 
-4-

of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects.
(b) Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”) and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011, made by the Sun Guarantors in favor of the Agent remain in full force and effect and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
6. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received a fully executed copy of an amendment to the Second Lien Debt Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement;
(c) Agent shall have received a fully executed copy of an amendment to the Last-Out Term Loan Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement;
(d) Agent shall have received a fully executed consent to the Second Lien Debt Intercreditor Agreement consenting to this Amendment; and
(e) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
7. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally; and
 
-5-

(d) The transactions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement and the application of the Net Cash Proceeds from such transactions as described herein are in compliance with the 2009 Indenture. Parent has received an opinion as to fairness to Parent of the transactions contemplated by the Royal Robbins Purchase Agreement from a financial point of view issued by an accounting, appraisal or investment banking firm of material standing.
8. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
9. Other Agreements .
(a) Effective simultaneously with receipt of the Initial RR Consideration, (i) the release in the form of Exhibit E hereto releasing Royal Robbins as a Borrower under the Credit Agreement and the other Loan Documents shall be automatically effective, (ii) Agent authorizes the filing of a UCC termination statement with respect to the UCC financing statement listed on Exhibit F hereto, and (iii) Agent agrees to take such further actions as may be reasonably requested by Borrowers to evidence the termination of the Liens of Agent in the assets of Royal Robbins and the release of Royal Robbins as a Borrower.
(b) Effective simultaneously with receipt of the Initial PF Consideration,(i) Agent authorizes the filing of the partial release in the form of Exhibit G hereto with respect to the UCC financing statement listed on Exhibit H hereto and (ii) Agent agrees to take such further actions as may be reasonably requested by Obligors to evidence the termination of the Liens of Agent in the PF Transferred Assets.
(c) Loan Parties agree that the Net Cash Proceeds of any consideration received by Parent in excess of the Initial RR Consideration under the Royal Robbins Purchase
 
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Agreement shall be subject to the terms of Section 5.3(b) of the Credit Agreement (as amended by the Fourth Amendment) and the Net Cash Proceeds of any consideration received by Phat Fashions in excess of the Initial PF Consideration under the Phat Fashions Purchase Agreement shall be subject to the terms of Section 5.3(b) of the Credit Agreement (as amended by the Fourth Amendment).
10. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
-7-

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

BORROWERS:	
	
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)	
KWD HOLDINGS, INC.	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
ZOBHA, LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, LLC	
SIERRA DESIGNS ACQUISITION COMPANY, LLC	
ROYAL ROBBINS, LLC	
VINCE, LLC	
		
By:	 		
Name:	 	Keith A. Grypp	
Title:	 	Senior Vice President	
 
Signature Page to Consent and Amendment No. 4 to Credit Agreement

			
AGENT AND LENDERS:	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent and a Lender	
		
By:	 		
Name:	 	ROBERT BERNIER	
Title:	 	VICE PRESIDENT	
 
Signature Page to Consent and Amendment No. 4 to Credit Agreement

			
PNC BANK, N.A. , as Lender	
		
By:	 		
Name:	 	Mark Herdman	
Title:	 	Vice President	
 
Signature Page to Consent and Amendment No. 4 to Credit Agreement

			
UBS LOAN FINANCE LLC, as a Lender	
		
By:	 		
Name:	 	Lana Gifas	
Title:	 	Director	
		
By:	 		
Name:	 	Joselin Fernandes	
Title:	 	Associate Director	
 
Signature Page to Consent and Amendment No. 4 to Credit Agreement

			
Agreed and acknowledged with respect to Section 5(b):	
	
SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 		
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
 
Signature Page to Consent and Amendment No. 4 to Credit Agreement

Exhibit 10.26
EXECUTION

KELLWOOD COMPANY
and
each of its Domestic Subsidiaries party hereto,
as Borrowers

AMENDED AND RESTATED TERM A LOAN AGREEMENT
Dated as of October 19, 2011

SCSF KELLWOOD FINANCE, LLC
and
SUN KELLWOOD FINANCE, LLC,
as Lenders
and
SUN KELLWOOD FINANCE, LLC,
as Collateral Agent

TABLE OF CONTENTS

 	 	 	  	PAGE	 	
Section 1.	 	DEFINITIONS; RULES OF CONSTRUCTION	  	 	1	  	
			
1.1	 	Definitions	  	 	1	  	
1.2	 	Accounting Terms	  	 	24	  	
1.3	 	Uniform Commercial Code	  	 	24	  	
1.4	 	Certain Matters of Construction	  	 	25	  	
			
Section 2.	 	CREDIT FACILITIES	  	 	25	  	
			
2.1	 	Term Loans	  	 	25	  	
	 	2.1.1 Term A Loans	  	 	25	  	
	 	2.1.2 Term Notes	  	 	25	  	
	 	2.1.3 Use of Proceeds	  	 	25	  	
	 	2.1.4 Prepayments	  	 	25	  	
			
Section 3.	 	INTEREST AND CHARGES	  	 	26	  	
			
3.1	 	Rates and Payment of Interest	  	 	26	  	
3.2	 	Computation of Interest and Yield Protection	  	 	26	  	
3.3	 	Reimbursement Obligations	  	 	26	  	
3.4	 	Capital Adequacy	  	 	27	  	
3.5	 	Mitigation	  	 	27	  	
3.6	 	Maximum Interest	  	 	27	  	
			
Section 4.	 	LOAN ADMINISTRATION.	  	 	28	  	
			
4.1	 	Borrower Representative	  	 	28	  	
4.2	 	One Obligation	  	 	28	  	
4.3	 	Effect of Termination	  	 	28	  	
			
Section 5.	 	PAYMENTS.	  	 	29	  	
			
5.1	 	General Payment Provisions	  	 	29	  	
5.2	 	Payment of Other Obligations	  	 	29	  	
5.3	 	Marshaling; Payments Set Aside	  	 	29	  	
5.4	 	Post-Default Allocation of Payments	  	 	29	  	
	 	5.4.1 Allocation	  	 	29	  	
	 	5.4.2 Erroneous Application	  	 	30	  	
5.5	 	Loan Account	  	 	30	  	
5.6	 	Taxes	  	 	30	  	
	 	5.6.1 Payments Free of Taxes	  	 	30	  	
	 	5.6.2 Payment	  	 	31	  	
	 	5.6.3 Refunds	  	 	31	  	
5.7	 	Lender Tax Information	  	 	31	  	
	 	5.7.1 Status of Lenders	  	 	31	  	
	 	5.7.2 Documentation	  	 	32	  	
	 	5.7.3 Lender Obligations	  	 	32	  	
 
i

							
5.8	 	Nature and Extent of Each Borrower’s Liability	  	 	32	  	
	 	5.8.1 Joint and Several Liability	  	 	32	  	
	 	5.8.2 Waivers	  	 	33	  	
	 	5.8.3 Extent of Liability; Contribution	  	 	34	  	
	 	5.8.4 Joint Enterprise	  	 	34	  	
	 	5.8.5 Subordination	  	 	34	  	
			
Section 6.	 	CONDITIONS PRECEDENT	  	 	35	  	
			
6.1	 	Conditions Precedent to Initial Loans	  	 	35	  	
			
Section 7.	 	COLLATERAL	  	 	36	  	
			
7.1	 	Security Reaffirmation	  	 	36	  	
7.2	 	Administration of Accounts	  	 	37	  	
7.3	 	Administration of Inventory	  	 	37	  	
	 	7.3.1 Records and Reports of Inventory	  	 	37	  	
	 	7.3.2 Returns of Inventory	  	 	37	  	
	 	7.3.3 Acquisition, Sale and Maintenance	  	 	37	  	
7.4	 	[Intentionally Omitted]	  	 	38	  	
7.5	 	Administration of Deposit Accounts and Securities Accounts	  	 	38	  	
7.6	 	General Provisions	  	 	38	  	
	 	7.6.1 Location of Collateral	  	 	38	  	
	 	7.6.2 Insurance of Collateral	  	 	39	  	
			
Section 8.	 	REPRESENTATIONS AND WARRANTIES	  	 	39	  	
			
8.1	 	General Representations and Warranties	  	 	39	  	
	 	8.1.1   Organization and Qualification	  	 	39	  	
	 	8.1.2   Power and Authority	  	 	39	  	
	 	8.1.3   Enforceability	  	 	40	  	
	 	8.1.4   Capital Structure	  	 	40	  	
	 	8.1.5   Corporate Names; Locations	  	 	40	  	
	 	8.1.6   Title to Properties; Priority of Liens	  	 	40	  	
	 	8.1.7   Financial Statements	  	 	40	  	
	 	8.1.8   Surety Obligations	  	 	41	  	
	 	8.1.9   Taxes	  	 	41	  	
	 	8.1.10 Brokers	  	 	41	  	
	 	8.1.11 Intellectual Property	  	 	41	  	
	 	8.1.12 Governmental Approvals	  	 	41	  	
	 	8.1.13 Compliance with Laws	  	 	42	  	
	 	8.1.14 Compliance with Environmental Laws	  	 	42	  	
	 	8.1.15 Burdensome Contracts	  	 	42	  	
	 	8.1.16 Litigation	  	 	42	  	
	 	8.1.17 No Defaults	  	 	42	  	
	 	8.1.18 ERISA	  	 	42	  	
	 	8.1.19 Trade Relations	  	 	43	  	
	 	8.1.20 Labor Relations	  	 	43	  	
 
ii

							
	 	8.1.21 Payable Practices	  	 	43	  	
	 	8.1.22 Not a Regulated Entity	  	 	43	  	
	 	8.1.23 Margin Stock	  	 	43	  	
	 	8.1.24 Plan Assets	  	 	43	  	
	 	8.1.25 Immaterial Subsidiaries	  	 	44	  	
	 	8.1.26 Patriot Act	  	 	44	  	
	 	8.1.27 OFAC	  	 	44	  	
	 	8.1.28 Nature of Business	  	 	44	  	
	 	8.1.29 Material Contracts	  	 	44	  	
	 	8.1.30 No Bankruptcy Filing	  	 	44	  	
	 	8.1.31 Security Interests	  	 	44	  	
8.2	 	Complete Disclosure	  	 	45	  	
			
Section 9.	 	COVENANTS AND CONTINUING AGREEMENTS	  	 	45	  	
			
9.1	 	Affirmative Covenants	  	 	45	  	
	 	9.1.1   Inspections	  	 	45	  	
	 	9.1.2   Financial and Other Information	  	 	46	  	
	 	9.1.3   Notices	  	 	47	  	
	 	9.1.4   Landlord and Storage Agreements	  	 	48	  	
	 	9.1.5   Compliance with Laws	  	 	48	  	
	 	9.1.6   Taxes	  	 	48	  	
	 	9.1.7   Insurance	  	 	48	  	
	 	9.1.8   Licenses	  	 	48	  	
	 	9.1.9   Future Subsidiaries	  	 	49	  	
	 	9.1.10 Additional Guarantors	  	 	49	  	
	 	9.1.11 Preservation of Existence, Etc.	  	 	49	  	
	 	9.1.12 Keeping of Records and Books of Account	  	 	49	  	
	 	9.1.13 Maintenance of Properties, Etc.	  	 	49	  	
	 	9.1.14 Obtaining of Permits, Etc.	  	 	49	  	
	 	9.1.15 Further Assurances	  	 	50	  	
	 	9.1.16 Post-Closing Covenants	  	 	50	  	
9.2	 	Negative Covenants	  	 	50	  	
	 	9.2.1   Permitted Debt	  	 	50	  	
	 	9.2.2   Permitted Liens	  	 	52	  	
	 	9.2.3   [Intentionally Omitted]	  	 	53	  	
	 	9.2.4   Distributions; Upstream Payments	  	 	53	  	
	 	9.2.5   Restricted Investments	  	 	53	  	
	 	9.2.6   Disposition of Assets	  	 	53	  	
	 	9.2.7   Loans; Extensions of Credit	  	 	53	  	
	 	9.2.8   Restrictions on Payment of Certain Debt	  	 	54	  	
	 	9.2.9   Fundamental Changes	  	 	54	  	
	 	9.2.10 Subsidiaries	  	 	54	  	
	 	9.2.11 Organic Documents	  	 	54	  	
	 	9.2.12 Tax Consolidation	  	 	54	  	
	 	9.2.13 Accounting Changes	  	 	55	  	
	 	9.2.14 Restrictive Agreements	  	 	55	  	
 
iii

							
	 	9.2.15 Hedging Agreements	  	 	55	  	
	 	9.2.16 Conduct of Business	  	 	55	  	
	 	9.2.17 Affiliate Transactions	  	 	55	  	
	 	9.2.18 Plans	  	 	56	  	
	 	9.2.19  Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt	  	 	56	  	
	 	9.2.20 Immaterial Subsidiaries	  	 	56	  	
	 	9.2.21 Fixed Charge Coverage Ratio	  	 	56	  	
	 	9.2.22 Federal Reserve Regulations	  	 	56	  	
	 	9.2.23 Investment Company Act of 1940	  	 	56	  	
	 	9.2.24 2009 Debenture Intercreditor Agreement	  	 	57	  	
			
Section 10.	 	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	  	 	57	  	
			
10.1	 	Events of Default	  	 	57	  	
10.2	 	Remedies upon Default	  	 	59	  	
10.3	 	License	  	 	60	  	
10.4	 	Setoff	  	 	60	  	
10.5	 	Remedies Cumulative; No Waiver	  	 	60	  	
	 	10.5.1 Cumulative Rights	  	 	60	  	
	 	10.5.2 Waivers	  	 	60	  	
			
Section 11.	 	COLLATERAL AGENT	  	 	61	  	
			
11.1	 	Appointment, Authority and Duties of Collateral Agent	  	 	61	  	
	 	11.1.1 Appointment and Authority	  	 	61	  	
	 	11.1.2 Duties	  	 	61	  	
	 	11.1.3 Collateral Agent Professionals	  	 	62	  	
	 	11.1.4 Instructions of Required Lenders	  	 	62	  	
11.2	 	Agreements Regarding Collateral and Field Examination Reports	  	 	62	  	
	 	11.2.1 Lien Releases; Care of Collateral	  	 	62	  	
	 	11.2.2 Possession of Collateral	  	 	62	  	
	 	11.2.3 Reports	  	 	63	  	
11.3	 	Reliance By Collateral Agent	  	 	63	  	
11.4	 	Action Upon Default	  	 	63	  	
11.5	 	Ratable Sharing	  	 	63	  	
11.6	 	Indemnification of Agent Indemnitees	  	 	64	  	
	 	11.6.1 Indemnification	  	 	64	  	
	 	11.6.2 Proceedings	  	 	64	  	
11.7	 	Limitation on Responsibilities of Collateral Agent	  	 	65	  	
11.8	 	Successor Agent and Co-Agents	  	 	65	  	
	 	11.8.1 Resignation; Successor Collateral Agent	  	 	65	  	
	 	11.8.2 Separate Collateral Agent	  	 	65	  	
11.9	 	Due Diligence and Non-Reliance	  	 	66	  	
11.10	 	No Third Party Beneficiaries	  	 	66	  	
11.11	 	Collateral Agent in its Individual Capacity	  	 	66	  	
 
iv

							
			
Section 12.	 	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	  	 	67	  	
			
12.1	 	Benefit of Agreement	  	 	67	  	
12.2	 	Participations	  	 	67	  	
	 	12.2.1 Permitted Participants; Effect	  	 	67	  	
	 	12.2.2 Voting Rights	  	 	67	  	
	 	12.2.3 Benefit of Set-Off	  	 	68	  	
12.3	 	Assignments	  	 	68	  	
	 	12.3.1 Permitted Assignments	  	 	68	  	
	 	12.3.2 Effect; Effective Date	  	 	68	  	
12.4	 	Tax Treatment	  	 	68	  	
12.5	 	Register	  	 	69	  	
			
Section 13.	 	MISCELLANEOUS	  	 	69	  	
			
13.1	 	Consents, Amendments and Waivers	  	 	69	  	
	 	13.1.1 Amendment	  	 	69	  	
	 	13.1.2 Limitations	  	 	70	  	
	 	13.1.3 Payment for Consents	  	 	70	  	
13.2	 	Indemnity	  	 	70	  	
13.3	 	Notices and Communications.	  	 	70	  	
	 	13.3.1 Notice Address	  	 	70	  	
	 	13.3.2 Electronic Communications; Voice Mail	  	 	71	  	
	 	13.3.3 Non-Conforming Communications	  	 	71	  	
13.4	 	Performance of Borrowers’ Obligations	  	 	71	  	
13.5	 	Credit Inquiries	  	 	71	  	
13.6	 	Severability	  	 	71	  	
13.7	 	Cumulative Effect; Conflict of Terms	  	 	72	  	
13.8	 	Counterparts; Facsimile Signatures	  	 	72	  	
13.9	 	Entire Agreement	  	 	72	  	
13.10	 	Obligations of Lenders	  	 	72	  	
13.11	 	Confidentiality	  	 	72	  	
13.12	 	GOVERNING LAW	  	 	73	  	
13.13	 	Consent to Forum	  	 	73	  	
13.14	 	Waivers by Obligors	  	 	73	  	
13.15	 	Patriot Act Notice	  	 	74	  	
13.16	 	Subordination	  	 	74	  	
13.17	 	Advertisement	  	 	75	  	
13.18	 	Intercreditor Agreement	  	 	75	  	
 
v

LIST OF EXHIBITS AND SCHEDULES

Exhibit A	  	Form of Term A Note	
Exhibit B	  	Assignment and Acceptance	
Exhibit C	  	Assignment Notice	
Exhibit D	  	Joinder Agreement	
Exhibit E	  	Compliance Certificate	

Schedule 1.1	  	Lender Term A Loan Amounts	
Schedule 7.5	  	Deposit Accounts	
Schedule 7.6.1	  	Business Locations	
Schedule 8.1.4	  	Names and Capital Structure	
Schedule 8.1.5	  	Corporate Names; Locations	
Schedule 8.1.8	  	Surety Obligations	
Schedule 8.1.11	  	Patents, Trademarks, Copyrights and Licenses	
Schedule 8.1.14	  	Environmental Matters	
Schedule 8.1.15	  	Restrictive Agreements	
Schedule 8.1.16	  	Litigation	
Schedule 8.1.18	  	Pension Plans	
Schedule 8.1.20	  	Labor Contracts	
Schedule 8.1.29	  	Material Contracts	
Schedule 9.2.1	  	Existing Indebtedness	
Schedule 9.2.2	  	Existing Liens	
Schedule 9.2.5	  	Investments	
Schedule 9.2.17	  	Existing Affiliate Transactions	
 
vi

AMENDED AND RESTATED TERM A LOAN AGREEMENT
THIS AMENDED AND RESTATED TERM A LOAN AGREEMENT (this “ Agreement ”) is dated as of October 19, 2011 among KELLWOOD COMPANY , a Delaware corporation (“ Borrower Representative ” or “ Parent ”) and its Domestic Subsidiaries from time to time a party hereto (each a “ Borrower ” and collectively with Borrower Representative, “ Borrowers ”), other Obligors (as defined below) party hereto, SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF Finance ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (“ Sun Finance ” and, together with the SCSF Finance, each a “ Lender ” and collectively, the “ Lenders ”) and Sun Finance, in its capacity as collateral agent for each Lender (the “ Collateral Agent ”).
R E C I T A L S:
WHEREAS , Parent, Borrowers, the other Obligors party thereto, the Lenders and Bank of America, N.A., as collateral agent (the “ Existing Collateral Agent ”), are party to that certain Term Loan Agreement dated as of July 23, 2009 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ Existing Agreement ”) pursuant to which the Lenders made certain Term A Loans the proceeds of which were used by the Borrowers to pay certain amounts due under the 2009 Holdouts (as defined in the Existing Agreement) and to finance their mutual and collective business enterprise;
WHEREAS , the Parties hereto have agreed to amend and restate the Existing Agreement to, among other things, remove Bank of America, N.A., as collateral agent and to appoint Sun Finance as Collateral Agent hereunder, upon and subject to the terms and conditions set forth herein;
WHEREAS , it is the intent of the parties hereto that this Agreement not constitute a novation of the Loans existing under the Existing Agreement or evidence repayment of any of such Loans and that this Agreement amend and restate in its entirety the Existing Agreement and re-evidence the Loans of the Borrowers outstanding thereunder and the Liens in the Collateral created under the agreements entered in connection therewith;
NOW, THEREFORE , for valuable consideration hereby acknowledged, the parties agree as follows:
Section 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions . As used herein, the following terms have the meanings set forth below:
2009 Debentures —the 2009 notes issued pursuant to the 2009 Indenture.
2009 Debenture Intercreditor Agreement —that certain Amended and Restated Intercreditor Agreement of even date herewith, by and between Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as collateral agent under the 2009 Indenture, the Revolver Agent, the Second Lien Agent and Collateral Agent.
 
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2009 Indenture —that certain indenture, dated as of July 23, 2009, by and between Parent and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee and collateral agent, pursuant to which Parent issued $120,590,000 in aggregate principal amount of 12.875% Second-Priority Senior Secured PIK Notes due December 31, 2014.
2009 Indenture Guaranty —that certain Guaranty Agreement (and including any guaranty agreement executed pursuant to the terms thereof and any replacement guaranty) dated as of July 23, 2009, by and among the Guarantors and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee, for the holders of the 2009 Debentures, as amended or supplemented from time to time.
Account —as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.
Account Debtor —a Person who is obligated under an Account, Chattel Paper or General Intangible.
Acquisition —the acquisition of (a) a controlling Equity Interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such Equity Interest or upon exercise of an option or warrant for, or conversion of securities into, such Equity Interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.
Affiliate —with respect to any Person, another Person (a) who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person; (b) who beneficially owns 10% or more of the voting securities or any class of Equity Interests of such first Person; (c) at least 10% of whose voting securities or any class of Equity Interests is beneficially owned, directly or indirectly, by such first Person; or (d) who is an executive or financial officer, director, partner or managing member of such first Person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.
Agent Indemnitees —Collateral Agent and its officers, directors, employees, Affiliates, agents and attorneys.
Agent Professionals —attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Collateral Agent.
 
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Agreement – as defined in the preamble hereto.
Allocable Amount —as defined in Section 5.8.3 .
Anti-Terrorism Laws —any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law —all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
Approved Fund —any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of business and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.
Asset Disposition —a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.
Assignment and Acceptance —an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B .
Bankruptcy Code —Title 11 of the United States Code.
Board of Governors —the Board of Governors of the Federal Reserve System.
Borrower Representative —as defined in the preamble to this Agreement.
Borrowers —Borrower and its Domestic Subsidiaries (other than Immaterial Subsidiaries) from time to time parties hereto.
Business Day —any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of – or are in fact closed in, Florida, or Illinois.
Capital Adequacy Regulation —any law, rule, regulation, guideline, request or directive of any central bank or other Governmental Authority, whether or not having the force of law, regarding capital adequacy of a bank or any Person controlling a bank.
Capital Expenditures —all liabilities incurred, expenditures made or payments due (whether or not made) for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.
 
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Capital Lease —any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP (but without giving effect to FASB ASC 840).
Capital Lease Obligations —with respect to any Person, obligations of such Person and its Subsidiaries under Capital Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP (but without giving effect to FASB ASC 840).
Cash Collateral —cash, and any interest or other income earned thereon, that is delivered to Collateral Agent to Cash Collateralize any Obligations.
Cash Collateralize —the delivery of cash to Collateral Agent, as security for the payment of Obligations, in an amount equal to with respect to any inchoate or contingent Obligations, Collateral Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. “Cash Collateralization” has a correlative meaning.
Cash Equivalents —(a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.
CERCLA —the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq .).
Change in Law —the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided , however , that for purposes of this definition, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith and (y) all requests, rules, guidelines 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, in each case, pursuant to Basell III, shall be deemed to have been adopted and gone into effect after the date of this Agreement.
 
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Change of Control —the occurrence of any of the following events: (a) Sponsor ceases to own and control, beneficially and of record, directly or indirectly, more than 50.1% of the voting and economic Equity Interests in Parent on a fully diluted basis, or (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have acquired beneficial ownership on a fully diluted basis of the voting Equity Interests of Parent sufficient to (whether or not exercised) elect a majority of the members of the board of directors (or similar governing body) of Parent.
Chattel Paper —as defined in the UCC.
Claims —all liabilities, obligations, losses, damages, penalties, judgments, proceedings, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.
Closing Date —as defined in Section 6.1 .
Code —the Internal Revenue Code of 1986, as amended.
Collateral —‘Collateral’ as defined in the Security Agreement.
Collateral Agent —as defined in the preamble hereto.
Compliance Certificate —a certificate, substantially in the form of Exhibit E and in substance reasonably satisfactory to Collateral Agent, by which Borrower Representative certifies the absence of any Default or Event of Default and sets forth a reasonably detailed calculation of the Fixed Charge Coverage Ratio for the 12 Fiscal Month period most recently ended (regardless of whether Fixed Charge Coverage Ratio is to be tested for such period).
Consolidated EBITDA —for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes,
 
-5-

based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred in Fiscal Years 2011 and 2012, in an aggregate amount for both years not to exceed $3,500,000, in each case, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBTIDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17 , and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17 , (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) costs and expenses incurred in connection with Acquisitions which are ultimately not consummated so long as such costs and expenses do not exceed $1,000,000 during any trailing twelve month period included in the calculation of Consolidated EBITDA, (l) losses associated with the start up of the “Lamb & Flag”, “Chord” and “BLK DNM” brands not to exceed $2,750,000 in any trailing twelve month period included in the calculation of Consolidated EBITDA, and (m) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Collateral Agent.
 
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Consolidated Net Income —for any period of computation thereof, the gross revenues from operations of Parent and its Subsidiaries (including payments received by Parent and its Subsidiaries of (a) interest income, and (b) Distributions made in the Ordinary Course of Businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP; but excluding (without duplication): (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of Parent or any Subsidiary, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up or write-down of any asset (provided, that write-downs of Accounts and/or Inventory shall not be so excluded), (v) any net gains resulting from repurchases of Debt, and (vi) any other net gain or loss of an extraordinary nature as determined in accordance with GAAP.
Consolidated Net Interest Expense —for any period, for Parent and its Subsidiaries on a consolidated basis, the sum of (a) all interest and similar expenses that are treated as interest in accordance with GAAP, and (b) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP. For each period of 12 consecutive Fiscal Months ending next following the date of each Acquisition (whether consummated before or after the Closing Date), Consolidated Net Interest Expense as a component of Consolidated EBITDA shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Obligations) incurred, acquired or assumed in connection with such Acquisition (“ Incremental Debt ”) calculated (A) as if all such Incremental Debt had been incurred as of the first day of such 12 consecutive Fiscal Month period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such 12 consecutive Fiscal Months, as the case may be.
Contingent Obligation —any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.
 
-7-

Convertible Debentures —those certain $200,000,000 3.50% Convertible Senior Debentures maturing June 15, 2034, issued pursuant to that certain Indenture dated as of June 22, 2004 by and between the Parent and Union Bank of California, N.A. or any of its successors, as trustee (as amended or supplemented from time to time, the “ Convertible Debenture Agreement ”).
Copyright Security Agreement —each copyright security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of the Lenders, a Lien on such Obligor’s interest in copyrights as security for the Obligations.
Covenant Testing Period —a period commencing on the last day of the most recent Fiscal Month ending on or prior to the Covenant Testing Trigger Date for which Collateral Agent has received Parent’s financial statements and ending on the date that Borrowers have maintained Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) of not less than 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) for 60 consecutive days.
Covenant Testing Trigger Date —means any day after the Closing Date that Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is less than 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof).
CWA —the Clean Water Act (33 U.S.C. §§ 1251 et seq .).
Debt —as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, credit documents or similar instruments, (c) all Capital Leases, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred and being paid in the Ordinary Course of Business, (e) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination, (f) all Contingent Obligations; (g) all reimbursement obligations in connection with (i) letters of credit, bank guarantees or bankers’ acceptances issued for the account of such Person or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the Ordinary Course of Business, (h) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse and (i) in the case of Borrowers, the Obligations. The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer. Notwithstanding anything herein to the contrary, the term “Debt” shall not include any operating leases that, as a result of changes in GAAP, would classify such operating leases as Capitalized Lease Obligations, required to be reflected on a consolidated balance sheet of Borrowers in accordance with GAAP.
 
-8-

Default —an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.
Default Rate —as defined in Section 3.1(b) .
Deposit Account —as defined in the UCC, but excluding the Excluded Accounts.
Deposit Account Control Agreements —the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
Distribution —any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest; or any payment of management or advisory fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by any Borrower to any holder of any Equity Interest of Parent or any Affiliate of such holder.
Document —as defined in the UCC.
Dollars —lawful money of the United States.
Domestic Subsidiary —a Subsidiary (other than an Immaterial Subsidiary) which is created or organized under the laws of the United States of America, any of its states or the District of Columbia.
Eligible Assignee —a Person that is (a) a Lender, U.S. based Affiliate of a Lender (other than an Obligor or any Subsidiary of an Obligor) or Approved Fund; (b) any other financial institution approved by Required Lenders and the Borrower Representative (which approval by the Borrower Representative shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within ten (10) Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Required Lenders in their discretion.
Enforcement Action —any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).
Environmental Laws —all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
 
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Environmental Notice —a notice from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release —a release as defined in CERCLA or under any other Environmental Law.
Equipment —as defined in the UCC, including all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory), and all parts, accessories and special tools therefor, and accessions thereto.
Equity Interest —the interest of any (a) shareholder in a corporation, (b) partner in a partnership (whether general, limited, limited liability or joint venture), (c) member in a limited liability company, or (d) other Person having any other form of equity security or ownership interest.
ERISA —the Employee Retirement Income Security Act of 1974.
Event of Default —as defined in Section 10 .
Exchange Act — the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Exchange Offer —that certain offer by Borrower Representative, completed as of July 23, 2009, pursuant to which Borrower Representative exchanged $117,832,000 in aggregate principal amount of its 7.875% debentures maturing July 15, 2009 and $13,790,000 in aggregate principal amount of its 7.625% debentures maturing October 15, 2017 for $120,590,000 in aggregate principal amount of its 2009 Debentures.
Excluded Accounts —as defined in Section 7.5 .
Excluded Tax —with respect to Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which any Borrower is a resident for tax purposes on the Closing Date; (c) any backup withholding Tax required by the Code to be withheld from amounts payable to a Payee that has failed or is unable to comply with
 
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Section 5.7 ; (d) in the case of a Foreign Payee, any United States withholding Tax that is (i) required pursuant to laws in force at the time such Payee becomes a Payee (or designates a new Lending Office) hereunder, or (ii) attributable to such Payee’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.7 , except to the extent that such Foreign Payee (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrowers with respect to such withholding Tax; and (e) any Taxes imposed on amounts payable by Borrowers under Sections 1471-1474 of the Code.
Existing Agreement —as defined in the recitals hereto.
Existing Collateral Agent —as defined in the recitals hereto.
Extraordinary Expenses —all costs, expenses or advances that Collateral Agent or a Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Borrower (which shall be reasonable under the circumstances in which they are incurred), including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Collateral Agent, any Lender, any Borrower, any representative of creditors of a Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Collateral Agent’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Collateral Agent, any Lender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; or (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations. Such costs, expenses and advances include transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Borrower or independent contractors in liquidating any Collateral, and travel expenses.
First Amendment and Restatement Closing Date —March 18, 2011.
Fiscal Month —one of the three fiscal periods in a Fiscal Quarter each of which is approximately one month in duration. There are 12 Fiscal Months in each Fiscal Year.
Fiscal Quarter —one of the four 13-week, or, if applicable, 14-week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on a Saturday of the thirteenth (or fourteenth, if applicable) week in such quarter.
Fiscal Year —the fiscal year of the Parent for financial accounting purposes. The current Fiscal Year will end on January 28, 2012.
 
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Fixed Charge Coverage Ratio —the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except those financed with Permitted Debt other than Revolver Loans or the Second Lien Debt) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrower to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Fixed Charges —the sum, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated Net Interest Expense paid or payable in cash (and, for the avoidance of doubt, excluding those paid-in-kind or capitalized), plus (b) scheduled principal payments made on Debt in cash and earnout payments paid in cash (other than earnout payments made in Fiscal Year 2011 in an aggregate amount not to exceed $58,500,000 by Parent and its Subsidiaries with respect to the “Vince” brand).
FLSA —the Fair Labor Standards Act of 1938.
Foreign Lender —any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Payee —any Payee that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Plan —any employee benefit plan or arrangement maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States, or any employee benefit plan or arrangement mandated by a government other than the United States for employees of any Obligor or Subsidiary.
Foreign Subsidiary —a Subsidiary that is not a Domestic Subsidiary or an Immaterial Subsidiary.
Full Payment —with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding) and (b) a release of any Claims of Obligors arising in connection with the Loan Documents against Collateral Agent and Lenders arising on or before the payment date.
GAAP —generally accepted accounting principles in the United States in effect from time to time.
General Intangibles —as defined in the UCC, including choses in action, causes of action, company or other business records, inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer lists, permits, tax refund claims, computer programs, operational manuals, internet addresses and domain names, insurance refunds and premium rebates, all rights to indemnification, and all other intangible Property of any kind.
 
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Governmental Approvals —all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.
Governmental Authority —any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.
Guarantor Payment —as defined in Section 5.8.3 .
Guarantors —each Person who guarantees payments or performance of any Obligations pursuant to Section 5.8 hereof and after the date hereof pursuant to a Joinder Agreement. It is understood that the Obligations shall not be guaranteed by any existing or future Foreign Subsidiary, including any Foreign Subsidiary of any Guarantor.
Hedging Agreement —an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.
Immaterial Subsidiaries — American Recreation Products International, Inc., a Delaware corporation, The Kellwood Foundation, an Illinois charitable foundation, Kellwood Financial Services, Inc., a Delaware corporation, XCSI, Inc., a Delaware corporation, Kellwood Retail Group, Inc., a Delaware corporation, MJF Imports, Inc., a New York corporation, Tri W Corporation, a North Carolina corporation, Halmode Apparel, Inc., a Delaware corporation, New Campaign, Inc., a Delaware corporation; and any other Domestic Subsidiary formed or acquired after the Closing Date (a) which is designated as such by the Borrower Representative in a written notice delivered to the Lenders from time to time and (b) which does not (i) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America and (ii) have revenues in any Fiscal Year in excess of $1,000,000 unless such Immaterial Subsidiary has become a Borrower pursuant to Section 9.2.20 or is an Obligor under the Revolver Agreement.
Indemnified Taxes —all Taxes imposed on a Payee with respect to the Obligations other than Excluded Taxes.
Indemnitees —Agent Indemnitees and Lender Indemnitees.
Indenture – that certain Indenture dated September 30, 1997 by and between The Chase Manhattan Bank, as trustee, or any successor trustee and the Parent, as amended, supplemented or restated from time to time, pursuant to which certain debt securities have been issued by the Parent.
 
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Insolvency Proceeding —any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for reorganization or other similar relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.
Instrument —as defined in the UCC.
Insurance Assignment —each collateral assignment of insurance pursuant to which an Obligor assigns to Collateral Agent, for the benefit of the Lenders, such Obligor’s rights under business interruption or other insurance policies as Collateral Agent and Required Lenders reasonably deems it appropriate to be assigned, as security for the Obligations.
Intellectual Property —all intellectual and similar Property of a Person, including inventions, designs, patents, patent applications, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, registrations and franchises; all books and records describing or used in connection with the foregoing; and all licenses or other rights to use any of the foregoing.
Intellectual Property Claim —any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Domestic Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Intellectual Property or other Property violates another Person’s Intellectual Property.
Intercreditor Agreement —means that certain Intercreditor Agreement dated as of the date hereof, by and among each Lender, Parent, Wells Fargo Bank, National Association, Cerberus Business Finance, LLC and any other parties thereto, as may be amended from time to time.
Inventory —as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in an Obligor’s business (but excluding Equipment).
Investment —any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
Joinder Agreement —an agreement substantially in the form of Exhibit D hereto by which a Domestic Subsidiary of Parent becomes a Borrower hereunder.
 
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Lender Indemnitees —Lenders and their officers, directors, employees, Affiliates (other than an Obligor or any Subsidiary of an Obligor), agents and attorneys.
Lenders —as defined in the preamble to this Agreement, including any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.
Lending Office —the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Collateral Agent and Borrower Representative.
License —any license or agreement under which a Borrower is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.
Licensor —any Person from whom a Borrower obtains the right to use any Intellectual Property.
Lien —any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.
Loan (s)—the Term A Loan.
Loan Account —the loan account established by each Lender on its books pursuant to Section 5.6 .
Loan Documents —this Agreement, Other Agreements and the Security Documents.
Loan Year —each calendar year commencing on the Closing Date and on each anniversary of the Closing Date.
Management Services Agreement —that certain Management Services Agreement dated as of May 29, 2008 by and between Parent and Sun Capital Partners Management V, LLC, as in effect on the date hereof.
Margin Stock —as defined in Regulation U of the Board of Governors.
Material Adverse Effect —the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, or condition (financial or otherwise) of Borrowers taken as a whole, on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Collateral Agent’s Liens on any Collateral; (b) impairs the ability of Borrowers taken as a whole to repay the Obligations or materially impairs the ability of any Borrower to perform any other obligation under the Loan Documents, or (c) otherwise impairs the ability of any Lender to enforce or collect any Obligations or of the Collateral Agent to realize upon any Borrowing Base Collateral (under and as defined in the Revolver Agreement).
 
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Material Contract —any agreement or arrangement to which an Obligor is party (other than the Loan Documents, the Second Lien Debt Documents or Revolver Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, or (b) that relates to Subordinated Debt, Debt under the 2009 Indenture or Debt in an aggregate amount of $46,000,000 or more.
Moody’s —Moody’s Investors Service, Inc., and its successors.
Multiemployer Plan —any employee benefit plan or arrangement described in Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor.
Notes —each Term B Note, Term C Note, Term D Note or other promissory note executed by a Borrower to evidence any Obligations.
Obligations —all (a) principal of and premium, if any, on the Loans, (b) interest (which shall include any capitalized interest), expenses, fees and other sums payable by Obligors under Loan Documents, (c) obligations of Obligors under any indemnity for Claims, (d) Extraordinary Expenses, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
Obligor —each Borrower, any Guarantor and any other Person that is liable for payment of the Obligations or that has granted a Lien in favor of Collateral Agent on its assets to secure the Obligations.
OFAC —The Office of Foreign Assets Control of the U.S. Department of the Treasury.
Ordinary Course of Business —the ordinary course of business of any Borrower or Subsidiary and undertaken in good faith.
Organic Documents —with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.
OSHA —the Occupational Safety and Hazard Act of 1970.
 
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Other Agreement —each Note, financial statement, report delivered hereunder, 2009 Debenture Intercreditor Agreement, Intercreditor Agreement, the Security Documents or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter executed by an Obligor or other Person in favor of Collateral Agent or a Lender in connection with any transactions relating hereto, but excluding, for the avoidance of doubt, the Management Services Agreement or any documents executed in connection with any equity investment in any Obligor.
Other Taxes —all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
Parent – as defined in the preamble to this Agreement.
Participant —as defined in Section 12.2 .
Patent Security Agreement —each patent security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in its patents, as security for the Obligations.
Patriot Act —the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Payee —Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation.
Payment Item —each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.
Permitted Acquisition —any Acquisition effected with the consent and approval of the board of directors or other applicable governing body of the Person being acquired, and with the duly obtained approval of such shareholders or other holders of equity or other ownership interest as such Person may be required to obtain, so long as (i) immediately prior to and immediately after the consummation of such Acquisition, no Default or Event of Default has occurred and is continuing, (ii) substantially all of the sales and operating profits generated by such Person (or assets) so acquired or invested are derived from a line or lines of business that are part of, or complementary, to the business as then conducted by Borrowers and Subsidiaries and (iii) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Asset Disposition —an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) one or more dispositions of Equipment or Real Estate so long as the net book value, as determined in accordance with GAAP, in the aggregate for all such dispositions does not to exceed $5,000,000 over the term of the Agreement; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) a termination of a lease of real or
 
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personal Property or License that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition of Investments of the type described in clause (c) of the definition of “Restricted Investments” in the ordinary course of management of the investment portfolio of Borrowers and Subsidiaries; (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens; (g) the sale of the Phat Farm business and related intellectual property, so long as no Event of Default exists and the gross cash proceeds from such sale are not less than $3,500,000 or (h) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Contingent Obligations —Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) guarantee obligations of a Borrower or any Domestic Subsidiary in respect of Debt or operating leases and other non-Debt obligations otherwise permitted under this Agreement of a Borrower or any wholly-owned Domestic Subsidiary.
Permitted Distributions —any Distribution permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Investment —investments described in clauses (a)—(i) of the definition of Restricted Investment.
Permitted Lien —as defined in Section 9.2.2 .
Permitted Purchase Money Debt —Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, provided that the aggregate outstanding amount of such Purchase Money Debt shall not exceed $5,750,000 at any time.
Person —any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.
Plan —an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which an Obligor is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions.
 
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Pro Rata —with respect to any Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the amount of such Lender’s Loan amount as set forth on Schedule 1.1 by all outstanding Loans.
Properly Contested —with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or such Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any Collateral of such Obligor with a value in excess of $287,500; (e) no Lien is imposed on Collateral of such Obligor, unless bonded and stayed to the satisfaction of the Required Lenders; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.
Property —any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Purchase Money Debt —(a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets which does not exceed on the date of acquisition the cost or fair market value, whichever is lower, of the Property being acquired on the date of acquisition; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) of items described in the preceding clauses (a) and (b) .
Purchase Money Lien —a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.
RCRA —the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate —all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.
Refinancing Conditions —the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount (including, any capitalized interest with respect thereto that does not exceed the principal amount (to the extent such interest was permitted to be capitalized hereunder)) of the Debt being extended, renewed or refinanced; (b) if the original Debt was subordinated to the Obligations, it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (c) the representations, covenants and defaults applicable to it are no less favorable in any material respect to Obligors than those applicable to the Debt being extended, renewed or refinanced; (d) no Lien is granted to secure it other than Liens securing the original Debt;
 
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(e) if the original Debt was the obligation of a Foreign Subsidiary, no Obligor becomes obligated on such Debt; (f) upon giving effect to it, no Default or Event of Default exists; (g) if the Stated Maturity of the Debt being extended, renewed or refinanced is earlier than the Stated Maturity of the Obligations, it has a Stated Maturity no earlier than the Stated Maturity of the Debt being extended, renewed or refinanced; and (h) it has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Debt being extended, renewed or refinanced.
Refinancing Debt —Debt that is the result of an extension, renewal or refinancing of Debt permitted under Section 9.2.1(b) ,  (d) or (j) .
Reportable Event —any event set forth in Section 4043(b) of ERISA.
Required Lenders —the Lenders having Loans in excess of 51% of all outstanding Loans.
Responsible Officer —with respect to all certificates and financial matters hereunder, President, Chief Executive Officer, and Chief Financial Officer of a Borrower (the “ Principal Responsible Officers ”) and, with respect to all notices and other matters hereunder, any Principal Responsible Officer, the Vice President, Finance and Controller, Vice President, Treasurer or General Counsel of the Borrower Representative or any other officer expressly designated by the Board of Directors of the Borrower Representative (or the appropriate committee thereof) or a Principal Responsible Officer as a Responsible Officer of the Borrower Representative. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower Representative shall be conclusively presumed to have been authorized by all necessary corporate and/or other action on the part of the Borrower Representative and each other Borrower on whose behalf it is delivered and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower Representative and each such Borrower.
Restricted Investment —any Investment by an Obligor, other than (a) Investments (other than those permitted by clause (b) through (g)  of this definition) that are existing on the Closing Date and are listed on Schedule 9.2.5 ; (b) Investments in Subsidiaries to the extent existing on the Closing Date; (c) cash and Cash Equivalents that are subject to Collateral Agent’s Lien and, subject to the Intercreditor Agreement, control; provided that, the cash consisting of collected funds and Cash Equivalents held by the Obligors shall not exceed $11,500,000 in the aggregate (excluding amounts held in employee trust accounts) for more than three (3) consecutive Business Days so long as any Revolver Debt is outstanding, (d) loans, advances and credit extensions permitted under Section 9.2.7 ; (e) Investments of (i) any Subsidiary in a Borrower or (ii) any Obligor in another Obligor or (iii) any Subsidiary which is not an Obligor in another Subsidiary which is not an Obligor; (f) with respect to any Obligor, Permitted Acquisitions; (g) Investments permitted by Section 9.2.9 ; (h) other Investments and Acquisitions consummated after the Closing Date by any Subsidiary which is not an Obligor which Investments or Acquisitions do not contain any Contingent Obligations, or any direct or contingent liabilities, of any Obligor and which have not been financed in whole or in part by any Obligor and (i) any other Investment permitted under the Revolver Agreement, as in effect on the date hereof.
 
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Restrictive Agreement —an agreement (other than a Loan Document, Revolver Loan Documents and Second Lien Debt Documents) that conditions or restricts the right of any Borrower, Domestic Subsidiary or other Obligor to incur or repay the Obligations, to grant Liens on the Collateral, to declare or make Distributions to an Obligor, to modify, extend or renew the Obligations, or to repay any intercompany Debt owed to an Obligor.
Revolver Agreement—means that certain Credit Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the financial institutions party thereto and Wells Fargo Bank, National Association (the “ Revolver Agent ”), as agent for the Lenders (as defined therein) (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Debt —shall mean the ‘Obligations’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Loan Documents —means ‘Loan Documents’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Royalties —all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.
S&P —Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Sanctioned Entity —(a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.
Sanctioned Person —a person named on the list of Specially Designated Nationals maintained by OFAC.
Second Lien Agent —Cerberus Business Finance, LLC or its successors or assigns.
Second Lien Debt —indebtedness and other obligations evidenced by the Second Lien Debt Documents and subject to the Intercreditor Agreement.
 
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Second Lien Debt Documents —Term Loan Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the Second Lien Agent and lenders from time to time party thereto (the “ Second Lien Term Loan Agreement ”) and the “Loan Documents” as defined therein.
Securities Account Control Agreements —the Securities Account control agreements to be executed by each securities intermediary maintaining a Securities Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
Securities Account —as defined in the UCC.
Security Agreement —the security agreement dated as of the date hereof made by each Obligor in favor of Collateral Agent, for the benefit of Lenders, securing the Obligations.
Security Documents – the Security Agreement, the Copyright Security Agreement, the Patent Security Agreement, Trademark Security Agreements, insurance assignments, control agreements, and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.
Software —as defined in the UCC.
Solvent —as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any loan documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.
Sponsor—means Sun Capital Partners, Inc. or any of its Affiliates.
Stated Maturity —with respect to any installment of interest or principal on any series of Debt, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Debt as of the date of this Agreement, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
 
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Subordinated Debt —Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations in a manner and form satisfactory to each Lender, and is unsecured and does not amortize prior to the Termination Date.
Subsidiary —any entity at least 50% of whose voting securities or Equity Interests is owned by an Obligor or any combination of Obligors (including indirect ownership by an Obligor through other entities in which such Obligor directly or indirectly owns 50% of the voting securities or Equity Interests).
Taxes —all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Trademark Security Agreement —each trademark security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in trademarks, as security for the Obligations.
Term A Loans – the loans made pursuant to Section 2.1.1 of this Agreement. The amount of each Lender’s Pro Rata share of the Term B Loans as of the Closing Date is set forth on Schedule 1.1 .
Term A Notes – a promissory note by Borrowers in favor of a Lender in the form of Exhibit A , evidencing the amount of such Lender’s Term A Loan amount as set forth on Schedule 1.1 .
Term B/C/D Loan Agreement – means that certain Third Amended and Restated Term Loan Agreement, dated as of the date hereof, by and among Parent, Borrowers, the other obligors party thereto, SCSF Finance, Sun Finance and the Collateral Agent.
Term B/C/D Loan Debt – means the ‘Obligations’ as defined in the Term B/C/D Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Intercreditor Agreement.
Termination Date – shall mean the earlier of (i) January 19, 2017, (ii) the date on which the Second Lien Debt under the Second Lien Term Loan Agreement has been paid in full in cash and all commitments to lend under the Second Lien Term Loan Agreement have been terminated; provided that, if the stated maturity date of the Second Lien Debt is extended, the stated maturity date set forth in clause (i) of this definition of the Loans shall be extended by a period of the same duration and (iii) the date on which all the Loans and Obligations are accelerated pursuant to Section 10.2 .
Transferee —any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.
 
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UCC —the Uniform Commercial Code as in effect in the State of Illinois or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.
Ultimate Parent —Kellwood Holding Corp., a Delaware corporation.
Upstream Payment —a Distribution by a Subsidiary of a Borrower to such Borrower.
US Foreign Holdco —any Domestic Subsidiary that is a holding company and whose assets consist solely of Stock or other equity of a Foreign Subsidiary and other assets of de minimis value (it being understood that such Domestic Subsidiary does not own any Accounts or Inventory).
Weighted Average Life to Maturity —when applied to any Debt at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Debt, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Debt.
1.2 Accounting Terms . Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to the Lenders before the Closing Date and using the same inventory valuation method as used in such financial statements. If GAAP changes during the term of this Agreement, or if the Borrowers interpret or apply GAAP differently (and Borrowers’ certified public accountants concur in such interpretation or application) from how it was interpreted or applied in preparing the financial statements provided to the Lenders prior to the Closing Date, such that any financial ratios or covenants contained herein would then be calculated in a different manner or with different components, then Borrowers shall provide the Lenders with prior written notice of any such changes and upon the request of either the Borrowers or the Lenders, the Borrowers and the Lenders agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those financial ratios or covenants as criteria for evaluating the Obligors’ financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided, however, that, until the Borrowers, the Lenders so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change.
1.3 Uniform Commercial Code . As used herein, the following terms are defined in accordance with the UCC in effect in the State of Illinois from time to time: “Chattel Paper,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles” and “Instrument.”
 
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1.4 Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Lenders’ notice addresses under Section 13.3.1 ; or (g) discretion of any Lender mean the sole and absolute discretion of such Person. All calculations of fundings of the Loans, and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
Section 2. CREDIT FACILITIES
2.1 Term Loans
2.1.1 Term A Loans . Each Lender severally made a Term A Loan to the Borrowers prior to the date hereof. The amount of Term A Loans outstanding as of the date hereof is set forth on Schedule 1.1 hereto.
2.1.2 Term Notes . The Term A Loans made by each Lender and interest accruing thereon shall be evidenced by the records of such Lender. At the request of any Lender, Borrowers shall deliver a Term A Note in the principal amount equal to such Lender’s Term A Loans to such Lender.
2.1.3 Use of Proceeds . The proceeds of the Term A Loans were used by the Borrowers to pay certain amounts due under the 2009 Holdouts (as defined in the Existing Agreement) and to finance their mutual and collective business enterprise.
2.1.4 Prepayments . (a)  Voluntary Prepayments . Borrowers may at any time on at least five (5) days’ prior written notice by Borrower Representative to each Lender voluntarily prepay all or part of the Loans; provided that any such prepayments or reductions shall be in a minimum amount of $500,000 and integral multiples of $250,000 in excess of such amount.
(b) Mandatory Prepayments .
(i) Upon the occurrence of a Change of Control, the Borrowers shall make Full Payment of all Obligations;
 
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(ii) Upon the sale of all or substantially all of the assets of the Borrowers and their Subsidiaries taken as a whole, in a transaction or a series of transactions, the Borrowers shall make Full Payment of all Obligations; and
(iii) On Termination Date, the Borrowers shall make Full Payment of all Obligations.
Section 3. INTEREST AND CHARGES
3.1 Rates and Payment of Interest . (a) The Obligations shall bear interest as follows: 10% per annum will be payable by adding such accrued interest to the principal amount of the Loans on the last day of the Fiscal Quarter then ended; provided , that Borrowers may elect, at their option, so long as Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is not less than $45,000,000, to pay a portion of such interest equal to 5% per annum in cash. Interest shall accrue from the date the Loans are advanced or the Obligation is incurred or payable, until paid by Borrowers.
(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if the Required Lenders in their discretion so elect, Obligations shall bear interest at a rate equal to the rates set forth in Section 3.1(a) plus 2.0% (the “ Default Rate ”). To the extent permitted by the Intercreditor Agreement, the Default Rate shall be payable in cash. To the extent the Intercreditor Agreement does not permit the Default Rate to be paid in cash, the Default Rate shall be paid in kind by capitalizing such amount to the principal amount of the Loans on the last day of the Fiscal Quarter then ended. Each Borrower acknowledges that the cost and expense to each Lender due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate the Lenders for such added cost and expense.
(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the last day of each Fiscal Quarter, (ii) on any date of prepayment, with respect to the principal amount of the Loans being prepaid; and (iii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.
3.2 Computation of Interest and Yield Protection . All computations of interest shall be computed for the actual days elapsed, based on a 365-day or 366-day year as applicable. Each determination by the Lenders of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
3.3 Reimbursement Obligations . Subject to the terms of the Intercreditor Agreement, Borrowers shall reimburse Collateral Agent and Lenders, without duplication, for all Extraordinary Expenses. Borrowers shall also reimburse the Collateral Agent and each Lender for all reasonable out-of-pocket and invoiced legal fees (which invoice may omit information that such counsel reasonably deems privileged) and all reasonable out-of-pocket accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other
 
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modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Collateral Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 9.1.1 , each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Collateral Agent’s or Lender’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Collateral Agent’s or a Lender’s professionals at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Collateral Agent, any Lender or any of their Affiliates (other than an Obligor or any Subsidiary of an Obligor) may have with such professionals with respect to this or any other transaction. All amounts reimbursable by Borrowers under this Section shall constitute Obligations secured by the Collateral and shall be payable on demand.
3.4 Capital Adequacy . If a Lender determines that any introduction of or any change in a Capital Adequacy Regulation, any change in the interpretation or administration of a Capital Adequacy Regulation by a Governmental Authority charged with interpretation or administration thereof, or any compliance by such Lender or any Person controlling such Lender with a Capital Adequacy Regulation, increases the amount of capital required or expected to be maintained by such Lender or Person (taking into consideration its capital adequacy policies and desired return on capital) as a consequence of such Lender’s Loans or other Obligations under the Loan Documents, then Borrowers shall, subject to the Intercreditor Agreement, within five days following demand therefor, pay such Lender an amount sufficient to compensate for such increase. A Lender’s demand for payment (delivered to Borrower Representative) shall set forth the nature of the occurrence giving rise to such compensation and a calculation of the amount to be paid. In determining such amount, the Lender may use any reasonable averaging and attribution method.
3.5 Mitigation . Each Lender agrees that (i) upon becoming aware that it is subject to Section 3.4 or 5.6 , it will take reasonable measures to reduce Borrowers’ obligations under such Sections, including funding or maintaining its Loans through another office, as long as use of such measures would not adversely affect the Lender’s Loans, business or interests, and would not be inconsistent with any internal policy or applicable legal or regulatory restriction and (ii) Borrowers shall have no obligation to reimburse any Lender under Sections 3.4 or 5.7 for costs or taxes incurred more than 90 days prior to notice to Borrower Representative with respect thereto.
3.6 Maximum Interest . In no event shall interest, charges or other amounts that are contracted for, charged or received by the Lenders pursuant to any Loan Documents and that are deemed interest under Applicable Law (“interest”) exceed the highest rate permissible under Applicable Law (“maximum rate”). If, in any month, any interest rate, absent the foregoing limitation, would have exceeded the maximum rate, then the interest rate for that month shall be the maximum rate and, if in a future month, that interest rate would otherwise be less than the maximum rate, then the rate shall remain at the maximum rate until the amount of interest actually paid equals the amount of interest which would have accrued if it had not been limited by the maximum rate during prior periods. If, upon Full Payment of the Obligations, the total amount of interest actually paid under the Loan Documents is less than the total amount of interest that would, but for this Section, have accrued under the Loan Documents, then
 
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Borrowers shall, to the extent permitted by Applicable Law, pay to each Lender (a) the lesser of (i) the amount of interest that would have been charged if the maximum rate had been in effect at all times, or (ii) the amount of interest that would have accrued had the interest rate otherwise set forth in the Loan Documents been in effect, minus (b) the amount of interest actually paid under the Loan Documents. If a court of competent jurisdiction determines that any Lender has received interest in excess of the maximum amount allowed under Applicable Law, such excess shall be deemed received on account of, and shall automatically be applied to reduce, Obligations other than interest (regardless of any erroneous application thereof by any Lender), and upon Full Payment of the Obligations, any balance shall be refunded to Borrowers. In determining whether any excess interest has been charged or received by any Lender, all interest at any time charged or received from Borrowers in connection with the Loan Documents shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Obligations.
Section 4. LOAN ADMINISTRATION.
4.1 Borrower Representative . Each Borrower hereby designates the Borrower Representative as its representative and agent for all purposes under the Loan Documents, including delivery or receipt of communications with any Lender, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with any Lender. Borrower Representative hereby accepts such appointment. Collateral Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication delivered by Borrower Representative on behalf of any Borrower. Lenders may send any notice or communication with a Borrower hereunder to Borrower Representative on behalf of such Borrower. Lenders shall have the right, in its discretion, to deal exclusively with Borrower Representative for any or all purposes under the Loan Documents. Each Borrower agrees that any notice election, communication, representation, agreement or undertaking made on its behalf by Borrower Representative shall be binding upon and enforceable against it.
4.2 One Obligation . The Loans and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Collateral Agent’s Lien upon all Collateral; provided, however that Collateral Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.
4.3 Effect of Termination . Subject to the Intercreditor Agreement, the principal amount of each Loan and all other Obligations shall be due and payable on the Termination Date. All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Collateral Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, Collateral Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Collateral Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Collateral Agent receives (a) a written agreement, executed by Borrower Representative and any Person whose advances are
 
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used in whole or in part to satisfy the Obligations, indemnifying Collateral Agent and Lenders from any such damages; or (b) such Cash Collateral as Collateral Agent, in its discretion, deems necessary to protect against any such damages. The provisions of Sections 3.3, 3.4, 5.3, 5.7, 11, 13.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.
Section 5. PAYMENTS.
5.1 General Payment Provisions . All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Indemnified Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time shall be deemed made on the next Business Day. Borrower Representative may, at the time of payment, specify to each Lender the Obligations to which such payment is to be applied, but each Lender shall in all events retain the right to apply such payment in such manner as the Lenders, subject to the provisions hereof, may determine to be appropriate. If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees. All payments received by the Lenders pursuant to this Agreement shall be applied in accordance with such Lender’s applicable Pro Rata portion of the aggregate outstanding Loans as of such date.
5.2 Payment of Other Obligations . Subject to the Intercreditor Agreement, Obligations other than the Loans, including Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.
5.3 Marshaling; Payments Set Aside . None of the Collateral Agent or the Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any payment by or on behalf of Borrowers is made to the Lenders, or if Collateral Agent or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
5.4 Post-Default Allocation of Payments .
5.4.1 Allocation . Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows and subject to the Intercreditor Agreement:
(a) first , to all costs and expenses, including Extraordinary Expenses, owing to Collateral Agent and then to Lenders;
(b) second , to all Obligations constituting unpaid fees;
 
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(c) third , to all Obligations constituting accrued and unpaid interest; and
(d) last , to all other Obligations.
Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a Pro Rata basis among the Obligations in the category. The allocations set forth in this Section are solely to determine the rights and priorities of the Collateral Agent and Lenders as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.
5.4.2 Erroneous Application . Collateral Agent and the Lenders shall not be liable for any application of amounts made by it/them in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).
5.5 Loan Account . Each Lender shall maintain in accordance with its usual and customary practices an account or accounts (“ Loan Account ”) evidencing the Debt of Borrowers resulting from each Loan. Any failure of a Lender to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Each Lender may maintain a single Loan Account in the name of the Borrower Representative for such Lender’s Loans, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.
Entries made in a Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Accounts is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies the applicable Lender in writing within 60 days after receipt or inspection that specific information is subject to dispute.
5.6 Taxes .
5.6.1 Payments Free of Taxes . All payments by Obligors of Obligations shall be free and clear of and without reduction for any Indemnified Taxes. If Applicable Law requires any Obligor or any Payee to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be, to the extent permitted by applicable law, based on information provided pursuant to Section 5.7 and the applicable Obligor or Payee shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that the applicable Payee receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.
 
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5.6.2 Payment . Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) each Payee for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Payee, or paid by any Payee, with respect to any Obligations, whether or not such Indemnified Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto; provided , however , that Borrowers shall not be required to compensate Collateral Agent or any Lender for any Indemnified Taxes or Other Taxes incurred more than six months prior to the date that the applicable Payee notifies Borrower Representative of such Indemnified Taxes or Other Taxes and of such Payee’s intention to claim compensation therefor; provided , further , that, if the circumstances giving rise to such Indemnified Taxes or Other Taxes is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to the amount of any such payment or liability delivered to Borrower Representative by any Payee (with a copy to Collateral Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Indemnified Taxes by a Borrower, Borrower Representative shall deliver to Collateral Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Collateral Agent. This Section 5.6 shall survive the repayment of the Loans and the termination of this Agreement.
5.6.3 Refunds . So long as no Event of Default is then in existence, if Collateral Agent or any Lender determines, in its sole discretion acting in good faith, that is has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts hereunder, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by Borrowers hereunder with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses and without interest (other than any interest by the relevant Governmental Authority with respect to such refund); provided that the Borrowers, upon request of Collateral Agent or such Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Collateral Agent or such Lender in the event Collateral Agent or such Lender is required to repay such refund to such Governmental Authority. This Section 5.6.3 shall not be construed to require Collateral Agent or any Lender to make available its tax returns to the Borrowers or any other person.
5.7 Lender Tax Information .
5.7.1 Status of Lenders . Each Payee shall deliver documentation and information to Collateral Agent and Borrower Representative, at the times and in form required by Applicable Law or reasonably requested by Collateral Agent or Borrower Representative, sufficient to permit Collateral Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Payee’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Payee’s status for withholding tax purposes in the applicable jurisdiction.
 
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5.7.2 Documentation . If a Borrower is resident for tax purposes in the United States, any Payee that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Agent or Borrower Representative, but only if such Payee is legally entitled to do so) IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Collateral Agent or Borrower Representative to determine whether such Payee is subject to backup withholding or information reporting requirements. If any Foreign Payee is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Collateral Agent or Borrower Representative, but only if such Foreign Payee is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Payee claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, IRS Form W-8BEN and a certificate stating such Foreign Payee is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of Section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Collateral Agent and Borrowers to determine the withholding or deduction required to be made.
5.7.3 Lender Obligations . Each Payee shall promptly notify Borrower Representative and Collateral Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Payee shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Collateral Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Collateral Agent by any Governmental Authority due to such Payee’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Payee authorizes Collateral Agent to set off any amounts due to Collateral Agent under this Section against any amounts payable to such Payee under any Loan Document. The obligation of a Payee under this subsection to Collateral Agent shall survive the payment of all Obligations and the resignation or replacement of Collateral Agent. This section shall survive the repayment of the Loans and the termination of this Agreement.
5.8 Nature and Extent of Each Borrower’s Liability
5.8.1 Joint and Several Liability . Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or
 
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may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Collateral Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Collateral Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Collateral Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.
5.8.2 Waivers . (a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel the Collateral Agent or the Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Collateral Agent and the Lenders that the provisions of this Section are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Collateral Agent and the Lenders would decline to make Loans. Notwithstanding anything to the contrary in any Loan Document, and except as set forth in Section 5.6 , each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.
(b) The Collateral Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.7 . If, in the exercise of any rights or remedies, any Collateral Agent or Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action by Collateral Agent or such Lender and waives any claim based upon such action, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had but for such action. Any election of remedies that results in denial or impairment of the right of Collateral Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. If a Lender bids at any foreclosure or trustee’s sale or at any private sale, such Lender may bid all or a portion of the Obligations and the amount of such bid need not be paid by such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether a Lender or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the
 
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Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.7 , notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which any Lender might otherwise be entitled but for such bidding at any such sale.
5.8.3 Extent of Liability; Contribution . (a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.7 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.
(b) If any Borrower makes a payment under this Section 5.7 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “ Allocable Amount ” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.7 without rendering such payment voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.
(c) Nothing contained in this Section 5.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.
5.8.4 Joint Enterprise . Each Borrower has requested that the Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that and Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.
5.8.5 Subordination . Each Borrower hereby subordinates any claims it may have as a result of this Section 5.7 , including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution and indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.
 
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Section 6. CONDITIONS PRECEDENT
6.1 Conditions Precedent to Initial Loans . The amendment and restatement of the Existing Agreement pursuant to the terms hereof shall be subject to satisfaction of each of the following conditions (except to the extent that such conditions are permitted by each Lender to be satisfied on a post-closing basis pursuant to a post-closing agreement) (the date such conditions are satisfied or waived, the “Closing Date”):
(a) Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to the Lenders by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.
(b) Collateral Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Collateral Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens.
(c) Collateral Agent shall have received duly executed deposit account control agreements with respect to certain Deposit Accounts and related lockbox and Securities Accounts constituting Collateral, in form and substance reasonably satisfactory to Agent, and with financial institutions, reasonably satisfactory to Agent.
(d) The Lenders shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Responsible Officer of Borrower Representative certifying that (i) each Obligor is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 8 are true and correct in all material respects; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(e) The Lenders shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment expect as shown, (ii) that an attached copy of resolutions (to the extent necessary under Applicable Law or applicable Organic Documents) authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility, and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. The Lenders may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.
(f) The Lenders shall have received copies of the charter documents of each Obligor, certified as appropriate by the Secretary of State or another official of such Obligor’s jurisdiction of organization. The Lenders shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.
 
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(g) No material adverse change in the business, assets, properties, liabilities, financial condition or prospects of any Obligor shall have occurred since January 29, 2011.
(h) No action, suit, investigation, litigation or proceeding shall have been pending or threatened in any court or before any arbitrator or governmental instrumentality that in Collateral Agent’s judgment (i) could reasonably be expected to have a material adverse effect on Borrowers’ business, operations, properties, or condition (financial or otherwise) or could materially and adversely impair Borrowers’ ability to perform satisfactorily under this Agreement; or (ii) could reasonably be expected to materially and adversely affect this Agreement or the transactions contemplated hereby.
(i) Borrowers shall have paid all legal fees and expenses to be paid to Lenders on the Closing Date.
(j) Collateral Agent shall have received (i) a fully-executed payoff letter from BMO, (ii) a fully-executed payoff letter evidencing payment in full of all of the Obligors’ indebtedness to Bank of America, N.A., as agent, and (iii) collateral assignment agreement from the Existing Collateral Agent assigning to Collateral Agent all of the Existing Collateral Agent’s Liens and security interests in the Obligors’ assets.
(k) Lenders shall have received evidence that the Loans under this Agreement have been designated as “Additional Priority Permitted Debt” under the 2009 Indenture.
(l) Borrowers shall have received, or shall receive substantially contemporaneously herewith, the proceeds of the Revolver Debt and the Second Lien Debt pursuant to the terms of the Revolver Loan Documents and Second Lien Debt Documents, as applicable, which shall be in form and substance reasonably satisfactory to Collateral Agent.
Section 7. COLLATERAL
7.1 Security Reaffirmation . The Obligors acknowledge that the Existing Agreement and the documents entered into in connection therewith granted a security interest in favor of the Existing Collateral Agent which secured the Obligations under this Agreement. The Obligors, subject to the terms and limits contained in the Loan Documents, acknowledge the assignment by the Existing Collateral Agent to Collateral Agent of all Existing Collateral Agent’s rights in the Collateral and reaffirm their Liens created in favor of Collateral Agent as the replacement collateral agent, for the benefit of the Lenders, on the Collateral to secure the Obligations hereunder. The Obligors hereby acknowledge that they have reviewed the terms and provisions of this Agreement and hereby (i) confirm that the Loan Documents to which they are a party or are otherwise bound continues to be in full force and effect, and all Collateral encumbered thereby will guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents, the payment and performance of the Obligations, as the case may be, including without limitation the payment and performance of all such applicable Obligations that are joint and several obligations of the each Obligor now or hereafter existing, and all of their obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of the Loan Documents and (ii) grant to Collateral Agent a continuing lien on and security interest in and to the Obligor’s right, title and interest in, to and under all the
 
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Collateral, pursuant to and in accordance with the Loan Documents as collateral security for the prompt payment and performance in full when due of all applicable Obligations subject to the terms and limits contained in the Loan Documents (whether at stated maturity, by acceleration or otherwise).
7.2 Administration of Accounts . Each Obligor shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Collateral Agent, on such periodic basis as Collateral Agent may request, an Account roll-forward, a sales and collections report, in form reasonably satisfactory to Collateral Agent. Borrower Representative shall also provide to Collateral Agent a summary aged trial balance of all Accounts as of the end of the preceding Fiscal Month, and as Collateral Agent may reasonably request, information related to Accounts, including Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information.
7.3 Administration of Inventory .
7.3.1 Records and Reports of Inventory . Each Obligor shall keep accurate and complete records of its Inventory, including costs, and shall submit to Collateral Agent inventory reports in form reasonably satisfactory to Collateral Agent, on such periodic basis as Collateral Agent may request, including Inventory perpetual reports. Each Obligor shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by Collateral Agent when an Event of Default exists) or periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Collateral Agent may request. Collateral Agent may participate in and observe each inventory or physical count. Borrower Representative shall also provide to Collateral Agent, concurrently with delivery of financial statements pursuant to Section 9.1.2(b) , (i) a summary of the Royalties payments owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) and (ii) as requested by Collateral Agent, a summary of charges owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) to shippers or freight forwarders for the overseas transportation of goods of Obligors and customs brokers which clear customs with respect thereto.
7.3.2 Returns of Inventory . No Obligor shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Collateral Agent is promptly notified if the aggregate Value of all Inventory returned in any Fiscal Month exceeds $2,625,000; and (d) any payment received by an Obligor for a return is promptly remitted to Collateral Agent for application to the Obligations.
7.3.3 Acquisition, Sale and Maintenance . No Obligor shall acquire or accept any Inventory on consignment or approval, and shall take reasonable steps to assure that all Inventory is produced in accordance with Applicable Law, including, in the case of Inventory produced in the United States of America, the FLSA. No Obligor shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require an
 
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Obligor to repurchase such Inventory. Obligors shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.
7.4 [Intentionally Omitted] .
7.5 Administration of Deposit Accounts and Securities Accounts . Schedule 7.5 sets forth all Deposit Accounts and Securities Accounts maintained by Obligors as of the Closing Date. Each Borrower shall take all actions necessary to establish Collateral Agent’s control of each such Deposit Account and Securities Account (other than an account exclusively used for payroll, payroll taxes or employee benefits, or trust or escrow accounts, or accounts containing not more than $650,000 in the aggregate for all such accounts at any time and not more than $30,000 in any single account at any time (collectively, the “ Excluded Accounts ”)). Each Obligor shall be the sole account holder of each Deposit Account and Securities Accounts and shall not allow any other Person (other than Collateral Agent) to have control (as defined in Article 9 of the UCC) over a Deposit Account, a Securities Account or any Property deposited therein. Borrower Representative shall promptly notify Collateral Agent of any opening, or closing of a Deposit Account or a Securities Account and, with the consent of Collateral Agent, will amend Schedule 7.5 to reflect same. Subject to the Intercreditor Agreement, following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is less than 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) and until the last day of a period of ninety (90) consecutive days thereafter during which average daily Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is equal to or exceeds 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) (each such period, a “ Cash Dominion Period ”), Collateral Agent may (subject to any notice requirements in the applicable Control Agreement) deliver written instructions to the depository banks and securities intermediaries at which such Deposit Accounts and Securities Accounts are maintained directing them to transfer on a daily basis all payments, deposits or other Property received in the Deposit Accounts or Securities Accounts to the Collection Account or as otherwise instructed by Collateral Agent; provided that upon the termination or expiration of all Cash Dominion Periods, Collateral Agent shall promptly rescind such instructions to such depository banks and securities intermediaries. At all times, other than during a Cash Dominion Period, Borrowers may withdraw cash or cash equivalents from Deposit Accounts and Securities Accounts and use such cash and cash equivalents for purposes not prohibited hereunder at such time.
7.6 General Provisions .
7.6.1 Location of Collateral . All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Obligors at the business locations set forth in Schedule 7.6.1 (as such schedule may be amended or modified from time to time), except that Obligors may (a) make sales or other dispositions of Collateral in accordance with Section 9.2.6 ; and (b) move Collateral to another location in the United States set forth on Schedule 7.6.1 (as such schedule may be amended or modified from time to time).
 
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7.6.2 Insurance of Collateral . Each Obligor shall maintain insurance with respect to the Collateral (other than Accounts and trademarks), covering casualty, hazard, public liability, theft, malicious mischief, and such other risks, in such amounts and with such endorsements as are in each case reasonably satisfactory to Collateral Agent, and with such insurers as are reasonably satisfactory to Collateral Agent or with any other insurers rated A+ or better by A.M. Best Rating Guide. All proceeds under each policy relating to Collateral shall be payable to Collateral Agent. From time to time upon reasonable request, Obligors, shall deliver to Collateral Agent the originals or certified copies of its insurance policies. Unless Collateral Agent shall agree otherwise, each policy shall include reasonably satisfactory endorsements (i) showing Collateral Agent as loss payee or additional insured, as appropriate; (ii) requiring 10 days prior written notice to Collateral Agent in the event of cancellation of the policy for non-payment of premium and requiring 30 days prior written notice to Collateral Agent in the event of cancellation of the policy for any other reason; and (iii) specifying that the interest of Collateral Agent shall not be impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If any Obligor fails to provide and pay for such insurance, Collateral Agent may, at its option, but shall not be required to, procure the insurance and charge Obligors therefor. Each Obligor agrees to deliver to Collateral Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists, Obligors may settle, adjust or compromise any insurance claim. If an Event of Default exists, only Collateral Agent (subject to the Intercreditor Agreement) shall be authorized to settle, adjust and compromise such claims.
Section 8. REPRESENTATIONS AND WARRANTIES
8.1 General Representations and Warranties . To induce Lenders to enter into this Agreement, each Obligor represents and warrants that:
8.1.1 Organization and Qualification . Each Obligor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
8.1.2 Power and Authority . Each Obligor is duly authorized to execute, deliver and perform its Loan Documents and has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.
 
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8.1.3 Enforceability . Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
8.1.4 Capital Structure . Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following) shows, for each Obligor, its name and its jurisdiction of organization and its authorized and issued Equity Interests, and for each Domestic Subsidiary only, the holders of its Equity Interests and all agreements binding on such holders with respect to their Equity Interests. Each Obligor has good title to the Equity Interests of its Domestic Subsidiaries, free and clear of all Liens (other than Permitted Liens) and all such Equity Interests are duly issued, fully paid and non-assessable. Except as set forth on Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following), there are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any Obligor or Domestic Subsidiary.
8.1.5 Corporate Names; Locations . During the five years preceding the Closing Date, except as shown on Schedule 8.1.5 , no Person that is an Obligor as of the Closing Date has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person. The chief executive offices and other locations of Collateral of Obligors as of the Closing Date are shown on Schedule 8.1.5 (as such schedule may be amended or supplemented from time to time).
8.1.6 Title to Properties; Priority of Liens . Each Obligor has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Lenders, in each case free of Liens except Permitted Liens. Each Obligor has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.
8.1.7 Financial Statements . (a) The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries and consolidating balance sheets and related statements of income for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries, copies of which have been delivered to Collateral Agent and each Lender prior to the Closing Date, fairly present in all material respects the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. Since January 29, 2011 there has been no change in the condition, financial or otherwise, of any Obligor or Domestic Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to Collateral Agent or any Lender at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Obligor and Domestic Subsidiary is Solvent, both before and after giving effect to the transactions contemplated by this Agreement and the Loans.
 
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(b) All projections furnished to Collateral Agent prior to the Closing Date are believed by the Borrower Representative at the time furnished to be reasonable, have been prepared on a reasonable basis and in good faith by the Borrower Representative, and have been based on assumptions believed by the Borrower Representative to be reasonable at the time made and upon the best information then reasonably available to the Borrower Representative, and the Borrower Representative is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material.
8.1.8 Surety Obligations . Except as set forth on Schedule 8.1.8 (as such schedule may be amended or supplemented from time to time), no Obligor is obligated as indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.
8.1.9 Taxes . Each Obligor has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested and except where the failure to file or pay the same could not reasonably be expected to have a Material Adverse Effect. The provision for Taxes on the books of each Obligor is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.
8.1.10 Brokers . There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents, except for the payment of transaction fees to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement.
8.1.11 Intellectual Property . Each Obligor owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others, except where the failure to own or have rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect. There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with respect to any Obligor or any of its Property (including any Intellectual Property, except for Intellectual Property Claims which could not reasonably be expected to have a Material Adverse Effect). Except as disclosed on Schedule 8.1.11 (as such schedule may be amended or supplemented from time to time), no Obligor pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Obligor is shown on Schedule 8.1.11 .
8.1.12 Governmental Approvals . Each Obligor has, is in compliance with, and is in good standing with respect to, all Governmental Approvals, licenses and permits necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance or failure to be in good standing could not reasonably be expected to have a Material Adverse Effect. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
 
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8.1.13 Compliance with Laws . Each Obligor has duly complied, and its Properties and business operations are in compliance, with all Applicable Laws, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, there have been no citations, notices or orders of material noncompliance issued to Obligor under any Applicable Law.
8.1.14 Compliance with Environmental Laws . Except as disclosed on Schedule 8.1.14 , no Obligor’s past or present operations, Real Estate or other Properties are subject to any on-going federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, no Obligor has received any Environmental Notice. As of the Closing Date, no Obligor has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.
8.1.15 Burdensome Contracts . No Obligor is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 8.1.15 (as such schedule may be amended or supplemented from time to time), none of which prohibit the execution or delivery of any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.
8.1.16 Litigation . Except as shown on Schedule 8.1.16 , there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor. No Obligor is in default with respect to any order, injunction or judgment of any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
8.1.17 No Defaults . No event or circumstance has occurred or exists that constitutes a Default or Event of Default. As of the Closing Date, no Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Debt in excess of $23,000,000 (other than Debt issued under the Revolver Loan Documents). As of the Closing Date, there is no basis upon which any party (other than an Obligor or Domestic Subsidiary) could terminate a Material Contract prior to its scheduled termination date.
8.1.18 ERISA . Except as disclosed on Schedule 8.1.18 (as such schedule may be amended or supplemented from time to time), no Obligor has any Multiemployer Plan. Each Obligor is in full compliance with the requirements of all Applicable Law, including ERISA, relating to each Multiemployer Plan. As of the Closing Date, no Obligor has any obligations
 
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under a Foreign Plan. No fact or situation exists that could reasonably be expected to result in a Material Adverse Effect in connection with any Multiemployer Plan. No Obligor has any withdrawal liability in connection with a Multiemployer Plan or Foreign Plan. All employer and employee contributions to Foreign Plans, to the extent required by law or the terms of such plans, have been made or accrued in accordance with normal accounting principles. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance and/or the book reserve established for each Foreign Plan, together with any accrued contributions, are sufficient to provide the accrued benefit obligations of all participants in such plans according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles.
8.1.19 Trade Relations . There exists no actual or threatened termination, limitation or modification of any business relationship between any Obligor and any customer or supplier, or any group of customers or suppliers, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Obligor to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.
8.1.20 Labor Relations . Except as described on Schedule 8.1.20 (as such schedule may be amended or supplemented from time to time), no Obligor is party to or bound by any collective bargaining agreement. As of the Closing Date, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.
8.1.21 Payable Practices . No Obligor has made any material change in its historical accounts payable practices from those in effect on the Closing Date.
8.1.22 Not a Regulated Entity . No Obligor is an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.
8.1.23 Margin Stock . No Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Loans proceeds have not been and will not be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
8.1.24 Plan Assets . As of the Closing Date, no Obligor is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code), and the execution of this Agreement is not a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
 
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8.1.25 Immaterial Subsidiaries . No Immaterial Subsidiary (a) owns or generates any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) has revenues (other than from intercompany Accounts) in any Fiscal Year in excess of $1,000,000.
8.1.26 Patriot Act . To the extent applicable, each Obligor is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Patriot Act. No part of the proceeds of the loans made hereunder will be used by any Obligor or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
8.1.27 OFAC . No Obligor nor any of its Subsidiaries is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Obligor nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
8.1.28 Nature of Business . No Obligor is engaged in any business other than the business it is engaged in on the Closing Date or any activities ancillary or related thereto, or logical extensions thereof.
8.1.29 Material Contracts . Set forth on Schedule 8.1.29 is a complete and accurate list as of the Closing Date of all Material Contracts of each Obligor, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (a) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the knowledge of such Obligor, all other parties thereto in accordance with its terms, (b) has not been otherwise amended or modified, and (c) is not in default due to the action of any Obligor or, to the best knowledge of any Obligor, any other party thereto.
8.1.30 No Bankruptcy Filing . No Obligor is contemplating either an Insolvency Proceeding or the liquidation of all or a major portion of such Obligor’s assets or property, and no Obligor has any knowledge of any Person contemplating an Insolvency Proceeding against it.
8.1.31 Security Interests . Each Security Agreement creates in favor of Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral secured thereby. Upon the filing of the UCC-1 financing statements and the recording of the
 
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Collateral Assignments for Security referred to in each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, such security interests in and Liens on the Collateral granted thereby shall be perfected, first priority security interests (to the extent perfection may be obtained by filing, and subject to Permitted Liens that are expressly allowed to have priority over Collateral Agent’s Liens under Applicable Law), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements in accordance with applicable law, (ii) the recording of the Collateral Assignments for Security pursuant to each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired U.S. patent and trademark applications and registrations and U.S. copyrights, (iii) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign intellectual property, and (iv) additional UCC filings to the extent new Obligors are acquired or existing Obligors change their states of organization.
8.2 Complete Disclosure . No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to a Lender in writing that could reasonably be expected to have a Material Adverse Effect.
Section 9. COVENANTS AND CONTINUING AGREEMENTS
9.1 Affirmative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall, and shall cause each Domestic Subsidiary to:
9.1.1 Inspections . (a) Permit Lenders from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligors or Domestic Subsidiary, inspect, audit and make extracts from any Borrowers’ or Domestic Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Domestic Subsidiary’s business, financial condition, assets, prospects and results of operations. No Lender shall have any duty to any Obligors to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligors. To the extent any other information is shared by a Lender with any Obligor, such Obligors acknowledge that it was prepared by the Lenders for their purposes and Obligors shall not be entitled to rely upon it.
(b) Reimburse Lenders for all charges, costs and expenses of each Lender in connection with examinations of any Obligor’s books and records or any other financial or Collateral matters as the Lenders deem appropriate up to two times per Loan Year; provided , however , that if an examination is initiated during a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits.
 
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9.1.2 Financial and Other Information . Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to each Lender:
(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year, consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Required Lenders, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;
(b) as soon as available, (i) and in any event within 45 days after the end of each of the first three Fiscal Quarters the following: (A) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month, unaudited consolidated balance sheet as of the end of such Fiscal Month and related consolidated profit and loss statement and cash flow statement (which cash flows statement need not be prepared in accordance with GAAP but instead may be prepared in a manner substantially similar to the cash flow statement presented to Collateral Agent with respect to the Fiscal Month ending on July 30, 2011) for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP, and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year end adjustments and the absence of footnotes;
(c) concurrently with delivery of financial statements under clauses (a) and (b) above, or more frequently if requested by Collateral Agent while a Default or Event of Default exists, a Compliance Certificate executed by the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative;
(d) to the extent available and upon Lenders’ request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements;
 
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(e) not later than 30 days after the end of each Fiscal Year, projections of Borrowers’ consolidated balance sheets, results of operations and cash flow for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to Collateral Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(f) at Collateral Agent’s request, a listing of each Obligor’s trade payables, specifying the trade creditor and balance due, all in form satisfactory to Collateral Agent;
(g) promptly after the sending or filing thereof, copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; provided , that each statement or report required to be delivered pursuant to this clause (g) shall be deemed to have been delivered on the date on which the Borrower Representative posts such document on the Borrower Representative’s website on the Internet at the website address www.kellwood.com, or when such document is posted on the Securities and Exchange Commission’s website at www.sec.gov (the “ SEC Website ”) or on an Internet website established by the Lenders with Intralinks, Inc. or other similarly available electronic media (each of the foregoing an “ Informational Website ”); provided , further , that (i) the Borrower Representative shall deliver paper copies of all such documents to any Lender that requests the Borrower Representative to deliver such paper copies (without impairment of the effectiveness of any document previously delivered in electronic media form) until a request to cease delivering paper copies is given by such Lender and (ii) each Lender shall be notified by electronic mail of the applicable Informational Website and of the posting of each such document; it being understood and agreed that (x) Collateral Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this clause (e), and in any event shall have no responsibility to monitor compliance by the Borrower Representative with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents and (y) Borrowers shall be responsible for (other than with respect to the SEC Website) and shall incur all risks associated with (including with respect to the SEC Website) the security and confidentiality of the Informational Websites and its information posted thereon; and
(h) such other reports and information (financial or otherwise) as any Lender may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
9.1.3 Notices . Notify the Lenders in writing, promptly (but in any event within 5 Business Days) after an Obligor obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if it is reasonably likely that an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material
 
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Contract; (d) the existence of any Default or Event of Default; (e) any adverse judgment not covered by insurance in an amount exceeding $5,750,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution is reasonably likely to have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice, which could reasonably be expected to have a Material Adverse Effect; (i) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; or (j) any opening of a new office or place of business where Collateral is located, within 30 days after such opening.
9.1.4 Landlord and Storage Agreements . Upon request, provide the Lenders with copies of all existing agreements, and promptly after execution thereof provide the Lenders with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral having a book value in excess of $1,150,000 in the aggregate at any time.
9.1.5 Compliance with Laws . Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Domestic Subsidiary, it shall act promptly and diligently to investigate and report to the Lenders and, to the extent required by Applicable Law, all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.
9.1.6 Taxes . Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, except for Taxes which in the aggregate do not exceed $250,000 or unless such Taxes are being Properly Contested.
9.1.7 Insurance . In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers reasonably satisfactory to the Required Lenders or other insurers rated A+ or better by Best Rating Guide, (a) with respect to the Properties and business of the Obligors of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated, and (b) business interruption insurance with deductibles and subject to an Insurance Assignment in favor of the Collateral Agent reasonably satisfactory to the Required Lenders.
9.1.8 Licenses . Keep each License affecting any material portion of the Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors in full force and effect subject to non-renewal or termination by the applicable Obligor in the Ordinary Course of Business, or otherwise in its reasonable
 
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judgment; notify Lenders of any proposed modification to any such License increasing the Royalties payable thereunder, or entry into any new License, in each case at least 10 days prior to the effective date of such License or modification, pay all Royalties when due; and notify Lenders of any material default or breach asserted by any Person to have occurred under any License.
9.1.9 Future Subsidiaries . Promptly notify the Lenders upon any Person becoming a Domestic Subsidiary and cause any such Subsidiary to execute and deliver to Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to the Required Lenders, as they shall deem appropriate; provided that prior to any Person becoming a Borrower hereunder, Borrower Representative shall provide at least 5 days written notice to Collateral Agent.
9.1.10 Additional Guarantors . In the event that any Person becomes party to the 2009 Indenture Guaranty or guaranties any part of the Second Lien Debt and such Person is not a Borrower hereunder, Borrower Representative shall immediately notify each Lender thereof and cause such Person to execute and deliver to the Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of the Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance satisfactory to Collateral Agent, as it shall deem appropriate.
9.1.11 Preservation of Existence, Etc. Maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except as permitted by Section 9.2.9 or except to the extent failure to be so qualified or in good standing could not reasonably be likely to have a Material Adverse Effect.
9.1.12 Keeping of Records and Books of Account . Keep accurate records and books of account, with entries made to permit the preparation of financial statements in accordance with GAAP.
9.1.13 Maintenance of Properties, Etc . Maintain and preserve all of its properties which are necessary for the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation losses excepted.
9.1.14 Obtaining of Permits, Etc . Obtain, maintain and preserve and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except to the extent failure to do so could not reasonably be likely to have a Material Adverse Effect.
 
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9.1.15 Further Assurances . Take such action and execute, acknowledge and deliver at its sole cost and expense, such agreements, instruments or other documents as Collateral Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected Liens any of the Collateral, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto Collateral Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Obligor (i) authorizes Collateral Agent to execute any such agreements, instruments or other documents in such Obligor’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes Collateral Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Obligor, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Obligor prior to the date hereof, in each case to the extent such filings are necessary or desirable in order to perfect or maintain the perfection of Collateral Agent’s security interest in the Collateral.
9.1.16 Post-Closing Covenants .
(a) On or before the date that is thirty (30) days following the Closing Date (or such later date as agreed to by Collateral Agent in its sole discretion), Borrowers shall use commercially reasonable efforts to provide Collateral Agent with: (a) all documents necessary to effect and reflect the release of the Lien in favor of Wells Fargo Bank, National Association (granted by Levi Strauss & Co.), recorded at the United States Patent and Trademark Office on November 5, 1985 at Reel 0509, Frame 218; (b) all documents necessary effect and reflect the release of the Lien in favor of Bankers Trust Company (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on December 18, 1986 at Reel 0547, Frame 322 and (c) all documents necessary to effect and reflect the release of the Lien in favor of BNY Financial Corp. (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on July 9, 1992 at Reel 0883, Frame 616; and
(b) On or before the date that is ten (10) days following the Closing Date (or such later date as agreed to by Collateral Agent in its sole discretion), Borrowers shall deliver to Collateral Agent duly executed Deposit Account Control Agreements in form and substance satisfactory to Collateral Agent with respect to Borrowers’ deposit accounts at Bank of America, N.A. and JPMorgan Chase Bank, N.A.
9.2 Negative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall not, and shall cause each Domestic Subsidiary not to:
9.2.1 Permitted Debt . Create, incur, guarantee or suffer to exist any Debt, except:
(a) the Obligations;
(b) Subordinated Debt;
 
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(c) Permitted Purchase Money Debt;
(d) Debt (other than the Obligations, Revolver Debt, Subordinated Debt, Permitted Purchase Money Debt, the 2009 Debentures, the Second Lien Debt and Term A Loan Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans and which is listed on Schedule 9.2.1 ;
(e) Bank Product Debt (as defined in the Revolver Agreement);
(f) Permitted Contingent Obligations, provided no Obligor or any Domestic Subsidiary thereof shall incur any Contingent Obligations in respect of the obligations of any Foreign Subsidiary;
(g) Refinancing Debt as long as each Refinancing Condition is satisfied in respect of such Refinancing Debt at the time such Refinancing Debt is incurred;
(h) the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;
(i) unsecured intercompany Debt for loans and advances made by any Borrower or wholly owned Subsidiary to (i) a Borrower, (ii) any other Obligor or (iii) if such wholly owned Subsidiary making such loan or advance is not an Obligor, any other wholly owned Subsidiary, provided that such intercompany Debt of any Obligor is subordinated pursuant to Section 13.16 ;
(j) financing of insurance premiums;
(k) unsecured Debt in an amount not to exceed $5,750,000 at any time outstanding;
(l) other unsecured Debt of any Domestic Subsidiary which is not an Obligor, provided that, in connection with such Debt, no Obligor has incurred a Contingent Obligation or any direct or contingent liability with respect thereto unless such Contingent Obligation is unsecured and is expressly permitted hereunder;
(m) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date as long as it is permitted under the Revolver Agreement as in effect on the date hereof;
(n)(i) the 2009 Debentures, as long as such Debt is subject to the 2009 Debenture Intercreditor Agreement; provided that , the principal amount of the Debt owing under the 2009 Debentures shall not exceed at any time an amount equal to the principal amount outstanding under the 2009 Debentures as of the date of the consummation of the Exchange Offer, plus any interest thereon that is paid-in-kind in accordance with the terms thereof and added to the outstanding principal thereof; (ii) the Revolver Debt, as long as such Debt is subject to the Intercreditor Agreement, and (iii) the Second Lien Debt, as long as such Debt is subject to the Intercreditor Agreement; and
 
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(o) Term B/C/D Loan Debt.
9.2.2 Permitted Liens . Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):
(a) Liens in favor of Collateral Agent securing the Obligations;
(b) Purchase Money Liens securing Permitted Purchase Money Debt;
(c) Liens for Taxes not yet due or being Properly Contested;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA but including carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;
(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt), statutory obligations (including in connection with workers’ compensation, unemployment insurance and other social security legislation (other than Liens for Taxes or imposed under ERISA)) and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Collateral Agent’s Liens;
(f) Liens securing judgments for the payment of money in an aggregate amount not in excess of $5,750,000 (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 10 consecutive days during which execution is not effectively stayed;
(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(h) normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;
(i) existing Liens shown on Schedule 9.2.2  and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby does not increase the maximum outstanding principal amount of such obligations;
(j) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as such Liens were existing at the time of such Acquisition by a Borrower or Subsidiary and were not incurred, extended or renewed in contemplation of such Acquisition; provided that (i) the Lien shall attach solely to the property acquired, and (ii) at the time of acquisition of such fixed assets, the aggregate amount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed by a Borrower or Subsidiary shall not exceed an amount equal to the lesser of the total purchase price or fair market value at the time of acquisition of such fixed assets;
 
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(k) other Liens that are created upon any of its Property (other than Collateral) after the Closing Date so long as the fair market value of such property subject to such liens does not exceed $5,750,000 at any time outstanding;
(l) Liens on deposits and unearned insurance premiums securing Debt permitted under Section 9.2(j) ; and
(m)(i) Liens on Collateral securing the Debt owing under the 2009 Debentures, as long as such Liens are subject to the 2009 Debenture Intercreditor Agreement; (ii) Liens on Collateral securing the Debt owing under the Revolver Agreement, as long as such Debt is subject to the Intercreditor Agreement, (iii) Liens on Collateral securing the Second Lien Debt as long as such liens are subject to the Intercreditor Agreement and (iv) Liens on Collateral securing the Term B/C/D Loan Debt and, in each case, such Debt is permitted under Section 9.2.1(n) or Section 9.2.1(o) .
9.2.3 [ Intentionally Omitted ]
9.2.4 Distributions; Upstream Payments .
(a) Declare or make any Distributions, except (i) Permitted Distributions and (ii) Upstream Payments; or
(b) Create or suffer to exist any encumbrance or restriction on the ability of a Domestic Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Revolver Loan Documents and the Second Lien Debt Documents and under Applicable Law or restrictions in effect on the Closing Date as shown on Schedule 8.1.15 .
9.2.5 Restricted Investments . Make any Restricted Investment.
9.2.6 Disposition of Assets . Make any Asset Disposition, except a Permitted Asset Disposition or a transfer of Property by a Subsidiary or Obligor to a Borrower.
9.2.7 Loans; Extensions of Credit . Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled Account Debtors to the extent reasonably necessary in the relevant Obligor’s reasonable business judgment to prevent or limit loss; (e) intercompany loans permitted by Section 9.2.1(i); and (f) loans or extensions of credit made in the ordinary course of business after the Closing Date as long as they are permitted under the Revolver Agreement as in effect on the date hereof.
 
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9.2.8 Restrictions on Payment of Certain Debt . Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Responsible Officer of Borrower Representative shall certify to each Lender, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (b) other Debt (other than the Obligations, Revolver Debt, the Second Lien Debt and Term B/C/D Loan Debt) prior to its due date under the agreements evidencing such Debt, except for any such prepayment with respect to the currently issued and outstanding notes under the Convertible Debentures, Indenture or 2009 Indenture to the extent such prepayment is permitted under the Revolver Agreement.
9.2.9 Fundamental Changes . (a) Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except:
(i) any Subsidiary may merge (x) with a Borrower, provided that such Borrower shall be the continuing or surviving Person, or (y) with any one or more Subsidiaries, provided that when any wholly-owned Subsidiary or Guarantor is merging with another Subsidiary, the wholly-owned Subsidiary or Guarantor shall be the continuing or surviving Person, or (z) with any other Person in connection with any Permitted Acquisition, provided that the continuing or surviving Person shall be a wholly-owned Subsidiary and, if such Subsidiary was a Guarantor or Borrower, also a Guarantor or Borrower;
(ii) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to a Borrower or to another Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary or a Guarantor, then the purchaser must also be a wholly-owned Subsidiary or Guarantor, respectively; or
(iii) in connection with a Permitted Asset Disposition.
(b) Except following thirty (30) days prior written notice to each Lender, change its name or conduct business under any fictitious name; change its tax or other organizational identification number; or change its form or state of organization.
9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with Section 9.1.9 or Section 9.2.9 in connection with Permitted Acquisitions; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.
9.2.11 Organic Documents . Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except for any amendment, modification or other change that does not adversely affect any Lender or any duty to pay Obligations.
9.2.12 Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Ultimate Parent and its Subsidiaries.
 
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9.2.13 Accounting Changes . Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2 ; or change its Fiscal Year.
9.2.14 Restrictive Agreements . Become a party to or permit any Subsidiary to become a party to any Restrictive Agreement, except a Restrictive Agreement as in effect on the Closing Date and shown on Schedule 8.1.16 , the 2009 Indenture, the 2009 Indenture Guaranty, the Convertible Debentures, the Indenture, the Second Lien Debt Documents or the Revolver Loan Documents.
9.2.15 Hedging Agreements . Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.
9.2.16 Conduct of Business . Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.
9.2.17 Affiliate Transactions . Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 9.2.7 ; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Obligors; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 9.2.17 ; (f) transactions with Affiliates (other than those described in clause (g) below) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to each Lender and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate; (g) payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto, (ii) Availability (as defined in the Revolver Agreement, as in effect on the date hereof) after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment); (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement; (i) transactions contemplated by the Term B/C/D Loan Agreement, and (j) payment of dividends or other distributions to Ultimate Parent (whether made to Ultimate Parent directly or to any Person directly or indirectly owned by Ultimate Parent and ultimately remitted to Ultimate Parent) in an amount sufficient to permit Ultimate Parent to pay (A) franchise taxes and other fees required to maintain Ultimate Holding’s corporate existence and (B) to pay consolidated or combined federal, state or local taxes, including estimated taxes, which payments in the aggregate by each Obligor and Domestic Subsidiary are not in excess of the aggregate tax liabilities that would have been payable by each Obligor and Domestic Subsidiary calculated on a stand-alone basis.
 
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9.2.18 Plans . Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date or assumed in connection with any Permitted Acquisition.
9.2.19 Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt . (a) Amend, supplement or otherwise modify (i) the 2009 Indenture or the 2009 Indenture Guaranty or (ii) any Convertible Debenture or Convertible Debenture Agreement or Convertible Debenture Guaranty, in a manner that directly or indirectly accelerates the time of payment, increases the principal amount of or interest rate applicable to indebtedness issued or provides for more restrictive terms that adversely affect the Lenders;
(b) Amend, supplement or otherwise modify any other document, instrument or agreement relating to any Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that adversely affects the Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof; or
(c) Amend, supplement or otherwise modify the Revolver Agreement or the Second Lien Debt in violation of the Intercreditor Agreement.
9.2.20 Immaterial Subsidiaries . Permit or suffer any Immaterial Subsidiary to (a) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) have revenues in any Fiscal Year in excess of $1,000,000, unless Borrower Representative causes such Immaterial Subsidiary to execute a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Collateral Agent, as it shall deem appropriate.
9.2.21 Fixed Charge Coverage Ratio . At any time during a Covenant Testing Period, fail to have a Fixed Charge Coverage Ratio, measured on a month-end basis, of at least 0.85 to 1.00 for the 12 month period ending on the last day of each Fiscal Month.
9.2.22 Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock for any related purpose governed by Regulations T, U or X of the Board of Governors.
9.2.23 Investment Company Act of 1940 . Engage in any business, enter into any transaction, use any securities or take any other action that would cause any Obligor to become an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
 
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9.2.24 2009 Debenture Intercreditor Agreement . Incur Debt after the Closing Date pursuant to Section 4.09(b)(1) of the 2009 Indenture and designate the holders of such Debt as additional holders of “Priority Obligations” (as defined in the 2009 Indenture Intercreditor Agreement).
Section 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
10.1 Events of Default . Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);
(b) Any representation, warranty or other written statement of any Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;
(c) Any Obligor breaches or fails to perform any covenant contained in Section 7.1 , 7.6.2 , 9.1.1 , 9.1.2 , 9.1.3 (other than Section 9.1.3(j) ) 9.1.7 , 9.1.11 or 9.2, or Section 6 of the Security Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Responsible Officer of such Obligor has knowledge thereof or a Responsible Officer of Borrower Representative receives notice thereof from any Lender, whichever is sooner; provided , however , that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;
(e) Any Guarantor repudiates, revokes or attempts to revoke its guaranty hereunder; any Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Collateral Agent (for the benefit of the Lenders); or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by the Required Lenders);
(f) Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations, the Revolver Debt and the Second Lien Debt) in excess of $5,750,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;
(g) Any judgment or order for the payment of money remains outstanding for more than 30 days against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,750,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;
 
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(h) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,750,000;
(i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting a portion of its business, which action could reasonably be expected to have a Material Adverse Effect; any Obligor suffers the loss, revocation or termination of one or more licenses, permits, leases or agreements, which loss, revocation or termination could reasonably be expected to have a Material Adverse Effect, except in connection with a Permitted Asset Disposition; there is a cessation of any part of an Obligor’s business for a period of time (other than in connection with a Permitted Asset Disposition), which cessation could reasonably be expected to have Material Adverse Effect; any Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs (other than in connection with a Permitted Asset Disposition); or any Obligor ceases to be Solvent;
(j) Any Insolvency Proceeding is commenced by any Obligor;
(k) Any Insolvency Proceeding is commenced against any Obligor and (i) such Obligor consents to the institution of the proceeding against it, (ii) the petition commencing the proceeding is not timely controverted by such Obligor, (iii) such petition is not dismissed within 60 days after its filing, or (iv) an order for relief is entered in the proceeding;
(l) A trustee (including an interim trustee) is appointed to take possession of any substantial Property of or to operate any of the business of any Obligor; or any Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally;
(m) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for any Multiemployer Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;
(n) Any Obligor or any of its Responsible Officers is criminally indicted or convicted for (i) a felony committed in the conduct of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Collateral;
(o) A Change of Control occurs;
(p) The Obligations at any time fail to constitute “Priority Obligations” under and as defined in the 2009 Debenture Intercreditor Agreement; or
(q) (i) the Obligors shall fail to pay when due any principal of or interest or premium on the Revolver Debt or the Second Lien Debt (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, if the effect of such default is to accelerate the maturity of the
 
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Revolver Debt or the Second Lien Debt, as applicable, (ii) any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such other default or event is to accelerate the maturity of the Revolver Debt or the Second Lien Debt; or (iii) the Revolver Debt or the Second Lien Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease the Revolver Debt or the Second Lien Debt shall be required to be made, in each case, prior to the Stated Maturity thereof; provided that this clause (q) shall not apply to the Revolver Debt or the Second Lien Debt that becomes due as a result of the voluntary sale or transfer of property or assets permitted under the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, or as a result of the application (other than by reason of a breach or default by the Obligors) of any provision of the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, that requires the Obligors to prepay a portion (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding or that requires the Obligors to offer to redeem or repurchase some (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding.
10.2 Remedies upon Default . If an Event of Default described in Section 10.1(j) occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Loans shall terminate, without any action by any Lender or notice of any kind. In addition, or if any other Event of Default exists, the Required Lenders may do any one or more of the following from time to time, subject to the terms of the Intercreditor Agreement:
(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law; and
(b) instruct the Collateral Agent to exercise any other rights or remedies afforded under any Loan Document, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Collateral Agent at a place designated by Collateral Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Collateral Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days’ notice of any proposed sale or other disposition of Collateral by Collateral Agent shall be reasonable. Collateral Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law. Collateral Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Collateral Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations.
 
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10.3 License . Collateral Agent for the benefit of each Lender is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Property of Obligors, including, without limitation, all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels and packaging materials, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral if and for so long as such non-exclusive license or other right to use, license or sub-license would not constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Obligor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such non-exclusive license or other right to use, license or sublicense, provided however, that at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, such grant shall include immediately and automatically any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (i) or (ii) above. Each Obligor’s rights and interests under Intellectual Property shall inure to Collateral Agent (for the benefit of the Lenders).
10.4 Setoff . Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor) are each authorized by Obligors at any time during an Event of Default, without notice to Obligors or any other Person, but subject to the Intercreditor Agreement, to set off and to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities or other Debt at any time held or owing by any Lender or any such Affiliate (other than an Obligor or any Subsidiary of an Obligor) to or for the account of any Obligor against any Obligations, whether or not demand for payment of such Obligation has been made, any Obligations have been declared due and payable, are then due, or are contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is adequate; it being understood and agreed, as between Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor), that all such deposits, funds or other moneys to be applied against any Obligations shall be allocated in accordance with the Intercreditor Agreement.
10.5 Remedies Cumulative; No Waiver .
10.5.1 Cumulative Rights . All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of Obligors contained in the Loan Documents are cumulative and not in derogation or substitution of each other. In particular, the rights and remedies of Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and shall not be exclusive of any other rights or remedies that Lenders may have, whether under any agreement, by law, at equity or otherwise.
10.5.2 Waivers . The failure or delay of any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a course of dealing. All rights and remedies shall continue in full force and effect until Full Payment of all Obligations. No modification of any terms of any Loan Documents (including any waiver thereof) shall be effective, unless such modification is specifically provided in a writing directed to Obligors and executed by the Lenders or the requisite Lenders, and such
 
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modification shall be applicable only to the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of any other Default or Event of Default that may exist at such time, unless expressly stated. If any Lender accepts performance by any Obligor under any Loan Documents in a manner other than that specified therein, or during any Default or Event of Default, or if any Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or exercise shall not operate to waive any Default or Event of Default nor to preclude exercise of any other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.
Section 11. COLLATERAL AGENT
11.1 Appointment, Authority and Duties of Collateral Agent .
11.1.1 Appointment and Authority . Each Lender appoints and designates Sun Finance as Collateral Agent hereunder. Collateral Agent has and may further, and each Lender authorizes Collateral Agent to, enter into all Loan Documents (including, without limitation, the 2009 Debenture Intercreditor Agreement and Intercreditor Agreement, any amendments thereto, and any and all other subordination and/or intercreditor agreements required under the terms of this Agreement) to which Collateral Agent is intended to be a party and accept all Loan Documents, for Collateral Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Collateral Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Collateral Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Collateral Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Collateral Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor or other Person; (c) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) exercise all rights and remedies given to Collateral Agent with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Collateral Agent shall be ministerial and administrative in nature, and Collateral Agent shall not have a fiduciary relationship with any Lender, Participant or other Person, by reason of any Loan Documents or any transaction relating thereto.
11.1.2 Duties. Collateral Agent shall not have any duties except those expressly set forth herein and in the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the extent directed to do so by Required Lenders in accordance with and pursuant to the terms of this Agreement and subject to the terms of the Intercreditor Agreement. The conferral upon Collateral Agent of any right shall not imply a duty on Collateral Agent’s part to exercise such right unless instructed to do so by Required Lenders in accordance with this Agreement and subject to the terms of the Intercreditor Agreement.
 
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11.1.3 Collateral Agent Professionals . Collateral Agent may perform its duties through agents and employees. Collateral Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Collateral Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.
11.1.4 Instructions of Required Lenders . The rights and remedies conferred upon Collateral Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Collateral Agent may request instructions from Required Lenders with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from Lenders of their indemnification obligations under Section 11.5 against all Claims that could be incurred by Collateral Agent in connection with any act. Collateral Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Collateral Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action whatsoever against Collateral Agent as a result of Collateral Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of all Lenders shall be required in the circumstances described in Section 13.1.1 , and in no event shall Required Lenders, without the prior written consent of each Lender, direct Collateral Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans. In no event shall Collateral Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Document or could subject any Agent Indemnitee to personal liability.
11.2 Agreements Regarding Collateral and Field Examination Reports .
11.2.1 Lien Releases; Care of Collateral . Lenders authorize Collateral Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations, (b) that is the subject of an Asset Disposition which Borrower Representative certifies in writing to Collateral Agent is a Permitted Asset Disposition or a Lien which Borrower Representative certifies is a Permitted Lien entitled to priority over Collateral Agent’s Liens (and Collateral Agent may rely conclusively on any such certificate without further inquiry), (c) that is within the limitations set forth in Section 13.1.1(c)(iii) , (d) with the written consent of all Lenders or (e) in accordance with the terms of the Intercreditor Agreement; provided further, upon request of Borrower Representative, Collateral Agent will provide Borrower Representative with a release of the Collateral Agent’s security interest in any assets or Collateral in conjunction with a Permitted Asset Disposition. Collateral Agent shall have no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected, insured or encumbered, nor to assure that Collateral Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.
11.2.2 Possession of Collateral . Collateral Agent and Lenders appoint each other Lender as agent for the purpose of perfecting Liens (for the benefit of the Lenders) in any Collateral that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains possession of any such Collateral, it shall notify Collateral Agent thereof and, promptly upon Collateral Agent’s request, deliver such Collateral to Collateral Agent or otherwise deal with such Collateral in accordance with Collateral Agent’s instructions.
 
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11.2.3 Reports . Collateral Agent shall promptly, upon receipt thereof, forward to each Lender copies of the results of any field audit prepared by or on behalf of Collateral Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees (a) that Collateral Agent make no representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Collateral Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Obligors books and records as well as upon representations of Obligors officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Collateral Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as any Claims arising in connection with any third parties that obtain all or any part of a Report through such Lender.
11.3 Reliance By Collateral Agent . Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.
11.4 Action Upon Default . Collateral Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Collateral Agent and the other Lenders thereof in writing. Each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of Collateral Agent and Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.
11.5 Ratable Sharing . If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.4.1 , as applicable, such Lender shall forthwith purchase from the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.4.1 , as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
 
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11.6 Indemnification of Agent Indemnitees .
11.6.1 Indemnification . EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGOR (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ANY AND ALL LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ALL REASONABLE FEES AND EXPENSES OF COUNSEL TO SUCH AGENT INDEMNITEES), ADVANCES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE AGENT INDEMNITEES UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, BY REASON OF COLLATERAL AGENT’S ENTERING INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) other than liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the gross negligence or willful misconduct of Agent Indemnitees. If Collateral Agent is sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or fraudulent transfer, then any monies paid by Collateral Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Collateral Agent by Lenders to the extent of each Lender’s Pro Rata share.
11.6.2 Proceedings . Without limiting the generality of the foregoing, if at any time (whether prior to or after the Termination Date) any proceeding is brought against any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for any act taken or omitted by Collateral Agent in connection with any Obligations, Collateral, Loan Documents or matters relating thereto, or otherwise to obtain any other relief of any kind on account of any transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required to pay under any judgment or other order entered in such proceeding or by reason of any settlement, including all interest, costs and expenses (including attorneys’ fees) incurred in defending same other than damages resulting from the gross negligence or willful misconduct of Agent Indemnitees. In Collateral Agent’s discretion, Collateral Agent may reserve for any such proceeding, and may satisfy any judgment, order or settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to Lenders subject to the Intercreditor Agreement.
 
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11.7 Limitation on Responsibilities of Collateral Agent . Collateral Agent shall not be liable to Lenders for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Collateral Agent’s gross negligence or willful misconduct. Collateral Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor or Lender of any obligations under the Loan Documents. Collateral Agent does not make to Lenders any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.
11.8 Successor Agent and Co-Agents .
11.8.1 Resignation; Successor Collateral Agent . Collateral Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Representative. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Collateral Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a commercial bank that is organized under the laws of the United States or any state or district thereof, has a combined capital surplus of at least $500,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrower Representative; provided that if any such successor Collateral Agent is not a United Stated person within the meaning of Code Section 7701(a)(30), such appointment shall be subject to approval by the Borrower Representative. If no successor agent is appointed prior to the effective date of the resignation of Collateral Agent, then Collateral Agent may appoint a successor agent from among the Lenders. Immediately upon such appointment by Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Collateral Agent without further act, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 11.5 and 13.2 . Notwithstanding any Collateral Agent’s resignation, the provisions of this Section 11 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Collateral Agent. Any successor by merger or acquisition of the stock or assets of Sun Finance shall continue to be Collateral Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.
11.8.2 Separate Collateral Agent . It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Collateral Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Collateral Agent may appoint an additional Person who is not so limited, as a separate collateral
 
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agent or co-collateral agent. If Collateral Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Collateral Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Collateral Agent. Lenders shall execute and deliver such documents as Collateral Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Collateral Agent until appointment of a new agent.
11.9 Due Diligence and Non-Reliance . Each Lender acknowledges and agrees that it has, independently and without reliance upon Collateral Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund the Loans hereunder. Each Lender has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and agrees that the other Lenders and Collateral Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Lender will, independently and without reliance upon the other Lenders or Collateral Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making the Loans, and in taking or refraining from any action under any Loan Documents. Collateral Agent shall have no duty or responsibility to provide any Lender with any notices, reports or certificates furnished to Collateral Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Collateral Agent or any of Collateral Agent’s Affiliates.
11.10 No Third Party Beneficiaries . This Section 11 is an agreement solely among Lenders and Collateral Agent, and does not confer any rights or benefits upon Obligor or any other Person. As between Obligors and Collateral Agent, any action that Collateral Agent may take under any Loan Documents shall be conclusively presumed to have been authorized and directed by Lenders as herein provided.
11.11 Collateral Agent in its Individual Capacity . Each of Sun Finance and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide bank products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Sun Finance were any other financial institution, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the Lenders. In their individual capacity, Sun Finance and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Lender agrees that Sun Finance and its Affiliates (other than an Obligor or any Subsidiary of an Obligor) shall be under no obligation to provide such information to Lenders.
 
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Section 12. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
12.1 Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of Obligors, Collateral Agent and Lenders and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents and any such assignment shall be absolutely void ab initio , and (b) any assignment by a Lender must be made in compliance with Section 12.3 . Agent pay treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 12.3 . Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.
12.2 Participations .
12.2.1 Permitted Participants; Effect . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a Person (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans for all purposes, all amounts payable by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Collateral Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Collateral Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant shall not be entitled to the benefits of Section 5.7 unless Borrowers agree otherwise in writing and unless such Participant shall have agreed to be treated as a Lender for purposes of, and subject to, Sections 5.6 and 5.7 and the definition of “Excluded Taxes”. In the event that a Lender sells participations in a Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Loan held by it (and the principal amount (and stated interest thereon) of the portion of the Loan that is subject to such participations) (the “Participant Register”). No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Borrower or any other Person (including the existence or identity of any participant or any information relating to a participant’s interest in the Loans or other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Loans or other obligations are in registered form under Treas. Reg. Section 5f.103-1(c). A Loan (and the Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each note shall expressly so provide). Any participation of such Loan (and the note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
12.2.2 Voting Rights . Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loans in which such Participant has an interest, postpones the Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan, or releases any Borrower, Guarantor or substantial portion of the Collateral.
 
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12.2.3 Benefit of Set-Off . Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 11.4 as if such Participant were a Lender.
12.3 Assignments .
12.3.1 Permitted Assignments . A Lender may assign to any Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $250,000 (unless otherwise agreed by the Required Lenders in their discretion) and integral multiples of $100,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Loans retained by the transferor Lender be at least $250,000 (unless otherwise agreed by the Required Lenders in their discretion); and (c) the parties to each such assignment shall execute and deliver to Lender, for its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans; provided, however, that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.
12.3.2 Effect; Effective Date . From the effective date of the assignment notice in the form of Exhibit C , (a) the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder, and (b) the transferor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to any indemnification provisions provided for the benefit of the Lenders hereunder or under the other Loan Documents or any other rights of the Lenders that are to survive the termination of this Agreement or any other Loan Documents) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of a transferor Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto). Upon consummation of an assignment, the transferor Lender, Collateral Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as appropriate.
12.4 Tax Treatment . If any interest in a Loan Document is transferred to a Eligible Assignee that is organized under the laws of any jurisdiction other than the United States or any state or district thereof, the Eligible Assignee, concurrently with the effectiveness of such transfer, shall have complied with the provisions of Section 5.7 .
 
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12.5 Register . Collateral Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Obligations (and the principal amount and stated interest thereon) held by such Lender (each, a “Registered Loan”). Other than in connection with an assignment by a Lender of all or any portion of its portion of the Obligations to an Affiliate of such Lender (i) a Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Loans to an Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register. Collateral Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register to the extent it has one) available for review by Borrowers from time to time during normal business hours as Borrowers may reasonably request. It is intended that any Register and Participant Register comply with the requirements of Sections 163(f), 871(h), 881(c) and 4701 of the Code and the Treasury Regulations promulgated thereunder and shall be applied in a manner consistent therewith.
Section 13. MISCELLANEOUS
13.1 Consents, Amendments and Waivers .
13.1.1 Amendment . No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of the Required Lenders and each Obligor party to such Loan Document; provided, however, that
(a) without the prior written consent of Collateral Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Collateral Agent;
(b) without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the amount set forth on Schedule 1.1 regarding such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;
 
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(c) without the prior written consent of all Lenders, no modification shall be effective that would (i) extend the Termination Date; (ii) alter Section 5.4 or 13.1.1 ; (iii) except as currently contemplated by the Loan Documents (including, without limitation, in connection with a Permitted Asset Disposition or as provided in Section 11.2.1 ) release Collateral with a book value greater than $45,000,000 during any calendar year; or (iv) except in connection with a Permitted Asset Disposition, release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release.
(d) With the written acknowledgment (without implying a requirement of consent) of Collateral Agent, Borrower Representative, and (if applicable) the signature of a Domestic Subsidiary becoming a Borrower, Joinder Agreements may be entered into and Schedules 8.1.4, 8.1.5, 8.1.9, 8.1.12, 8.1.15, 8.1.16, 8.1.17, 8.1.19, 8.1.21 and 8.1.29 may be modified.
13.1.2 Limitations . The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders and/or Collateral Agent as among themselves. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing, and then only in the specific instance and for the specific purpose for which it is given.
13.1.3 Payment for Consents . No Obligors will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.
13.2 Indemnity . EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE . In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.
13.3 Notices and Communications.
13.3.1 Notice Address . All notices, requests and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Representative’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 13.3 . Each such notice, request or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to any
 
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Lender pursuant to Section 2.1.4 shall be effective until actually received by the individual to whose attention at Lender such notice is required to be sent. Any written notice, request or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by the Borrower Representative shall be deemed received by all Obligors.
13.3.2 Electronic Communications; Voice Mail . Electronic mail and internet websites may be used only for routine communications, such as financial statements and other information required by Section 9.1.2 , administrative matters and distribution of Loan Documents for execution. Collateral Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.
13.3.3 Non-Conforming Communications . Collateral Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of an Obligor.
13.4 Performance of Borrowers’ Obligations
. Collateral Agent or Lenders may, in its/their discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Collateral Agent or any Lender to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Collateral Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Collateral Agent or any Lender under this Section shall be reimbursed to Collateral Agent and/or such Lender by Borrowers, on demand , with interest from the date incurred to the date of payment thereof at the Default Rate applicable to the Loans. Any payment made or action taken by Collateral Agent or Lenders under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.
13.5 Credit Inquiries . Each Obligor hereby authorizes Collateral Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary in connection with the establishment of credit lines and/or trade credit or any verification of any Obligor’s Accounts.
13.6 Severability . Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.
 
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13.7 Cumulative Effect; Conflict of Terms . The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise specifically provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.
13.8 Counterparts; Facsimile Signatures . Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Collateral Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
13.9 Entire Agreement . Time is of the essence of the Loan Documents. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
13.10 Obligations of Lenders . The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Loans of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Collateral Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Collateral Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute Collateral Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Borrower.
13.11 Confidentiality . During the term of this Agreement and for 12 months thereafter, Lenders agree to take reasonable precautions to maintain the confidentiality of any information that Borrowers deliver to Lenders and identify as confidential at the time of delivery, except that Lenders may disclose such information (a) to their respective officers, directors, employees, Affiliates and agents, including legal counsel, auditors and other professional advisors; (b) to any party to the Loan Documents from time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the request of any Governmental Authority exercising regulatory authority over such Lender; (e) which ceases to be confidential, other than by an act or omission of any Lender, or which becomes available to any Lender on a nonconfidential basis; (f) to the extent reasonably required in connection with any litigation relating to any Loan Documents or transactions contemplated thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the exercise of any rights or remedies under the Loan Documents; (h) to any Transferee, as long as such Person agrees to be bound by the provisions of this Section; (i) to the National Association of Insurance Commissioners or any similar organization, or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to any investor or potential investor in an Approved Fund that is a Lender or Transferee, but solely for use by such investor to evaluate an investment in such Approved Fund, or to any manager, servicer or other Person in connection with its administration of any such Approved Fund; or (k) with the consent of Borrower Representative. Notwithstanding the foregoing, Lenders may issue and disseminate to the public general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ names in advertising and other promotional materials.
 
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13.12 GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
13.13 Consent to Forum . EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES OF AMERICA LOCATED IN COOK COUNTY, ILLINOIS, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Collateral Agent or any Lender to bring proceedings against any Obligor in any other court. Nothing in this Agreement shall be deemed to preclude enforcement by Collateral Agent or any Lender of any judgment or order obtained in any forum or jurisdiction.
13.14 Waivers by Obligors . To the fullest extent permitted by Applicable Law, Obligors waives (a) the right to trial by jury (which Collateral Agent and each Lender hereby also waives) in any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Collateral Agent on which Obligors may in any way be liable, and hereby ratifies anything Collateral Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Collateral Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Collateral Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof . Each Obligor acknowledges that the foregoing waivers are a material inducement to Collateral Agent and Lenders entering into this Agreement and that Collateral Agent and Lenders are relying upon the foregoing in their dealings with Obligor. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
 
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13.15 Patriot Act Notice . Collateral Agent and Lenders hereby notify Obligor that pursuant to the requirements of the Patriot Act, Collateral Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Collateral Agent and Lenders to identify it in accordance with the Patriot Act. Collateral Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor’s management and owners, such as legal name, address, social security number and date of birth.
13.16 Subordination . Each Obligor covenants and agrees that the payment of all indebtedness, principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of any Obligor), fees, charges, expenses, reasonable attorneys’ fees and any other sum, obligation or liability owing by any other Obligor to such Obligor, including any intercompany trade payables or royalty or licensing fees (collectively, the “Intercompany Obligations”), is subordinated, to the extent and in the manner provided in this Section 13.16 , to the prior payment in full of all Obligations (herein, the “Senior Obligations”) and that the subordination is for the benefit of Lenders, and Lenders may enforce such provisions directly (it being understood that nothing in this Section 13.16 shall prohibit any payment on any Intercompany Obligations so long as no Default or Event of Default has occurred and is continuing).
(a) Each Obligor hereby (i) authorizes Lenders to demand specific performance of the terms of this Section 13.16 whether or not any other Obligor shall have complied with any of the provisions hereof applicable to it, at any time when such Obligor shall have failed to comply with any provisions of this Section 13.16 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.
(b) Upon any distribution of assets of any Obligor in any dissolution, winding-up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) and subject to the provisions of Section 13.16 :
(i) Lenders shall first be entitled to receive payment in full in cash of the Senior Obligations before any Obligor is entitled to receive any payment on account of the Intercompany Obligations.
(ii) Any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, to which any other Obligor would be entitled except for the provisions of Section 13.16 , shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to Lenders, to the extent necessary to make payment in full of all Senior Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to Lenders.
(iii) In the event that notwithstanding the foregoing provisions of Section 13.16 , any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, shall be received by any other Obligor on account of the Intercompany Obligations before all Senior Obligations are paid in full, such payment or distribution shall be received and held in trust for and shall be paid over to Lenders for application to the payment of the Senior Obligations until all of the Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to Lenders.
 
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(c) No right of the Lenders or any other present or future holders of any Senior Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Obligor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Obligor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
13.17 Advertisement . Each Obligor hereby authorizes Lenders to publish the names of Borrowers and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Lenders elect to publish.
13.18 Intercreditor Agreement . Notwithstanding anything contained herein, this Agreement and the other Loan Documents and the rights, remedies, duties and obligations evidenced hereby and thereby are subject in all respects to the terms and conditions of the Intercreditor Agreement. Furthermore, without limitation of the sentence above, the rights of the Lenders and the duty and/or obligation of Collateral Agent to take any enforcement action hereunder and/or under or with respect to any other Loan Documents is subject in all respects to the terms and conditions of the Intercreditor Agreement. In the event there is a conflict between this Agreement and/or any other Loan Documents and the Intercreditor Agreement, the Intercreditor Agreement shall control and govern.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
 
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

BORROWERS:	
	
KELLWOOD COMPANY	
KWD HOLDINGS, INC.	
KELLWOOD FINANCIAL RESOURCES, INC. (formerly known as Newkell, Inc.)	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
ZOBHA, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Treasurer	
	
AMERICAN RECREATION PRODUCTS, INC.	
SIERRA DESIGNS ACQUISITION CORPORATION	
ROYAL ROBBINS, INC.	
		
By:	 	/s/ Michael J. McConvery	
Name:	 	Michael J. McConvery	
Title:	 	Vice President and Assistant Secretary	
 
[Signature Page to Amended and Restated Term A Loan Agreement]

			
LENDERS : 	
		
	 	SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell Curtis Lentz	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
		
	 	SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell Curtis Lentz	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
	
COLLATERAL AGENT :	
		
	 	SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Maxwell Curtis Lentz	
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
 
[Signature Page to Amended and Restated Term A Loan Agreement]

IN WITNESS WHEREOF , this Note is executed as of the date set forth above.

BORROWERS:
 
KELLWOOD COMPANY
KWD HOLDINGS, INC.
KELLWOOD FINANCIAL RESOURCES, INC. (formerly known as Newkell, Inc.)
PHAT FASHIONS LLC
PHAT LICENSING LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
ZOBHA, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 		

AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION CORPORATION ROYAL ROBBINS, INC.	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 		
 
A-1

Exhibit 10.27
EXECUTION VERSION

 
KELLWOOD COMPANY
and
each of its Domestic Subsidiaries party hereto,
as Borrowers

SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT
Dated as of April 20, 2012

SCSF KELLWOOD FINANCE, LLC
and
SUN KELLWOOD FINANCE, LLC,
as Lenders
and
SUN KELLWOOD FINANCE, LLC,
as Collateral Agent

 

TABLE OF CONTENTS

 	 	 	  	 	  	PAGE	 	
Section 1.	 	DEFINITIONS; RULES OF CONSTRUCTION	  	 	1	  	
			
1.1	 	Definitions	  	 	1	  	
1.2	 	Accounting Terms	  	 	24	  	
1.3	 	Uniform Commercial Code	  	 	24	  	
1.4	 	Certain Matters of Construction	  	 	24	  	
			
Section 2.	 	CREDIT FACILITIES	  	 	25	  	
			
2.1	 	Term Loans	  	 	25	  	
	 	2.1.1	  	Term A Loans	  	 	25	  	
	 	2.1.2	  	Term Notes	  	 	25	  	
	 	2.1.3	  	Use of Proceeds	  	 	25	  	
	 	2.1.4	  	Prepayments	  	 	25	  	
			
Section 3.	 	INTEREST AND CHARGES	  	 	26	  	
			
3.1	 	Rates and Payment of Interest	  	 	26	  	
3.2	 	Computation of Interest and Yield Protection	  	 	26	  	
3.3	 	Reimbursement Obligations	  	 	26	  	
3.4	 	Capital Adequacy	  	 	27	  	
3.5	 	Mitigation	  	 	27	  	
3.6	 	Maximum Interest	  	 	27	  	
			
Section 4.	 	LOAN ADMINISTRATION	  	 	28	  	
			
4.1	 	Borrower Representative	  	 	28	  	
4.2	 	One Obligation	  	 	28	  	
4.3	 	Effect of Termination	  	 	28	  	
			
Section 5.	 	PAYMENTS	  	 	29	  	
			
5.1	 	General Payment Provisions	  	 	29	  	
5.2	 	Payment of Other Obligations	  	 	29	  	
5.3	 	Marshaling; Payments Set Aside	  	 	29	  	
5.4	 	Post-Default Allocation of Payments	  	 	29	  	
	 	5.4.1	  	Allocation	  	 	29	  	
	 	5.4.2	  	Erroneous Application	  	 	30	  	
5.5	 	Loan Account	  	 	30	  	
5.6	 	Taxes	  	 	30	  	
	 	5.6.1	  	Payments Free of Taxes	  	 	30	  	
	 	5.6.2	  	Payment	  	 	30	  	
	 	5.6.3	  	Refunds	  	 	31	  	
5.7	 	Lender Tax Information	  	 	31	  	
	 	5.7.1	  	Status of Lenders	  	 	31	  	
	 	5.7.2	  	Documentation	  	 	31	  	
 
i

									
	 	5.7.3	  	Lender Obligations	  	 	32	  	
5.8	 	Nature and Extent of Each Borrower’s Liability	  	 	32	  	
	 	5.8.1	  	Joint and Several Liability	  	 	32	  	
	 	5.8.2	  	Waivers	  	 	33	  	
	 	5.8.3	  	Extent of Liability; Contribution	  	 	34	  	
	 	5.8.4	  	Joint Enterprise	  	 	34	  	
	 	5.8.5	  	Subordination	  	 	34	  	
			
Section 6.	 	CONDITIONS PRECEDENT	  	 	35	  	
			
6.1	 	Conditions Precedent	  	 	35	  	
			
Section 7.	 	COLLATERAL	  	 	36	  	
			
7.1	 	Security Reaffirmation	  	 	36	  	
7.2	 	Administration of Accounts	  	 	36	  	
7.3	 	Administration of Inventory	  	 	37	  	
	 	7.3.1	  	Records and Reports of Inventory	  	 	37	  	
	 	7.3.2	  	Returns of Inventory	  	 	37	  	
	 	7.3.3	  	Acquisition, Sale and Maintenance	  	 	37	  	
7.4	 	[Intentionally Omitted]	  	 	37	  	
7.5	 	Administration of Deposit Accounts and Securities Accounts	  	 	37	  	
7.6	 	General Provisions	  	 	38	  	
	 	7.6.1	  	Location of Collateral	  	 	38	  	
	 	7.6.2	  	Insurance of Collateral	  	 	38	  	
			
Section 8.	 	REPRESENTATIONS AND WARRANTIES	  	 	39	  	
			
8.1	 	General Representations and Warranties	  	 	39	  	
	 	8.1.1	  	Organization and Qualification	  	 	39	  	
	 	8.1.2	  	Power and Authority	  	 	39	  	
	 	8.1.3	  	Enforceability	  	 	39	  	
	 	8.1.4	  	Capital Structure	  	 	39	  	
	 	8.1.5	  	Corporate Names; Locations	  	 	39	  	
	 	8.1.6	  	Title to Properties; Priority of Liens	  	 	40	  	
	 	8.1.7	  	Financial Statements	  	 	40	  	
	 	8.1.8	  	Surety Obligations	  	 	40	  	
	 	8.1.9	  	Taxes	  	 	40	  	
	 	8.1.10	  	Brokers	  	 	41	  	
	 	8.1.11	  	Intellectual Property	  	 	41	  	
	 	8.1.12	  	Governmental Approvals	  	 	41	  	
	 	8.1.13	  	Compliance with Laws	  	 	41	  	
	 	8.1.14	  	Compliance with Environmental Laws	  	 	41	  	
	 	8.1.15	  	Burdensome Contracts	  	 	42	  	
	 	8.1.16	  	Litigation	  	 	42	  	
	 	8.1.17	  	No Defaults	  	 	42	  	
	 	8.1.18	  	ERISA	  	 	42	  	
	 	8.1.19	  	Trade Relations	  	 	42	  	
	 	8.1.20	  	Labor Relations	  	 	43	  	
 
ii

									
	 	8.1.21	 	Payable Practices	  	 	43	  	
	 	8.1.22	 	Not a Regulated Entity	  	 	43	  	
	 	8.1.23	 	Margin Stock	  	 	43	  	
	 	8.1.24	 	Plan Assets	  	 	43	  	
	 	8.1.25	 	Immaterial Subsidiaries	  	 	43	  	
	 	8.1.26	 	Patriot Act	  	 	43	  	
	 	8.1.27	 	OFAC	  	 	43	  	
	 	8.1.28	 	Nature of Business	  	 	44	  	
	 	8.1.29	 	Material Contracts	  	 	44	  	
	 	8.1.30	 	No Bankruptcy Filing	  	 	44	  	
8.2	 	Complete Disclosure	  	 	44	  	
			
Section 9.	 	COVENANTS AND CONTINUING AGREEMENTS	  	 	44	  	
			
9.1	 	Affirmative Covenants	  	 	44	  	
	 	9.1.1	 	Inspections	  	 	44	  	
	 	9.1.2	 	Financial and Other Information	  	 	45	  	
	 	9.1.3	 	Notices	  	 	47	  	
	 	9.1.4	 	Landlord and Storage Agreements	  	 	47	  	
	 	9.1.5	 	Compliance with Laws	  	 	48	  	
	 	9.1.6	 	Taxes	  	 	48	  	
	 	9.1.7	 	Insurance	  	 	48	  	
	 	9.1.8	 	Licenses	  	 	48	  	
	 	9.1.9	 	Future Subsidiaries	  	 	48	  	
	 	9.1.10	 	Additional Guarantors	  	 	49	  	
	 	9.1.11	 	Preservation of Existence, Etc.	  	 	49	  	
	 	9.1.12	 	Keeping of Records and Books of Account	  	 	49	  	
	 	9.1.13	 	Maintenance of Properties, Etc.	  	 	49	  	
	 	9.1.14	 	Obtaining of Permits, Etc.	  	 	49	  	
	 	9.1.15	 	Further Assurances	  	 	49	  	
9.2	 	Negative Covenants	  	 	50	  	
	 	9.2.1	 	Permitted Debt	  	 	50	  	
	 	9.2.2	 	Permitted Liens	  	 	51	  	
	 	9.2.3	 	[Intentionally Omitted]	  	 	52	  	
	 	9.2.4	 	Distributions; Upstream Payments	  	 	52	  	
	 	9.2.5	 	Restricted Investments	  	 	53	  	
	 	9.2.6	 	Disposition of Assets	  	 	53	  	
	 	9.2.7	 	Loans; Extensions of Credit	  	 	53	  	
	 	9.2.8	 	Restrictions on Payment of Certain Debt	  	 	53	  	
	 	9.2.9	 	Fundamental Changes	  	 	53	  	
	 	9.2.10	 	Subsidiaries	  	 	54	  	
	 	9.2.11	 	Organic Documents	  	 	54	  	
	 	9.2.12	 	Tax Consolidation	  	 	54	  	
	 	9.2.13	 	Accounting Changes	  	 	54	  	
	 	9.2.14	 	Restrictive Agreements	  	 	54	  	
	 	9.2.15	 	Hedging Agreements	  	 	54	  	
	 	9.2.16	 	Conduct of Business	  	 	54	  	
 
iii

									
	 	9.2.17	 	Affiliate Transactions	 	 	54	  	
	 	9.2.18	 	Plans	 	 	55	  	
	 	9.2.19	 	Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt	 	 	55	  	
	 	9.2.20	 	Immaterial Subsidiaries	 	 	55	  	
	 	9.2.21	 	Fixed Charge Coverage Ratio	 	 	56	  	
	 	9.2.22	 	Federal Reserve Regulations	 	 	56	  	
	 	9.2.23	 	Investment Company Act of 1940	 	 	56	  	
	 	9.2.24	 	2009 Debenture Intercreditor Agreement	 	 	56	  	
			
Section 10.	 	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	 	 	56	  	
			
10.1	 	Events of Default	 	 	56	  	
10.2	 	Remedies upon Default	 	 	58	  	
10.3	 	License	 	 	59	  	
10.4	 	Setoff	 	 	59	  	
10.5	 	Remedies Cumulative; No Waiver	 	 	60	  	
	 	10.5.1	 	Cumulative Rights	 	 	60	  	
	 	10.5.2	 	Waivers	 	 	60	  	
			
Section 11.	 	COLLATERAL AGENT	 	 	60	  	
			
11.1	 	Appointment, Authority and Duties of Collateral Agent	 	 	60	  	
	 	11.1.1	 	Appointment and Authority	 	 	60	  	
	 	11.1.2	 	Duties	 	 	61	  	
	 	11.1.3	 	Collateral Agent Professionals	 	 	61	  	
	 	11.1.4	 	Instructions of Required Lenders	 	 	61	  	
11.2	 	Agreements Regarding Collateral and Field Examination Reports	 	 	61	  	
	 	11.2.1	 	Lien Releases; Care of Collateral	 	 	61	  	
	 	11.2.2	 	Possession of Collateral	 	 	62	  	
	 	11.2.3	 	Reports	 	 	62	  	
11.3	 	Reliance By Collateral Agent	 	 	62	  	
11.4	 	Action Upon Default	 	 	62	  	
11.5	 	Ratable Sharing	 	 	63	  	
11.6	 	Indemnification of Agent Indemnitees	 	 	63	  	
	 	11.6.1	 	Indemnification	 	 	63	  	
	 	11.6.2	 	Proceedings	 	 	64	  	
11.7	 	Limitation on Responsibilities of Collateral Agent	 	 	64	  	
11.8	 	Successor Agent and Co-Agents	 	 	64	  	
	 	11.8.1	 	Resignation; Successor Collateral Agent	 	 	64	  	
	 	11.8.2	 	Separate Collateral Agent	 	 	65	  	
11.9	 	Due Diligence and Non-Reliance	 	 	65	  	
11.10	 	No Third Party Beneficiaries	 	 	65	  	
11.11	 	Collateral Agent in its Individual Capacity	 	 	66	  	
 
iv

									
			
Section 12.	 	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	  	 	66	  	
			
12.1	 	Benefit of Agreement	  	 	66	  	
12.2	 	Participations	  	 	66	  	
	 	12.2.1	  	Permitted Participants; Effect	  	 	66	  	
	 	12.2.2	  	Voting Rights	  	 	67	  	
	 	12.2.3	  	Benefit of Set-Off	  	 	67	  	
12.3	 	Assignments	  	 	67	  	
	 	12.3.1	  	Permitted Assignments	  	 	67	  	
	 	12.3.2	  	Effect; Effective Date	  	 	67	  	
12.4	 	Tax Treatment	  	 	68	  	
12.5	 	Register	  	 	68	  	
			
Section 13.	 	MISCELLANEOUS	  	 	68	  	
			
13.1	 	Consents, Amendments and Waivers	  	 	68	  	
	 	13.1.1	  	Amendment	  	 	68	  	
	 	13.1.2	  	Limitations	  	 	69	  	
	 	13.1.3	  	Payment for Consents	  	 	69	  	
13.2	 	Indemnity	  	 	69	  	
13.3	 	Notices and Communications	  	 	70	  	
	 	13.3.1	  	Notice Address	  	 	70	  	
	 	13.3.2	  	Electronic Communications; Voice Mail	  	 	70	  	
	 	13.3.3	  	Non -Conforming Communications	  	 	70	  	
13.4	 	Performance of Borrowers’ Obligations	  	 	70	  	
13.5	 	Credit Inquiries	  	 	71	  	
13.6	 	Severability	  	 	71	  	
13.7	 	Cumulative Effect; Conflict of Terms	  	 	71	  	
13.8	 	Counterparts; Facsimile Signatures	  	 	71	  	
13.9	 	Entire Agreement	  	 	71	  	
13.10	 	Obligations of Lenders	  	 	71	  	
13.11	 	Confidentiality	  	 	71	  	
13.12	 	GOVERNING LAW	  	 	72	  	
13.13	 	Consent to Forum	  	 	72	  	
13.14	 	Waivers by Obligors	  	 	72	  	
13.15	 	Patriot Act Notice	  	 	73	  	
13.16	 	Subordination	  	 	73	  	
13.17	 	Advertisement	  	 	74	  	
13.18	 	Intercreditor Agreement	  	 	74	  	
 
v

LIST OF EXHIBITS AND SCHEDULES

Exhibit A	  	Form of Term A Note	
Exhibit B	  	Assignment and Acceptance	
Exhibit C	  	Assignment Notice	
Exhibit D	  	Joinder Agreement	
Exhibit E	  	Compliance Certificate	

Schedule 1.1	  	Lender Term A Loan Amounts	
Schedule 7.5	  	Deposit Accounts	
Schedule 7.6.1	  	Business Locations	
Schedule 8.1.4	  	Names and Capital Structure	
Schedule 8.1.5	  	Corporate Names; Locations	
Schedule 8.1.8	  	Surety Obligations	
Schedule 8.1.11	  	Patents, Trademarks, Copyrights and Licenses	
Schedule 8.1.14	  	Environmental Matters	
Schedule 8.1.15	  	Restrictive Agreements	
Schedule 8.1.16	  	Litigation	
Schedule 8.1.18	  	Pension Plans	
Schedule 8.1.20	  	Labor Contracts	
Schedule 8.1.29	  	Material Contracts	
Schedule 9.2.1	  	Existing Indebtedness	
Schedule 9.2.2	  	Existing Liens	
Schedule 9.2.5	  	Investments	
Schedule 9.2.17	  	Existing Affiliate Transactions	
 
vi

SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT (this “ Agreement ”) is dated as of April 20, 2012 among KELLWOOD COMPANY , a Delaware corporation (“ Borrower Representative ” or “ Parent ”) and its Domestic Subsidiaries from time to time a party hereto (each a “ Borrower ” and collectively with Borrower Representative, “ Borrowers ”), other Obligors (as defined below) party hereto, SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF Finance ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (“ Sun Finance ” and, together with the SCSF Finance, each a “ Lender ” and collectively, the “ Lenders ”) and Sun Finance, in its capacity as collateral agent for each Lender (the “ Collateral Agent ”).
RECITALS:
WHEREAS , Parent, Borrowers, the other Obligors party thereto, the Lenders and Collateral, are party to that certain Amended and Restated Term A Loan Agreement dated as of October 19, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ Existing Agreement ”) pursuant to which the Lenders made certain Term A Loans the proceeds of which were used by the Borrowers to pay certain amounts due under the 2009 Holdouts (as defined in the Existing Agreement) and to finance their mutual and collective business enterprise;
WHEREAS , the Parties hereto have agreed to amend and restate the Existing Agreement to, among other things, amend certain of the Definitions and other various provisions contained herein, upon and subject to the terms and conditions set forth herein;
WHEREAS , it is the intent of the parties hereto that this Agreement not constitute a novation of the Loans existing under the Existing Agreement or evidence repayment of any of such Loans and that this Agreement amend and restate in its entirety the Existing Agreement and re-evidence the Loans of the Borrowers outstanding thereunder and the Liens in the Collateral created under the agreements entered in connection therewith;
NOW, THEREFORE , for valuable consideration hereby acknowledged, the parties agree as follows:
Section 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions . As used herein, the following terms have the meanings set forth below:
2009 Debentures —the 2009 notes issued pursuant to the 2009 Indenture.
2009 Debenture Intercreditor Agreement —that certain Amended and Restated Intercreditor Agreement of even date herewith, by and between Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as collateral agent under the 2009 Indenture, the Revolver Agent, the Second Lien Agent and Collateral Agent.
 
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2009 Indenture —that certain indenture, dated as of July 23, 2009, by and between Parent and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee and collateral agent, pursuant to which Parent issued $120,590,000 in aggregate principal amount of 12.875% Second-Priority Senior Secured PIK Notes due December 31, 2014.
2009 Indenture Guaranty —that certain Guaranty Agreement (and including any guaranty agreement executed pursuant to the terms thereof and any replacement guaranty) dated as of July 23, 2009, by and among the Guarantors and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee, for the holders of the 2009 Debentures, as amended or supplemented from time to time.
Account —as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.
Account Debtor —a Person who is obligated under an Account, Chattel Paper or General Intangible.
Acquisition —the acquisition of (a) a controlling Equity Interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such Equity Interest or upon exercise of an option or warrant for, or conversion of securities into, such Equity Interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.
Affiliate —with respect to any Person, another Person (a) who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person; (b) who beneficially owns 10% or more of the voting securities or any class of Equity Interests of such first Person; (c) at least 10% of whose voting securities or any class of Equity Interests is beneficially owned, directly or indirectly, by such first Person; or (d) who is an executive or financial officer, director, partner or managing member of such first Person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.
Agent Indemnitees —Collateral Agent and its officers, directors, employees, Affiliates, agents and attorneys.
Agent Professionals —attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Collateral Agent.
Agreement —as defined in the preamble hereto.
Allocable Amount —as defined in Section 5.8.3.
 
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Anti-Terrorism Laws —any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law —all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
Approved Fund —any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of business and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.
Asset Disposition —a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.
Assignment and Acceptance —an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B.
Bankruptcy Code —Title 11 of the United States Code.
Board of Governors —the Board of Governors of the Federal Reserve System.
Borrower Representative —as defined in the preamble to this Agreement.
Borrowers —Borrower and its Domestic Subsidiaries (other than Immaterial Subsidiaries) from time to time parties hereto.
Business Day —any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of—or are in fact closed in, Florida, or Illinois.
Capital Adequacy Regulation —any law, rule, regulation, guideline, request or directive of any central bank or other Governmental Authority, whether or not having the force of law, regarding capital adequacy of a bank or any Person controlling a bank.
Capital Expenditures —all liabilities incurred, expenditures made or payments due (whether or not made) for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.
Capital Lease —any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP (but without giving effect to FASB ASC 840).
Capital Lease Obligations —with respect to any Person, obligations of such Person and its Subsidiaries under Capital Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP (but without giving effect to FASB ASC 840).
 
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Cash Collateral —cash, and any interest or other income earned thereon, that is delivered to Collateral Agent to Cash Collateralize any Obligations.
Cash Collateralize —the delivery of cash to Collateral Agent, as security for the payment of Obligations, in an amount equal to with respect to any inchoate or contingent Obligations, Collateral Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. “Cash Collateralization” has a correlative meaning.
Cash Equivalents —(a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.
CERCLA —the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq .).
Change in Law —the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided , however , that for purposes of this definition, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith and (y) all requests, rules, guidelines 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, in each case, pursuant to Basell III, shall be deemed to have been adopted and gone into effect after the date of this Agreement.
Change of Control —the occurrence of any of the following events: (a) Sponsor ceases to own and control, beneficially and of record, directly or indirectly, more than 50.1% of the voting and economic Equity Interests in Parent on a fully diluted basis, or
 
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(b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have acquired beneficial ownership on a fully diluted basis of the voting Equity Interests of Parent sufficient to (whether or not exercised) elect a majority of the members of the board of directors (or similar governing body) of Parent.
Chattel Paper —as defined in the UCC.
Claims —all liabilities, obligations, losses, damages, penalties, judgments, proceedings, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.
Closing Date —as defined in Section 6.1.
Code —the Internal Revenue Code of 1986, as amended.
Collateral —‘Collateral’ as defined in the Security Agreement.
Collateral Agent —as defined in the preamble hereto.
Compliance Certificate —a certificate, substantially in the form of Exhibit E and in substance reasonably satisfactory to Collateral Agent, by which Borrower Representative certifies the absence of any Default or Event of Default and sets forth a reasonably detailed calculation of the Fixed Charge Coverage Ratio for the 12 Fiscal Month period most recently ended (regardless of whether Fixed Charge Coverage Ratio is to be tested for such period).
Consolidated EBITDA —for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the
 
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extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (1) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate, (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses incurred in Fiscal Year 2012 solely in connection with the audit of the Vince business in an amount not to exceed $350,000; provided that for the purpose of this definition, “Consolidated EBITDA” of the Parent and its subsidiaries shall be deemed to be: $5,832,000 for the fiscal quarter ended July 31, 2011, $15,604,000 for the fiscal quarter ended October 31, 2011 and $6,604,000 for the fiscal quarter ended January 31, 2012. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after
 
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the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Collateral Agent.
Consolidated Net Income —for any period of computation thereof, the gross revenues from operations of Parent and its Subsidiaries (including payments received by Parent and its Subsidiaries of (a) interest income, and (b) Distributions made in the Ordinary Course of Businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP; but excluding (without duplication): (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of Parent or any Subsidiary, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up or write-down of any asset (provided, that write-downs of Accounts and/or Inventory shall not be so excluded), (v) any net gains resulting from repurchases of Debt, and (vi) any other net gain or loss of an extraordinary nature as determined in accordance with GAAP.
Consolidated Net Interest Expense —for any period, for Parent and its Subsidiaries on a consolidated basis, the sum of (a) all interest and similar expenses that are treated as interest in accordance with GAAP, and (b) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP. For each period of 12 consecutive Fiscal Months ending next following the date of each Acquisition (whether consummated before or after the Closing Date), Consolidated Net Interest Expense as a component of Consolidated EBITDA shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Obligations) incurred, acquired or assumed in connection with such Acquisition (“ Incremental Debt ”) calculated (A) as if all such Incremental Debt had been incurred as of the first day of such 12 consecutive Fiscal Month period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such 12 consecutive Fiscal Months, as the case may be.
Contingent Obligation —any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase
 
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any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.
Convertible Debentures —those certain $200,000,000 3.50% Convertible Senior Debentures maturing June 15, 2034, issued pursuant to that certain Indenture dated as of June 22, 2004 by and between the Parent and Union Bank of California, N.A. or any of its successors, as trustee (as amended or supplemented from time to time, the “ Convertible Debenture Agreement ”).
Copyright Security Agreement —each copyright security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of the Lenders, a Lien on such Obligor’s interest in copyrights as security for the Obligations.
Covenant Testing Period —has the meaning assigned to such term in the Revolver Agreement.
Covenant Testing Trigger Date —has the meaning assigned to such term in the Revolver Agreement.
CWA —the Clean Water Act (33 U.S.C. §§ 1251 et seq .).
Debt —as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, credit documents or similar instruments, (c) all Capital Leases, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred and being paid in the Ordinary Course of Business, (e) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination, (f) all Contingent Obligations; (g) all reimbursement obligations in connection with (i) letters of credit, bank guarantees or bankers’ acceptances issued for the account of such Person or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the Ordinary Course of Business, (h) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse and (i) in the case of Borrowers, the Obligations. The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer. Notwithstanding anything herein to the contrary, the term “Debt” shall not include any operating leases that, as a result of changes in GAAP, would classify such operating leases as Capitalized Lease Obligations, required to be reflected on a consolidated balance sheet of Borrowers in accordance with GAAP.
 
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Default —an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.
Default Rate —as defined in Section 3.1(b).
Deposit Account —as defined in the UCC, but excluding the Excluded Accounts.
Deposit Account Control Agreements —the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
Distribution —any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest; or any payment of management or advisory fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by any Borrower to any holder of any Equity Interest of Parent or any Affiliate of such holder.
Document —as defined in the UCC.
Dollars —lawful money of the United States.
Domestic Subsidiary —a Subsidiary (other than an Immaterial Subsidiary) which is created or organized under the laws of the United States of America, any of its states or the District of Columbia.
Eligible Assignee —a Person that is (a) a Lender, U.S. based Affiliate of a Lender (other than an Obligor or any Subsidiary of an Obligor) or Approved Fund; (b) any other financial institution approved by Required Lenders and the Borrower Representative (which approval by the Borrower Representative shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within ten (10) Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Required Lenders in their discretion.
Enforcement Action —any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).
Environmental Laws —all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
 
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Environmental Notice —a notice from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release —a release as defined in CERCLA or under any other Environmental Law.
Equipment —as defined in the UCC, including all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory), and all parts, accessories and special tools therefor, and accessions thereto.
Equity Interest —the interest of any (a) shareholder in a corporation, (b) partner in a partnership (whether general, limited, limited liability or joint venture), (c) member in a limited liability company, or (d) other Person having any other form of equity security or ownership interest.
ERISA —the Employee Retirement Income Security Act of 1974.
Event of Default —as defined in Section 10.
Exchange Act —the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Exchange Offer —that certain offer by Borrower Representative, completed as of July 23, 2009, pursuant to which Borrower Representative exchanged $117,832,000 in aggregate principal amount of its 7.875% debentures maturing July 15, 2009 and $13,790,000 in aggregate principal amount of its 7.625% debentures maturing October 15, 2017 for $120,590,000 in aggregate principal amount of its 2009 Debentures.
Excluded Accounts —as defined in Section 7.5.
Excluded Tax —with respect to Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which any Borrower is a resident for tax purposes on the Closing Date; (c) any backup withholding Tax required by the Code to be withheld from amounts payable to a Payee that has failed or is unable to comply with
 
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Section 5.7; (d) in the case of a Foreign Payee, any United States withholding Tax that is (i) required pursuant to laws in force at the time such Payee becomes a Payee (or designates a new Lending Office) hereunder, or (ii) attributable to such Payee’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.7, except to the extent that such Foreign Payee (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrowers with respect to such withholding Tax; and (e) any Taxes imposed on amounts payable by Borrowers under Sections 1471-1474 of the Code.
Existing Agreement —as defined in the recitals hereto.
Extraordinary Expenses —all costs, expenses or advances that Collateral Agent or a Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Borrower (which shall be reasonable under the circumstances in which they are incurred), including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Collateral Agent, any Lender, any Borrower, any representative of creditors of a Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Collateral Agent’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Collateral Agent, any Lender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; or (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations. Such costs, expenses and advances include transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Borrower or independent contractors in liquidating any Collateral, and travel expenses.
First Amendment and Restatement Closing Date —March 18, 2011.
Fiscal Month —one of the three fiscal periods in a Fiscal Quarter each of which is approximately one month in duration. There are 12 Fiscal Months in each Fiscal Year.
Fiscal Quarter —one of the four 13-week, or, if applicable, 14-week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on a Saturday of the thirteenth (or fourteenth, if applicable) week in such quarter.
Fiscal Year —the fiscal year of the Parent for financial accounting purposes. The current Fiscal Year will end on January 28, 2012.
 
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Fixed Charge Coverage Ratio —the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except those financed with Permitted Debt other than Revolver Loans or the Second Lien Debt) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrower to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Fixed Charges —the sum, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated Net Interest Expense paid or payable in cash (and, for the avoidance of doubt, excluding those paid-in-kind or capitalized), plus (b) scheduled principal payments made on Debt in cash and earnout payments paid in cash (other than earnout payments made in Fiscal Year 2011 in an aggregate amount not to exceed $58,500,000 by Parent and its Subsidiaries with respect to the “Vince” brand).
FLSA —the Fair Labor Standards Act of 1938.
Foreign Lender —any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Payee —any Payee that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Plan —any employee benefit plan or arrangement maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States, or any employee benefit plan or arrangement mandated by a government other than the United States for employees of any Obligor or Subsidiary.
Foreign Subsidiary —a Subsidiary that is not a Domestic Subsidiary or an Immaterial Subsidiary.
Full Payment —with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding) and (b) a release of any Claims of Obligors arising in connection with the Loan Documents against Collateral Agent and Lenders arising on or before the payment date.
GAAP —generally accepted accounting principles in the United States in effect from time to time.
General Intangibles —as defined in the UCC, including choses in action, causes of action, company or other business records, inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer lists, permits, tax refund claims, computer programs, operational manuals, internet addresses and domain names, insurance refunds and premium rebates, all rights to indemnification, and all other intangible Property of any kind.
 
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Governmental Approvals —all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.
Governmental Authority —any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.
Guarantor Payment —as defined in Section 5.8.3.
Guarantors —each Person who guarantees payments or performance of any Obligations pursuant to Section 5.8 hereof and after the date hereof pursuant to a Joinder Agreement. It is understood that the Obligations shall not be guaranteed by any existing or future Foreign Subsidiary, including any Foreign Subsidiary of any Guarantor.
Hedging Agreement —an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.
Immaterial Subsidiaries —American Recreation Products International, Inc., a Delaware corporation, The Kellwood Foundation, an Illinois charitable foundation, Kellwood Financial Services, Inc., a Delaware corporation, XCSI, Inc., a Delaware corporation, Kellwood Retail Group, Inc., a Delaware corporation, MJF Imports, Inc., a New York corporation, Tri W Corporation, a North Carolina corporation, Halmode Apparel, Inc., a Delaware corporation, New Campaign, Inc., a Delaware corporation; and any other Domestic Subsidiary formed or acquired after the Closing Date (a) which is designated as such by the Borrower Representative in a written notice delivered to the Lenders from time to time and (b) which does not (i) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America and (ii) have revenues in any Fiscal Year in excess of $1,000,000 unless such Immaterial Subsidiary has become a Borrower pursuant to Section 9.2.20 or is an Obligor under the Revolver Agreement.
Indemnified Taxes —all Taxes imposed on a Payee with respect to the Obligations other than Excluded Taxes.
Indemnitees —Agent Indemnitees and Lender Indemnitees.
Indenture —that certain Indenture dated September 30, 1997 by and between The Chase Manhattan Bank, as trustee, or any successor trustee and the Parent, as amended, supplemented or restated from time to time, pursuant to which certain debt securities have been issued by the Parent.
 
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Insolvency Proceeding —any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for reorganization or other similar relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.
Instrument —as defined in the UCC.
Insurance Assignment —each collateral assignment of insurance pursuant to which an Obligor assigns to Collateral Agent, for the benefit of the Lenders, such Obligor’s rights under business interruption or other insurance policies as Collateral Agent and Required Lenders reasonably deems it appropriate to be assigned, as security for the Obligations.
Intellectual Property —all intellectual and similar Property of a Person, including inventions, designs, patents, patent applications, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, registrations and franchises; all books and records describing or used in connection with the foregoing; and all licenses or other rights to use any of the foregoing.
Intellectual Property Claim —any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Domestic Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Intellectual Property or other Property violates another Person’s Intellectual Property.
Intercreditor Agreement —means that certain Intercreditor Agreement dated as of the date hereof, by and among each Lender, Parent, Wells Fargo Bank, National Association, Cerberus Business Finance, LLC and any other parties thereto, as may be amended from time to time.
Inventory —as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in an Obligor’s business (but excluding Equipment).
Investment —any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
Joinder Agreement —an agreement substantially in the form of Exhibit D hereto by which a Domestic Subsidiary of Parent becomes a Borrower hereunder.
Lender Indemnitees —Lenders and their officers, directors, employees, Affiliates (other than an Obligor or any Subsidiary of an Obligor), agents and attorneys.
 
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Lenders —as defined in the preamble to this Agreement, including any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.
Lending Office —the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Collateral Agent and Borrower Representative.
License —any license or agreement under which a Borrower is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.
Licensor —any Person from whom a Borrower obtains the right to use any Intellectual Property.
Lien —any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.
Loan (s)—the Term A Loan.
Loan Account —the loan account established by each Lender on its books pursuant to Section 5.6.
Loan Documents —this Agreement, Other Agreements and the Security Documents.
Loan Year —each calendar year commencing on the Closing Date and on each anniversary of the Closing Date.
Management Services Agreement —that certain Management Services Agreement dated as of May 29, 2008 by and between Parent and Sun Capital Partners Management V, LLC, as in effect on the date hereof.
Margin Stock —as defined in Regulation U of the Board of Governors.
Material Adverse Effect —the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, or condition (financial or otherwise) of Borrowers taken as a whole, on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Collateral Agent’s Liens on any Collateral; (b) impairs the ability of Borrowers taken as a whole to repay the Obligations or materially impairs the ability of any Borrower to perform any other obligation under the Loan Documents, or (c) otherwise impairs the ability of any Lender to enforce or collect any Obligations or of the Collateral Agent to realize upon any Borrowing Base Collateral (under and as defined in the Revolver Agreement).
 
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Material Contract —any agreement or arrangement to which an Obligor is party (other than the Loan Documents, the Second Lien Debt Documents or Revolver Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, or (b) that relates to Subordinated Debt, Debt under the 2009 Indenture or Debt in an aggregate amount of $46,000,000 or more.
Moody’s —Moody’s Investors Service, Inc., and its successors.
Multiemplover Plan —any employee benefit plan or arrangement described in Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor.
Notes —the Term A Note or other promissory note executed by a Borrower to evidence any Obligations.
Obligations —all (a) principal of and premium, if any, on the Loans, (b) interest (which shall include any capitalized interest), expenses, fees and other sums payable by Obligors under Loan Documents, (c) obligations of Obligors under any indemnity for Claims, (d) Extraordinary Expenses, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
Obligor —each Borrower, any Guarantor and any other Person that is liable for payment of the Obligations or that has granted a Lien in favor of Collateral Agent on its assets to secure the Obligations.
OFAC —The Office of Foreign Assets Control of the U.S. Department of the Treasury.
Ordinary Course of Business —the ordinary course of business of any Borrower or Subsidiary and undertaken in good faith.
Organic Documents —with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.
OSHA —the Occupational Safety and Hazard Act of 1970.
Other Agreement —each Note, financial statement, report delivered hereunder, 2009 Debenture Intercreditor Agreement, Intercreditor Agreement, the Security Documents or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter executed by an Obligor or other Person in favor of
 
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Collateral Agent or a Lender in connection with any transactions relating hereto, but excluding, for the avoidance of doubt, the Management Services Agreement or any documents executed in connection with any equity investment in any Obligor.
Other Taxes —all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
Parent —as defined in the preamble to this Agreement.
Participant —as defined in Section 12.2.
Patent Security Agreement —each patent security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in its patents, as security for the Obligations.
Patriot Act —the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Payee —Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation.
Payment Item —each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.
Permitted Acquisition —any Acquisition effected with the consent and approval of the board of directors or other applicable governing body of the Person being acquired, and with the duly obtained approval of such shareholders or other holders of equity or other ownership interest as such Person may be required to obtain, so long as (i) immediately prior to and immediately after the consummation of such Acquisition, no Default or Event of Default has occurred and is continuing, (ii) substantially all of the sales and operating profits generated by such Person (or assets) so acquired or invested are derived from a line or lines of business that are part of, or complementary, to the business as then conducted by Borrowers and Subsidiaries and (iii) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Asset Disposition —an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) one or more dispositions of Equipment or Real Estate so long as the net book value, as determined in accordance with GAAP, in the aggregate for all such dispositions does not to exceed $5,000,000 over the term of the Agreement; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) a termination of a lease of real or personal Property or License that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition of Investments of the type described in clause (c) of the definition of “Restricted Investments” in the ordinary course of management of
 
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the investment portfolio of Borrowers and Subsidiaries; (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens; (g) the sale of the Phat Farm business and related intellectual property, so long as no Event of Default exists and the gross cash proceeds from such sale are not less than $3,500,000 or (h) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Contingent Obligations —Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) guarantee obligations of a Borrower or any Domestic Subsidiary in respect of Debt or operating leases and other non-Debt obligations otherwise permitted under this Agreement of a Borrower or any wholly-owned Domestic Subsidiary.
Permitted Distributions —any Distribution permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Investment —investments described in clauses (a)—(i) of the definition of Restricted Investment.
Permitted Lien —as defined in Section 9.2.2.
Permitted Purchase Money Debt —Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, provided that the aggregate outstanding amount of such Purchase Money Debt shall not exceed $5,750,000 at any time.
Person —any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.
Plan —an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which an Obligor is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions.
Pro Rata —with respect to any Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the amount of such Lender’s Loan amount as set forth on Schedule 1.1 by all outstanding Loans.
 
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Properly Contested —with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or such Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any Collateral of such Obligor with a value in excess of $287,500; (e) no Lien is imposed on Collateral of such Obligor, unless bonded and stayed to the satisfaction of the Required Lenders; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.
Property —any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Purchase Money Debt —(a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets which does not exceed on the date of acquisition the cost or fair market value, whichever is lower, of the Property being acquired on the date of acquisition; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) of items described in the preceding clauses (a) and (b).
Purchase Money Lien —a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.
RCRA —the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate —all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.
Refinancing Conditions —the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount (including, any capitalized interest with respect thereto that does not exceed the principal amount (to the extent such interest was permitted to be capitalized hereunder)) of the Debt being extended, renewed or refinanced; (b) if the original Debt was subordinated to the Obligations, it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (c) the representations, covenants and defaults applicable to it are no less favorable in any material respect to Obligors than those applicable to the Debt being extended, renewed or refinanced; (d) no Lien is granted to secure it other than Liens securing the original Debt; (e) if the original Debt was the obligation of a Foreign Subsidiary, no Obligor becomes obligated on such Debt; (f) upon giving effect to it, no Default or Event of Default exists; (g) if the Stated Maturity of the Debt being extended, renewed or refinanced is earlier than the Stated Maturity of the Obligations, it has a Stated Maturity no earlier than the Stated Maturity of the Debt being extended, renewed or refinanced; and (h) it has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Debt being extended, renewed or refinanced.
 
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Refinancing Debt —Debt that is the result of an extension, renewal or refinancing of Debt permitted under Section 9.2.1(b), (d) or (j).
Reportable Event —any event set forth in Section 4043(b) of ERISA.
Required Lenders —the Lenders having Loans in excess of 51% of all outstanding Loans.
Responsible Officer —with respect to all certificates and financial matters hereunder, President, Chief Executive Officer, and Chief Financial Officer of a Borrower (the “ Principal Responsible Officers ”) and, with respect to all notices and other matters hereunder, any Principal Responsible Officer, the Vice President, Finance and Controller, Vice President, Treasurer or General Counsel of the Borrower Representative or any other officer expressly designated by the Board of Directors of the Borrower Representative (or the appropriate committee thereof) or a Principal Responsible Officer as a Responsible Officer of the Borrower Representative. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower Representative shall be conclusively presumed to have been authorized by all necessary corporate and/or other action on the part of the Borrower Representative and each other Borrower on whose behalf it is delivered and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower Representative and each such Borrower.
Restricted Investment —any Investment by an Obligor, other than (a) Investments (other than those permitted by clause (b) through (g)  of this definition) that are existing on the Closing Date and are listed on Schedule 9.2.5; (b) Investments in Subsidiaries to the extent existing on the Closing Date; (c) cash and Cash Equivalents that are subject to Collateral Agent’s Lien and, subject to the Intercreditor Agreement, control; provided that, the cash consisting of collected funds and Cash Equivalents held by the Obligors shall not exceed $11,500,000 in the aggregate (excluding amounts held in employee trust accounts) for more than three (3) consecutive Business Days so long as any Revolver Debt is outstanding, (d) loans, advances and credit extensions permitted under Section 9.2.7; (e) Investments of (i) any Subsidiary in a Borrower or (ii) any Obligor in another Obligor or (iii) any Subsidiary which is not an Obligor in another Subsidiary which is not an Obligor; (f) with respect to any Obligor, Permitted Acquisitions; (g) Investments permitted by Section 9.2.9; (h) other Investments and Acquisitions consummated after the Closing Date by any Subsidiary which is not an Obligor which Investments or Acquisitions do not contain any Contingent Obligations, or any direct or contingent liabilities, of any Obligor and which have not been financed in whole or in part by any Obligor and (i) any other Investment permitted under the Revolver Agreement, as in effect on the date hereof.
Restrictive Agreement —an agreement (other than a Loan Document, Revolver Loan Documents and Second Lien Debt Documents) that conditions or restricts the right of any Borrower, Domestic Subsidiary or other Obligor to incur or repay the Obligations, to grant Liens on the Collateral, to declare or make Distributions to an Obligor, to modify, extend or renew the Obligations, or to repay any intercompany Debt owed to an Obligor.
 
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Revolver Agreement —means that certain Credit Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the financial institutions party thereto and Wells Fargo Bank, National Association (the “ Revolver Agent ”), as agent for the Lenders (as defined therein) (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Debt —shall mean the ‘Obligations’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Loan Documents —means ‘Loan Documents’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Royalties —all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.
S&P —Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Sanctioned Entity —(a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.
Sanctioned Person —a person named on the list of Specially Designated Nationals maintained by OFAC.
Second Lien Agent —Cerberus Business Finance, LLC or its successors or assigns.
Second Lien Debt —indebtedness and other obligations evidenced by the Second Lien Debt Documents and subject to the Intercreditor Agreement.
Second Lien Debt Documents —Term Loan Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the Second Lien Agent and lenders from time to time party thereto (the “ Second Lien Term Loan Agreement ”) and the “Loan Documents” as defined therein.
Securities Account Control Agreements —the Securities Account control agreements to be executed by each securities intermediary maintaining a Securities Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
 
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Securities Account —as defined in the UCC.
Security Agreement —the security agreement dated as of the date hereof made by each Obligor in favor of Collateral Agent, for the benefit of Lenders, securing the Obligations.
Security Documents —the Security Agreement, the Copyright Security Agreement, the Patent Security Agreement, Trademark Security Agreements, insurance assignments, control agreements, and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.
Software —as defined in the UCC.
Solvent —as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any loan documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.
Sponsor —means Sun Capital Partners, Inc. or any of its Affiliates.
Stated Maturity —with respect to any installment of interest or principal on any series of Debt, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Debt as of the date of this Agreement, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
Subordinated Debt —Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations in a manner and form satisfactory to each Lender, and is unsecured and does not amortize prior to the Termination Date.
 
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Subsidiary —any entity at least 50% of whose voting securities or Equity Interests is owned by an Obligor or any combination of Obligors (including indirect ownership by an Obligor through other entities in which such Obligor directly or indirectly owns 50% of the voting securities or Equity Interests).
Taxes —all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Trademark Security Agreement —each trademark security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in trademarks, as security for the Obligations.
Term A Loans —the loans made pursuant to Section 2.1.1 of this Agreement. The amount of each Lender’s Pro Rata share of the Term B Loans as of the Closing Date is set forth on Schedule 1.1.
Term A Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A , evidencing the amount of such Lender’s Term A Loan amount as set forth on Schedule 1.1.
Term B/C/D/E/F Loan Agreement —means that certain Fourth Amended and Restated Term Loan Agreement, dated as of the date hereof, by and among Parent, Borrowers, the other obligors party thereto, SCSF Finance, Sun Finance and the Collateral Agent.
Term B/C/D/E/F Loan Debt —means the ‘Obligations’ as defined in the Term B/C/D/E/F Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Intercreditor Agreement.
Termination Date —shall mean the earlier of (i) January 19, 2017, (ii) the date on which the Second Lien Debt under the Second Lien Term Loan Agreement has been paid in full in cash and all commitments to lend under the Second Lien Term Loan Agreement have been terminated; provided that, if the stated maturity date of the Second Lien Debt is extended, the stated maturity date set forth in clause (i) of this definition of the Loans shall be extended by a period of the same duration and (iii) the date on which all the Loans and Obligations are accelerated pursuant to Section 10.2.
Transferee —any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.
UCC —the Uniform Commercial Code as in effect in the State of Illinois or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.
Ultimate Parent —Kellwood Holding Corp., a Delaware corporation.
 
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Upstream Payment —a Distribution by a Subsidiary of a Borrower to such Borrower.
US Foreign Holdco —any Domestic Subsidiary that is a holding company and whose assets consist solely of Stock or other equity of a Foreign Subsidiary and other assets of de minimis value (it being understood that such Domestic Subsidiary does not own any Accounts or Inventory).
Weighted Average Life to Maturity —when applied to any Debt at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Debt, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Debt.
1.2 Accounting Terms . Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to the Lenders before the Closing Date and using the same inventory valuation method as used in such financial statements. If GAAP changes during the term of this Agreement, or if the Borrowers interpret or apply GAAP differently (and Borrowers’ certified public accountants concur in such interpretation or application) from how it was interpreted or applied in preparing the financial statements provided to the Lenders prior to the Closing Date, such that any financial ratios or covenants contained herein would then be calculated in a different manner or with different components, then Borrowers shall provide the Lenders with prior written notice of any such changes and upon the request of either the Borrowers or the Lenders, the Borrowers and the Lenders agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those financial ratios or covenants as criteria for evaluating the Obligors’ financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided, however, that, until the Borrowers, the Lenders so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change.
1.3 Uniform Commercial Code . As used herein, the following terms are defined in accordance with the UCC in effect in the State of Illinois from time to time: “Chattel Paper,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles” and “Instrument.”
1.4 Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the
 
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interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Lenders’ notice addresses under Section 13.3.1; or (g) discretion of any Lender mean the sole and absolute discretion of such Person. All calculations of fundings of the Loans, and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
Section 2. CREDIT FACILITIES
2.1 Term Loans
2.1.1 Term A Loans . Each Lender severally made a Term A Loan to the Borrowers prior to the date hereof. The amount of Term A Loans outstanding as of the date hereof is set forth on Schedule 1.1 hereto.
2.1.2 Term Notes . The Term A Loans made by each Lender and interest accruing thereon shall be evidenced by the records of such Lender. At the request of any Lender, Borrowers shall deliver a Term A Note in the principal amount equal to such Lender’s Term A Loans to such Lender.
2.1.3 Use of Proceeds . The proceeds of the Term A Loans were used by the Borrowers to pay certain amounts due under the 2009 Holdouts (as defined in the Existing Agreement) and to finance their mutual and collective business enterprise.
2.1.4 Prepayments . (a)  Voluntary Prepayments . Borrowers may at any time on at least five (5) days’ prior written notice by Borrower Representative to each Lender voluntarily prepay all or part of the Loans; provided that any such prepayments or reductions shall be in a minimum amount of $500,000 and integral multiples of $250,000 in excess of such amount.
(b) Mandatory Prepayments .
(i) Upon the occurrence of a Change of Control, the Borrowers shall make Full Payment of all Obligations;
(ii) Upon the sale of all or substantially all of the assets of the Borrowers and their Subsidiaries taken as a whole, in a transaction or a series of transactions, the Borrowers shall make Full Payment of all Obligations; and
 
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(iii) On Termination Date, the Borrowers shall make Full Payment of all Obligations.
Section 3. INTEREST AND CHARGES
3.1 Rates and Payment of Interest . (a) The Obligations shall bear interest as follows: 10% per annum will be payable by adding such accrued interest to the principal amount of the Loans on the last day of the Fiscal Quarter then ended; provided , that Borrowers may elect, at their option, so long as Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is not less than $45,000,000, to pay a portion of such interest equal to 5% per annum in cash. Interest shall accrue from the date the Loans are advanced or the Obligation is incurred or payable, until paid by Borrowers.
(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if the Required Lenders in their discretion so elect, Obligations shall bear interest at a rate equal to the rates set forth in Section 3.1(a) plus 2.0% (the “ Default Rate ”). To the extent permitted by the Intercreditor Agreement, the Default Rate shall be payable in cash. To the extent the Intercreditor Agreement does not permit the Default Rate to be paid in cash, the Default Rate shall be paid in kind by capitalizing such amount to the principal amount of the Loans on the last day of the Fiscal Quarter then ended. Each Borrower acknowledges that the cost and expense to each Lender due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate the Lenders for such added cost and expense.
(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the last day of each Fiscal Quarter, (ii) on any date of prepayment, with respect to the principal amount of the Loans being prepaid; and (iii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.
3.2 Computation of Interest and Yield Protection . All computations of interest shall be computed for the actual days elapsed, based on a 365-day or 366-day year as applicable. Each determination by the Lenders of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
3.3 Reimbursement Obligations . Subject to the terms of the Intercreditor Agreement, Borrowers shall reimburse Collateral Agent and Lenders, without duplication, for all Extraordinary Expenses. Borrowers shall also reimburse the Collateral Agent and each Lender for all reasonable out-of-pocket and invoiced legal fees (which invoice may omit information that such counsel reasonably deems privileged) and all reasonable out-of-pocket accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Collateral Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 9.1.1 , each
 
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inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Collateral Agent’s or Lender’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Collateral Agent’s or a Lender’s professionals at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Collateral Agent, any Lender or any of their Affiliates (other than an Obligor or any Subsidiary of an Obligor) may have with such professionals with respect to this or any other transaction. All amounts reimbursable by Borrowers under this Section shall constitute Obligations secured by the Collateral and shall be payable on demand.
3.4 Capital Adequacy . If a Lender determines that any introduction of or any change in a Capital Adequacy Regulation, any change in the interpretation or administration of a Capital Adequacy Regulation by a Governmental Authority charged with interpretation or administration thereof, or any compliance by such Lender or any Person controlling such Lender with a Capital Adequacy Regulation, increases the amount of capital required or expected to be maintained by such Lender or Person (taking into consideration its capital adequacy policies and desired return on capital) as a consequence of such Lender’s Loans or other Obligations under the Loan Documents, then Borrowers shall, subject to the Intercreditor Agreement, within five days following demand therefor, pay such Lender an amount sufficient to compensate for such increase. A Lender’s demand for payment (delivered to Borrower Representative) shall set forth the nature of the occurrence giving rise to such compensation and a calculation of the amount to be paid. In determining such amount, the Lender may use any reasonable averaging and attribution method.
3.5 Mitigation . Each Lender agrees that (i) upon becoming aware that it is subject to Section 3.4 or 5.6, it will take reasonable measures to reduce Borrowers’ obligations under such Sections, including funding or maintaining its Loans through another office, as long as use of such measures would not adversely affect the Lender’s Loans, business or interests, and would not be inconsistent with any internal policy or applicable legal or regulatory restriction and (ii) Borrowers shall have no obligation to reimburse any Lender under Sections 3.4 or 5.7 for costs or taxes incurred more than 90 days prior to notice to Borrower Representative with respect thereto.
3.6 Maximum Interest . In no event shall interest, charges or other amounts that are contracted for, charged or received by the Lenders pursuant to any Loan Documents and that are deemed interest under Applicable Law (“interest”) exceed the highest rate permissible under Applicable Law (“maximum rate”). If, in any month, any interest rate, absent the foregoing limitation, would have exceeded the maximum rate, then the interest rate for that month shall be the maximum rate and, if in a future month, that interest rate would otherwise be less than the maximum rate, then the rate shall remain at the maximum rate until the amount of interest actually paid equals the amount of interest which would have accrued if it had not been limited by the maximum rate during prior periods. If, upon Full Payment of the Obligations, the total amount of interest actually paid under the Loan Documents is less than the total amount of interest that would, but for this Section, have accrued under the Loan Documents, then Borrowers shall, to the extent permitted by Applicable Law, pay to each Lender (a) the lesser of (i) the amount of interest that would have been charged if the maximum rate had been in effect at all times, or (ii) the amount of interest that would have accrued had the interest rate otherwise set forth in the Loan Documents been in effect, minus (b) the amount of interest actually paid under
 
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the Loan Documents. If a court of competent jurisdiction determines that any Lender has received interest in excess of the maximum amount allowed under Applicable Law, such excess shall be deemed received on account of, and shall automatically be applied to reduce, Obligations other than interest (regardless of any erroneous application thereof by any Lender), and upon Full Payment of the Obligations, any balance shall be refunded to Borrowers. In determining whether any excess interest has been charged or received by any Lender, all interest at any time charged or received from Borrowers in connection with the Loan Documents shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Obligations.
Section 4. LOAN ADMINISTRATION.
4.1 Borrower Representative . Each Borrower hereby designates the Borrower Representative as its representative and agent for all purposes under the Loan Documents, including delivery or receipt of communications with any Lender, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with any Lender. Borrower Representative hereby accepts such appointment. Collateral Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication delivered by Borrower Representative on behalf of any Borrower. Lenders may send any notice or communication with a Borrower hereunder to Borrower Representative on behalf of such Borrower. Lenders shall have the right, in its discretion, to deal exclusively with Borrower Representative for any or all purposes under the Loan Documents. Each Borrower agrees that any notice election, communication, representation, agreement or undertaking made on its behalf by Borrower Representative shall be binding upon and enforceable against it.
4.2 One Obligation . The Loans and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Collateral Agent’s Lien upon all Collateral; provided, however that Collateral Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.
4.3 Effect of Termination . Subject to the Intercreditor Agreement, the principal amount of each Loan and all other Obligations shall be due and payable on the Termination Date. All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Collateral Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, Collateral Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Collateral Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Collateral Agent receives (a) a written agreement, executed by Borrower Representative and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Collateral Agent and Lenders from any such damages; or (b) such Cash Collateral as Collateral Agent, in its discretion, deems necessary to protect against any such damages. The provisions of Sections 3.3, 3.4, 5.3, 5.7, 11, 13.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.
 
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Section 5. PAYMENTS.
5.1 General Payment Provisions . All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Indemnified Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time shall be deemed made on the next Business Day. Borrower Representative may, at the time of payment, specify to each Lender the Obligations to which such payment is to be applied, but each Lender shall in all events retain the right to apply such payment in such manner as the Lenders, subject to the provisions hereof, may determine to be appropriate. If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees. All payments received by the Lenders pursuant to this Agreement shall be applied in accordance with such Lender’s applicable Pro Rata portion of the aggregate outstanding Loans as of such date.
5.2 Payment of Other Obligations . Subject to the Intercreditor Agreement, Obligations other than the Loans, including Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.
5.3 Marshaling; Payments Set Aside . None of the Collateral Agent or the Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any payment by or on behalf of Borrowers is made to the Lenders, or if Collateral Agent or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
5.4 Post-Default Allocation of Payments
5.4.1 Allocation . Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows and subject to the Intercreditor Agreement:
(a) first , to all costs and expenses, including Extraordinary Expenses, owing to Collateral Agent and then to Lenders;
(b) second , to all Obligations constituting unpaid fees;
(c) third , to all Obligations constituting accrued and unpaid interest; and
(d) last , to all other Obligations.
 
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Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a Pro Rata basis among the Obligations in the category. The allocations set forth in this Section are solely to determine the rights and priorities of the Collateral Agent and Lenders as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.
5.4.2 Erroneous Application . Collateral Agent and the Lenders shall not be liable for any application of amounts made by it/them in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).
5.5 Loan Account . Each Lender shall maintain in accordance with its usual and customary practices an account or accounts (“ Loan Account ”) evidencing the Debt of Borrowers resulting from each Loan. Any failure of a Lender to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Each Lender may maintain a single Loan Account in the name of the Borrower Representative for such Lender’s Loans, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.
Entries made in a Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Accounts is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies the applicable Lender in writing within 60 days after receipt or inspection that specific information is subject to dispute.
5.6 Taxes .
5.6.1 Payments Free of Taxes . All payments by Obligors of Obligations shall be free and clear of and without reduction for any Indemnified Taxes. If Applicable Law requires any Obligor or any Payee to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be, to the extent permitted by applicable law, based on information provided pursuant to Section 5.7 and the applicable Obligor or Payee shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that the applicable Payee receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.
5.6.2 Payment . Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) each Payee for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Payee, or paid by any Payee, with respect to any Obligations, whether or not such
 
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Indemnified Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto; provided , however , that Borrowers shall not be required to compensate Collateral Agent or any Lender for any Indemnified Taxes or Other Taxes incurred more than six months prior to the date that the applicable Payee notifies Borrower Representative of such Indemnified Taxes or Other Taxes and of such Payee’s intention to claim compensation therefor; provided , further , that, if the circumstances giving rise to such Indemnified Taxes or Other Taxes is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to the amount of any such payment or liability delivered to Borrower Representative by any Payee (with a copy to Collateral Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Indemnified Taxes by a Borrower, Borrower Representative shall deliver to Collateral Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Collateral Agent. This Section 5.6 shall survive the repayment of the Loans and the termination of this Agreement.
5.6.3 Refunds . So long as no Event of Default is then in existence, if Collateral Agent or any Lender determines, in its sole discretion acting in good faith, that is has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts hereunder, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by Borrowers hereunder with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses and without interest (other than any interest by the relevant Governmental Authority with respect to such refund); provided that the Borrowers, upon request of Collateral Agent or such Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Collateral Agent or such Lender in the event Collateral Agent or such Lender is required to repay such refund to such Governmental Authority. This Section 5.6.3 shall not be construed to require Collateral Agent or any Lender to make available its tax returns to the Borrowers or any other person.
5.7 Lender Tax Information .
5.7.1 Status of Lenders . Each Payee shall deliver documentation and information to Collateral Agent and Borrower Representative, at the times and in form required by Applicable Law or reasonably requested by Collateral Agent or Borrower Representative, sufficient to permit Collateral Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Payee’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Payee’s status for withholding tax purposes in the applicable jurisdiction.
5.7.2 Documentation . If a Borrower is resident for tax purposes in the United States, any Payee that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Agent or Borrower Representative, but only if such Payee is legally entitled to do so) IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested
 
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by Collateral Agent or Borrower Representative to determine whether such Payee is subject to backup withholding or information reporting requirements. If any Foreign Payee is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Collateral Agent or Borrower Representative, but only if such Foreign Payee is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Payee claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, IRS Form W-8BEN and a certificate stating such Foreign Payee is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of Section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Collateral Agent and Borrowers to determine the withholding or deduction required to be made.
5.7.3 Lender Obligations . Each Payee shall promptly notify Borrower Representative and Collateral Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Payee shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Collateral Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Collateral Agent by any Governmental Authority due to such Payee’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Payee authorizes Collateral Agent to set off any amounts due to Collateral Agent under this Section against any amounts payable to such Payee under any Loan Document. The obligation of a Payee under this subsection to Collateral Agent shall survive the payment of all Obligations and the resignation or replacement of Collateral Agent. This section shall survive the repayment of the Loans and the termination of this Agreement.
5.8 Nature and Extent of Each Borrower’s Liability
5.8.1 Joint and Several Liability . Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or
 
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the absence of any action, by Collateral Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Collateral Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Collateral Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.
5.8.2 Waivers . (a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel the Collateral Agent or the Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Collateral Agent and the Lenders that the provisions of this Section are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Collateral Agent and the Lenders would decline to make Loans. Notwithstanding anything to the contrary in any Loan Document, and except as set forth in Section 5.6, each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.
(b) The Collateral Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.7. If, in the exercise of any rights or remedies, any Collateral Agent or Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action by Collateral Agent or such Lender and waives any claim based upon such action, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had but for such action. Any election of remedies that results in denial or impairment of the right of Collateral Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. If a Lender bids at any foreclosure or trustee’s sale or at any private sale, such Lender may bid all or a portion of the Obligations and the amount of such bid need not be paid by such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether a Lender or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.7, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which any Lender might otherwise be entitled but for such bidding at any such sale.
 
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5.8.3 Extent of Liability; Contribution . (a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.7 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.
(b) If any Borrower makes a payment under this Section 5.7 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “ Allocable Amount ” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.7 without rendering such payment voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.
(c) Nothing contained in this Section 5.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.
5.8.4 Joint Enterprise . Each Borrower has requested that the Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that and Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.
5.8.5 Subordination . Each Borrower hereby subordinates any claims it may have as a result of this Section 5.7, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution and indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.
 
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Section 6. CONDITIONS PRECEDENT
6.1 Conditions Precedent . The amendment and restatement of the Existing Agreement pursuant to the terms hereof shall be subject to satisfaction of each of the following conditions (except to the extent that such conditions are permitted by each Lender to be satisfied on a post-closing basis pursuant to a post-closing agreement) (the date such conditions are satisfied or waived, the “Closing Date”):
(a) Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to the Lenders by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.
(b) [Reserved]
(c) [Reserved]
(d) The Lenders shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Responsible Officer of Borrower Representative certifying that (i) each Obligor is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 8 are true and correct in all material respects; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(e) The Lenders shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment expect as shown, (ii) that an attached copy of resolutions (to the extent necessary under Applicable Law or applicable Organic Documents) authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility, and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. The Lenders may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.
(f) The Lenders shall have received copies of the charter documents of each Obligor, certified as appropriate by the Secretary of State or another official of such Obligor’s jurisdiction of organization. The Lenders shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.
(g) No material adverse change in the business, assets, properties, liabilities, financial condition or prospects of any Obligor shall have occurred since January 28, 2012.
(h) No action, suit, investigation, litigation or proceeding shall have been pending or threatened in any court or before any arbitrator or governmental instrumentality that in Collateral Agent’s judgment (i) could reasonably be expected to have a material adverse effect on Borrowers’ business, operations, properties, or condition (financial or otherwise) or could materially and adversely impair Borrowers’ ability to perform satisfactorily under this Agreement; or (ii) could reasonably be expected to materially and adversely affect this Agreement or the transactions contemplated hereby.
 
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(i) Borrowers shall have paid all legal fees and expenses to be paid to Lenders on the Closing Date.
(j) .
(k) Lenders shall have received evidence that the Loans under this Agreement have been designated as “Additional Priority Permitted Debt” under the 2009 Indenture.
Section 7. COLLATERAL
7.1 Security Reaffirmation . The Obligors acknowledge that the Existing Agreement and the documents entered into in connection therewith granted a security interest in favor of the Collateral Agent which secured the Obligations under this Agreement. The Obligors, subject to the terms and limits contained in the Loan Documents, acknowledge the Collateral Agent’s rights in the Collateral and reaffirm their Liens created in favor of Collateral Agent, for the benefit of the Lenders, on the Collateral to secure the Obligations hereunder. The Obligors hereby acknowledge that they have reviewed the terms and provisions of this Agreement and hereby (i) confirm that the Loan Documents to which they are a party or are otherwise bound continues to be in full force and effect, and all Collateral encumbered thereby will guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents, the payment and performance of the Obligations, as the case may be, including without limitation the payment and performance of all such applicable Obligations that are joint and several obligations of the each Obligor now or hereafter existing, and all of their obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of the Loan Documents and (ii) grant to Collateral Agent a continuing lien on and security interest in and to the Obligor’s right, title and interest in, to and under all the Collateral, pursuant to and in accordance with the Loan Documents as collateral security for the prompt payment and performance in full when due of all applicable Obligations subject to the terms and limits contained in the Loan Documents (whether at stated maturity, by acceleration or otherwise). Administration of Accounts . Each Obligor shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Collateral Agent, on such periodic basis as Collateral Agent may request, an Account roll-forward, a sales and collections report, in form reasonably satisfactory to Collateral Agent. Borrower Representative shall also provide to Collateral Agent a summary aged trial balance of all Accounts as of the end of the preceding Fiscal Month, and as Collateral Agent may reasonably request, information related to Accounts, including Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information.
 
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7.3 Administration of Inventory .
7.3.1 Records and Reports of Inventory . Each Obligor shall keep accurate and complete records of its Inventory, including costs, and shall submit to Collateral Agent inventory reports in form reasonably satisfactory to Collateral Agent, on such periodic basis as Collateral Agent may request, including Inventory perpetual reports. Each Obligor shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by Collateral Agent when an Event of Default exists) or periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Collateral Agent may request. Collateral Agent may participate in and observe each inventory or physical count. Borrower Representative shall also provide to Collateral Agent, concurrently with delivery of financial statements pursuant to Section 9.1.2(b), (i) a summary of the Royalties payments owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) and (ii) as requested by Collateral Agent, a summary of charges owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) to shippers or freight forwarders for the overseas transportation of goods of Obligors and customs brokers which clear customs with respect thereto.
7.3.2 Returns of Inventory . No Obligor shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Collateral Agent is promptly notified if the aggregate Value of all Inventory returned in any Fiscal Month exceeds $2,625,000; and (d) any payment received by an Obligor for a return is promptly remitted to Collateral Agent for application to the Obligations.
7.3.3 Acquisition, Sale and Maintenance . No Obligor shall acquire or accept any Inventory on consignment or approval, and shall take reasonable steps to assure that all Inventory is produced in accordance with Applicable Law, including, in the case of Inventory produced in the United States of America, the FLSA. No Obligor shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require an Obligor to repurchase such Inventory. Obligors shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.
7.4 [Intentionally Omitted] .
7.5 Administration of Deposit Accounts and Securities Accounts . Schedule 7.5 sets forth all Deposit Accounts and Securities Accounts maintained by Obligors as of the Closing Date. Each Borrower shall take all actions, if not already taken, necessary to establish Collateral Agent’s control of each such Deposit Account and Securities Account (other than an account exclusively used for payroll, payroll taxes or employee benefits, or trust or escrow accounts, or accounts containing not more than $650,000 in the aggregate for all such accounts at any time and not more than $30,000 in any single account at any time (collectively, the “ Excluded Accounts ”)). Each Obligor shall be the sole account holder of each Deposit Account and Securities Accounts and shall not allow any other Person (other than Collateral Agent) to have control (as defined in Article 9 of the UCC) over a Deposit Account, a Securities Account or any Property deposited therein. Borrower Representative shall promptly notify Collateral Agent of any opening, or closing of a Deposit Account or a Securities Account and, with the consent of Collateral Agent, will amend Schedule 7.5 to reflect same. Subject to the Intercreditor
 
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Agreement, following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is less than 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) and until the last day of a period of ninety (90) consecutive days thereafter during which average daily Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is equal to or exceeds 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) (each such period, a “ Cash Dominion Period ”), Collateral Agent may (subject to any notice requirements in the applicable Control Agreement) deliver written instructions to the depository banks and securities intermediaries at which such Deposit Accounts and Securities Accounts are maintained directing them to transfer on a daily basis all payments, deposits or other Property received in the Deposit Accounts or Securities Accounts to the Collection Account or as otherwise instructed by Collateral Agent; provided that upon the termination or expiration of all Cash Dominion Periods, Collateral Agent shall promptly rescind such instructions to such depository banks and securities intermediaries. At all times, other than during a Cash Dominion Period, Borrowers may withdraw cash or cash equivalents from Deposit Accounts and Securities Accounts and use such cash and cash equivalents for purposes not prohibited hereunder at such time.
7.6 General Provisions .
7.6.1 Location of Collateral . All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Obligors at the business locations set forth in Schedule 7.6.1 (as such schedule may be amended or modified from time to time), except that Obligors may (a) make sales or other dispositions of Collateral in accordance with Section 9.2.6; and (b) move Collateral to another location in the United States set forth on Schedule 7.6.1 (as such schedule may be amended or modified from time to time).
7.6.2 Insurance of Collateral . Each Obligor shall maintain insurance with respect to the Collateral (other than Accounts and trademarks), covering casualty, hazard, public liability, theft, malicious mischief, and such other risks, in such amounts and with such endorsements as are in each case reasonably satisfactory to Collateral Agent, and with such insurers as are reasonably satisfactory to Collateral Agent or with any other insurers rated A+ or better by A.M. Best Rating Guide. All proceeds under each policy relating to Collateral shall be payable to Collateral Agent. From time to time upon reasonable request, Obligors, shall deliver to Collateral Agent the originals or certified copies of its insurance policies. Unless Collateral Agent shall agree otherwise, each policy shall include reasonably satisfactory endorsements (i) showing Collateral Agent as loss payee or additional insured, as appropriate; (ii) requiring 10 days prior written notice to Collateral Agent in the event of cancellation of the policy for non-payment of premium and requiring 30 days prior written notice to Collateral Agent in the event of cancellation of the policy for any other reason; and (iii) specifying that the interest of Collateral Agent shall not be impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If any Obligor fails to provide and pay for such insurance, Collateral Agent may, at its option, but shall not be required to, procure the insurance and charge Obligors therefor. Each Obligor agrees to deliver to Collateral Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists, Obligors may settle, adjust or compromise any insurance claim. If an Event of Default exists, only Collateral Agent (subject to the Intercreditor Agreement) shall be authorized to settle, adjust and compromise such claims.
 
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Section 8. REPRESENTATIONS AND WARRANTIES
8.1 General Representations and Warranties . To induce Lenders to enter into this Agreement, each Obligor represents and warrants that:
8.1.1 Organization and Qualification . Each Obligor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
8.1.2 Power and Authority . Each Obligor is duly authorized to execute, deliver and perform its Loan Documents and has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.
8.1.3 Enforceability . Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
8.1.4 Capital Structure . Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following) shows, for each Obligor, its name and its jurisdiction of organization and its authorized and issued Equity Interests, and for each Domestic Subsidiary only, the holders of its Equity Interests and all agreements binding on such holders with respect to their Equity Interests. Each Obligor has good title to the Equity Interests of its Domestic Subsidiaries, free and clear of all Liens (other than Permitted Liens) and all such Equity Interests are duly issued, fully paid and non-assessable. Except as set forth on Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following), there are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any Obligor or Domestic Subsidiary.
8.1.5 Corporate Names; Locations . During the five years preceding the Closing Date, except as shown on Schedule 8.1.5, no Person that is an Obligor as of the Closing Date has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person. The chief executive offices and other locations of Collateral of Obligors as of the Closing Date are shown on Schedule 8.1.5 (as such schedule may be amended or supplemented from time to time).
 
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8.1.6 Title to Properties; Priority of Liens . Each Obligor has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Lenders, in each case free of Liens except Permitted Liens. Each Obligor has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.
8.1.7 Financial Statements . (a) The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries and consolidating balance sheets and related statements of income for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries, copies of which have been delivered to Collateral Agent and each Lender prior to the Closing Date, fairly present in all material respects the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. Since January 29, 2011 there has been no change in the condition, financial or otherwise, of any Obligor or Domestic Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to Collateral Agent or any Lender at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Obligor and Domestic Subsidiary is Solvent, both before and after giving effect to the transactions contemplated by this Agreement and the Loans.
(b) All projections furnished to Collateral Agent prior to the Closing Date are believed by the Borrower Representative at the time furnished to be reasonable, have been prepared on a reasonable basis and in good faith by the Borrower Representative, and have been based on assumptions believed by the Borrower Representative to be reasonable at the time made and upon the best information then reasonably available to the Borrower Representative, and the Borrower Representative is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material.
8.1.8 Surety Obligations . Except as set forth on Schedule 8.1.8 (as such schedule may be amended or supplemented from time to time), no Obligor is obligated as indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.
8.1.9 Taxes . Each Obligor has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested and except where the failure to file or pay the same could not reasonably be expected to have a Material Adverse Effect. The provision for Taxes on the books of each Obligor is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.
 
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8.1.10 Brokers . There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents, except for the payment of transaction fees to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement.
8.1.11 Intellectual Property . Each Obligor owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others, except where the failure to own or have rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect. There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with respect to any Obligor or any of its Property (including any Intellectual Property, except for Intellectual Property Claims which could not reasonably be expected to have a Material Adverse Effect). Except as disclosed on Schedule 8.1.11 (as such schedule may be amended or supplemented from time to time), no Obligor pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Obligor is shown on Schedule 8.1.11.
8.1.12 Governmental Approvals . Each Obligor has, is in compliance with, and is in good standing with respect to, all Governmental Approvals, licenses and permits necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance or failure to be in good standing could not reasonably be expected to have a Material Adverse Effect. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
8.1.13 Compliance with Laws . Each Obligor has duly complied, and its Properties and business operations are in compliance, with all Applicable Laws, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, there have been no citations, notices or orders of material noncompliance issued to Obligor under any Applicable Law.
8.1.14 Compliance with Environmental Laws . Except as disclosed on Schedule 8.1.14 , no Obligor’s past or present operations, Real Estate or other Properties are subject to any on-going federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, no Obligor has received any Environmental Notice. As of the Closing Date, no Obligor has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.
 
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8.1.15 Burdensome Contracts . No Obligor is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 8.1.15 (as such schedule may be amended or supplemented from time to time), none of which prohibit the execution or delivery of any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.
8.1.16 Litigation . Except as shown on Schedule 8.1.16, there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor. No Obligor is in default with respect to any order, injunction or judgment of any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
8.1.17 No Defaults . No event or circumstance has occurred or exists that constitutes a Default or Event of Default. As of the Closing Date, no Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Debt in excess of $23,000,000 (other than Debt issued under the Revolver Loan Documents). As of the Closing Date, there is no basis upon which any party (other than an Obligor or Domestic Subsidiary) could terminate a Material Contract prior to its scheduled termination date.
8.1.18 ERISA . Except as disclosed on Schedule 8.1.18 (as such schedule may be amended or supplemented from time to time), no Obligor has any Multiemployer Plan. Each Obligor is in full compliance with the requirements of all Applicable Law, including ERISA, relating to each Multiemployer Plan. As of the Closing Date, no Obligor has any obligations under a Foreign Plan. No fact or situation exists that could reasonably be expected to result in a Material Adverse Effect in connection with any Multiemployer Plan. No Obligor has any withdrawal liability in connection with a Multiemployer Plan or Foreign Plan. All employer and employee contributions to Foreign Plans, to the extent required by law or the terms of such plans, have been made or accrued in accordance with normal accounting principles. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance and/or the book reserve established for each Foreign Plan, together with any accrued contributions, are sufficient to provide the accrued benefit obligations of all participants in such plans according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles.
8.1.19 Trade Relations . There exists no actual or threatened termination, limitation or modification of any business relationship between any Obligor and any customer or supplier, or any group of customers or suppliers, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Obligor to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.
 
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8.1.20 Labor Relations . Except as described on Schedule 8.1.20 (as such schedule may be amended or supplemented from time to time), no Obligor is party to or bound by any collective bargaining agreement. As of the Closing Date, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.
8.1.21 Payable Practices . No Obligor has made any material change in its historical accounts payable practices from those in effect on the Closing Date.
8.1.22 Not a Regulated Entity . No Obligor is an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.
8.1.23 Margin Stock . No Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Loans proceeds have not been and will not be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
8.1.24 Plan Assets . As of the Closing Date, no Obligor is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code), and the execution of this Agreement is not a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
8.1.25 Immaterial Subsidiaries . No Immaterial Subsidiary (a) owns or generates any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) has revenues (other than from intercompany Accounts) in any Fiscal Year in excess of $1,000,000.
8.1.26 Patriot Act . To the extent applicable, each Obligor is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Patriot Act. No part of the proceeds of the loans made hereunder will be used by any Obligor or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.  OFAC . No Obligor nor any of its Subsidiaries is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Obligor nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
 
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8.1.28 Nature of Business . No Obligor is engaged in any business other than the business it is engaged in on the Closing Date or any activities ancillary or related thereto, or logical extensions thereof.
8.1.29 Material Contracts . Set forth on Schedule 8.1.29 is a complete and accurate list as of the Closing Date of all Material Contracts of each Obligor, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (a) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the knowledge of such Obligor, all other parties thereto in accordance with its terms, (b) has not been otherwise amended or modified, and (c) is not in default due to the action of any Obligor or, to the best knowledge of any Obligor, any other party thereto.
8.1.30 No Bankruptcy Filing . No Obligor is contemplating either an Insolvency Proceeding or the liquidation of all or a major portion of such Obligor’s assets or property, and no Obligor has any knowledge of any Person contemplating an Insolvency Proceeding against it.
8.2 Complete Disclosure . No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to a Lender in writing that could reasonably be expected to have a Material Adverse Effect.
Section 9. COVENANTS AND CONTINUING AGREEMENTS
9.1 Affirmative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall, and shall cause each Domestic Subsidiary to:
9.1.1 Inspections . (a) Permit Lenders from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligors or Domestic Subsidiary, inspect, audit and make extracts from any Borrowers’ or Domestic Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Domestic Subsidiary’s business, financial condition, assets, prospects and results of operations. No Lender shall have any duty to any Obligors to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligors. To the extent any other information is shared by a Lender with any Obligor, such Obligors acknowledge that it was prepared by the Lenders for their purposes and Obligors shall not be entitled to rely upon it.
(b) Reimburse Lenders for all charges, costs and expenses of each Lender in connection with examinations of any Obligor’s books and records or any other financial or Collateral matters as the Lenders deem appropriate up to two times per Loan Year; provided , however , that if an examination is initiated during a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits.
 
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9.1.2 Financial and Other Information . Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to each Lender:
(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that (A) with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 180 days of the close of such Fiscal Year, and (B) with respect to all other financial statements for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 97 days after the close of such Fiscal Year), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Required Lenders, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;
(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) (x) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (y) commencing with the Fiscal Quarter ending April 30, 2012, unaudited balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month (A) unaudited consolidated balance sheets as of the end of such Fiscal Month and a related consolidated profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) commencing with the Fiscal Month ending May 31, 2012, unaudited balance sheets as of the end of such Fiscal Month and a related
 
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profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year (it being understood that with respect to clauses (i)(A)(y) above and this clause (ii)(B), delivery of the profit and loss statement and statements of working capital, accounts payable and accounts receivable for the Vince business on a standalone basis shall satisfy the requirements set forth in such clauses (i)(A)(y) and (ii)(B) for the Fiscal Months and Fiscal Quarters ending prior to July 31, 2012) and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year end adjustments and the absence of footnotes;
(c) concurrently with delivery of financial statements under clauses (a) and (b) above, or more frequently if requested by Collateral Agent while a Default or Event of Default exists, a Compliance Certificate executed by the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative;
(d) to the extent available and upon Lenders’ request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements, including any such management letters and material reports with respect to the Vince business on a standalone basis;
(e) not later than 30 days after the end of each Fiscal Year, projections of (i) Borrowers’ consolidated balance sheets, results of operations and cash flow, (ii) the Vince business’ balance sheets, results of operations and cash flow on a standalone basis, in each case, for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to the Collateral Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(f) at Collateral Agent’s request, a listing of each Obligor’s trade payables, specifying the trade creditor and balance due, all in form satisfactory to Collateral Agent;
(g) promptly after the sending or filing thereof, copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; provided , that each statement or report required to be delivered pursuant to this clause (g) shall be deemed to have been delivered on the date on which the Borrower Representative posts such document on the Borrower Representative’s website on the Internet at the website address www.kellwood.com, or when such document is posted on the Securities and Exchange
 
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Commission’s website at www.sec.gov (the “ SEC Website ”) or on an Internet website established by the Lenders with Intralinks, Inc. or other similarly available electronic media (each of the foregoing an “ Informational Website ”); provided , further , that (i) the Borrower Representative shall deliver paper copies of all such documents to any Lender that requests the Borrower Representative to deliver such paper copies (without impairment of the effectiveness of any document previously delivered in electronic media form) until a request to cease delivering paper copies is given by such Lender and (ii) each Lender shall be notified by electronic mail of the applicable Informational Website and of the posting of each such document; it being understood and agreed that (x) Collateral Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this clause (e), and in any event shall have no responsibility to monitor compliance by the Borrower Representative with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents and (y) Borrowers shall be responsible for (other than with respect to the SEC Website) and shall incur all risks associated with (including with respect to the SEC Website) the security and confidentiality of the Informational Websites and its information posted thereon;
(h) not later than 15 days after the Collateral Agent’s request, such information regarding actions undertaken and/or completed to ensure that the Vince business is working towards reporting its financial performance on a standalone basis such that it could be marketed and sold on a standalone basis; and
(i) such other reports and information (financial or otherwise) as any Lender may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
9.1.3 Notices . Notify the Lenders in writing, promptly (but in any event within 5 Business Days) after an Obligor obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if it is reasonably likely that an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any adverse judgment not covered by insurance in an amount exceeding $5,750,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution is reasonably likely to have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice, which could reasonably be expected to have a Material Adverse Effect; (i) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; or (j) any opening of a new office or place of business where Collateral is located, within 30 days after such opening.
9.1.4 Landlord and Storage Agreements . Upon request, provide the Lenders with copies of all existing agreements, and promptly after execution thereof provide the Lenders with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral having a book value in excess of $1,150,000 in the aggregate at any time.
 
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9.1.5 Compliance with Laws . Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Domestic Subsidiary, it shall act promptly and diligently to investigate and report to the Lenders and, to the extent required by Applicable Law, all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.
9.1.6 Taxes . Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, except for Taxes which in the aggregate do not exceed $250,000 or unless such Taxes are being Properly Contested.
9.1.7 Insurance . In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers reasonably satisfactory to the Required Lenders or other insurers rated A+ or better by Best Rating Guide, (a) with respect to the Properties and business of the Obligors of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated, and (b) business interruption insurance with deductibles and subject to an Insurance Assignment in favor of the Collateral Agent reasonably satisfactory to the Required Lenders.
9.1.8 Licenses . Keep each License affecting any material portion of the Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors in full force and effect subject to non-renewal or termination by the applicable Obligor in the Ordinary Course of Business, or otherwise in its reasonable judgment; notify Lenders of any proposed modification to any such License increasing the Royalties payable thereunder, or entry into any new License, in each case at least 10 days prior to the effective date of such License or modification, pay all Royalties when due; and notify Lenders of any material default or breach asserted by any Person to have occurred under any License.
9.1.9 Future Subsidiaries . Promptly notify the Lenders upon any Person becoming a Domestic Subsidiary and cause any such Subsidiary to execute and deliver to Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to the Required Lenders, as they shall deem appropriate; provided that prior to any Person becoming a Borrower hereunder, Borrower Representative shall provide at least 5 days written notice to Collateral Agent.
 
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9.1.10 Additional Guarantors . In the event that any Person becomes party to the 2009 Indenture Guaranty or guaranties any part of the Second Lien Debt and such Person is not a Borrower hereunder, Borrower Representative shall immediately notify each Lender thereof and cause such Person to execute and deliver to the Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of the Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance satisfactory to Collateral Agent, as it shall deem appropriate.
9.1.11 Preservation of Existence, Etc. Maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except as permitted by Section 9.2.9 or except to the extent failure to be so qualified or in good standing could not reasonably be likely to have a Material Adverse Effect.
9.1.12 Keeping of Records and Books of Account . Keep accurate records and books of account, with entries made to permit the preparation of financial statements in accordance with GAAP.
9.1.13 Maintenance of Properties, Etc. Maintain and preserve all of its properties which are necessary for the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation losses excepted.
9.1.14 Obtaining of Permits, Etc. Obtain, maintain and preserve and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except to the extent failure to do so could not reasonably be likely to have a Material Adverse Effect.
9.1.15 Further Assurances . Take such action and execute, acknowledge and deliver at its sole cost and expense, such agreements, instruments or other documents as Collateral Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected Liens any of the Collateral, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto Collateral Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Obligor (i) authorizes Collateral Agent to execute any such agreements, instruments or other documents in such Obligor’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes Collateral Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Obligor, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Obligor prior to the date hereof, in each case to the extent such filings are necessary or desirable in order to perfect or maintain the perfection of Collateral Agent’s security interest in the Collateral.
 
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9.2 Negative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall not, and shall cause each Domestic Subsidiary not to:
9.2.1 Permitted Debt . Create, incur, guarantee or suffer to exist any Debt, except:
(a) the Obligations;
(b) Subordinated Debt;
(c) Permitted Purchase Money Debt;
(d) Debt (other than the Obligations, Revolver Debt, Subordinated Debt, Permitted Purchase Money Debt, the 2009 Debentures, the Second Lien Debt and Term A Loan Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans and which is listed on Schedule 9.2.1;
(e) Bank Product Debt (as defined in the Revolver Agreement);
(f) Permitted Contingent Obligations, provided no Obligor or any Domestic Subsidiary thereof shall incur any Contingent Obligations in respect of the obligations of any Foreign Subsidiary;
(g) Refinancing Debt as long as each Refinancing Condition is satisfied in respect of such Refinancing Debt at the time such Refinancing Debt is incurred;
(h) the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;
(i) unsecured intercompany Debt for loans and advances made by any Borrower or wholly owned Subsidiary to (i) a Borrower, (ii) any other Obligor or (iii) if such wholly owned Subsidiary making such loan or advance is not an Obligor, any other wholly owned Subsidiary, provided that such intercompany Debt of any Obligor is subordinated pursuant to Section 13.16;
(j) financing of insurance premiums;
(k) unsecured Debt in an amount not to exceed $5,750,000 at any time outstanding;
(1) other unsecured Debt of any Domestic Subsidiary which is not an Obligor, provided that, in connection with such Debt, no Obligor has incurred a Contingent Obligation or any direct or contingent liability with respect thereto unless such Contingent Obligation is unsecured and is expressly permitted hereunder;
 
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(m) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date as long as it is permitted under the Revolver Agreement as in effect on the date hereof;
(n) (i) the 2009 Debentures, as long as such Debt is subject to the 2009 Debenture Intercreditor Agreement; provided that , the principal amount of the Debt owing under the 2009 Debentures shall not exceed at any time an amount equal to the principal amount outstanding under the 2009 Debentures as of the date of the consummation of the Exchange Offer, plus any interest thereon that is paid-in-kind in accordance with the terms thereof and added to the outstanding principal thereof; (ii) the Revolver Debt, as long as such Debt is subject to the Intercreditor Agreement, and (iii) the Second Lien Debt, as long as such Debt is subject to the Intercreditor Agreement; and
(o) Term B/C/D/E/F Loan Debt.
9.2.2 Permitted Liens . Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):
(a) Liens in favor of Collateral Agent securing the Obligations;
(b) Purchase Money Liens securing Permitted Purchase Money Debt;
(c) Liens for Taxes not yet due or being Properly Contested;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA but including carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;
(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt), statutory obligations (including in connection with workers’ compensation, unemployment insurance and other social security legislation (other than Liens for Taxes or imposed under ERISA)) and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Collateral Agent’s Liens;
(f) Liens securing judgments for the payment of money in an aggregate amount not in excess of $5,750,000 (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 10 consecutive days during which execution is not effectively stayed;
 
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(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(h) normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;
(i) existing Liens shown on Schedule 9.2.2 and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby does not increase the maximum outstanding principal amount of such obligations;
(j) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as such Liens were existing at the time of such Acquisition by a Borrower or Subsidiary and were not incurred, extended or renewed in contemplation of such Acquisition; provided that (i) the Lien shall attach solely to the property acquired, and (ii) at the time of acquisition of such fixed assets, the aggregate amount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed by a Borrower or Subsidiary shall not exceed an amount equal to the lesser of the total purchase price or fair market value at the time of acquisition of such fixed assets;
(k) other Liens that are created upon any of its Property (other than Collateral) after the Closing Date so long as the fair market value of such property subject to such liens does not exceed $5,750,000 at any time outstanding;
(1) Liens on deposits and unearned insurance premiums securing Debt permitted under Section 9.2(j); and
(m) (i) Liens on Collateral securing the Debt owing under the 2009 Debentures, as long as such Liens are subject to the 2009 Debenture Intercreditor Agreement; (ii) Liens on Collateral securing the Debt owing under the Revolver Agreement, as long as such Debt is subject to the Intercreditor Agreement, (iii) Liens on Collateral securing the Second Lien Debt as long as such liens are subject to the Intercreditor Agreement and (iv) Liens on Collateral securing the Term B/C/D/E/F Loan Debt and, in each case, such Debt is permitted under Section 9.2.1(n) or Section 9.2.1(o).
9.2.3 [Intentionally Omitted]
9.2.4 Distributions; Upstream Payments .
(a) Declare or make any Distributions, except (i) Permitted Distributions and (ii) Upstream Payments; or
(b) Create or suffer to exist any encumbrance or restriction on the ability of a Domestic Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Revolver Loan Documents and the Second Lien Debt Documents and under Applicable Law or restrictions in effect on the Closing Date as shown on Schedule 8.1.15.
 
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9.2.5 Restricted Investments . Make any Restricted Investment.
9.2.6 Disposition of Assets . Make any Asset Disposition, except a Permitted Asset Disposition or a transfer of Property by a Subsidiary or Obligor to a Borrower.
9.2.7 Loans; Extensions of Credit . Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled Account Debtors to the extent reasonably necessary in the relevant Obligor’s reasonable business judgment to prevent or limit loss; (e) intercompany loans permitted by Section 9.2.1(f); and (f) loans or extensions of credit made in the ordinary course of business after the Closing Date as long as they are permitted under the Revolver Agreement as in effect on the date hereof.
9.2.8 Restrictions on Payment of Certain Debt . Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Responsible Officer of Borrower Representative shall certify to each Lender, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (b) other Debt (other than the Obligations, Revolver Debt, the Second Lien Debt and Term B/C/D/E/F Loan Debt) prior to its due date under the agreements evidencing such Debt, except for any such prepayment with respect to the currently issued and outstanding notes under the Convertible Debentures, Indenture or 2009 Indenture to the extent such prepayment is permitted under the Revolver Agreement.
9.2.9 Fundamental Changes . (a) Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except:
(i) any Subsidiary may merge (x) with a Borrower, provided that such Borrower shall be the continuing or surviving Person, or (y) with any one or more Subsidiaries, provided that when any wholly-owned Subsidiary or Guarantor is merging with another Subsidiary, the wholly-owned Subsidiary or Guarantor shall be the continuing or surviving Person, or (z) with any other Person in connection with any Permitted Acquisition, provided that the continuing or surviving Person shall be a wholly-owned Subsidiary and, if such Subsidiary was a Guarantor or Borrower, also a Guarantor or Borrower;
(ii) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to a Borrower or to another Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary or a Guarantor, then the purchaser must also be a wholly-owned Subsidiary or Guarantor, respectively; or
 
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(iii) in connection with a Permitted Asset Disposition.
(b) Except following thirty (30) days prior written notice to each Lender, change its name or conduct business under any fictitious name; change its tax or other organizational identification number; or change its form or state of organization.
9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with Section 9.1.9 or Section 9.2.9 in connection with Permitted Acquisitions; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.
9.2.11 Organic Documents . Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except for any amendment, modification or other change that does not adversely affect any Lender or any duty to pay Obligations.
9.2.12 Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Ultimate Parent and its Subsidiaries.
9.2.13 Accounting Changes . Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its Fiscal Year.
9.2.14 Restrictive Agreements . Become a party to or permit any Subsidiary to become a party to any Restrictive Agreement, except a Restrictive Agreement as in effect on the Closing Date and shown on Schedule 8.1.16, the 2009 Indenture, the 2009 Indenture Guaranty, the Convertible Debentures, the Indenture, the Second Lien Debt Documents or the Revolver Loan Documents.
9.2.15 Hedging Agreements . Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.
9.2.16 Conduct of Business . Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.
9.2.17 Affiliate Transactions . Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 9.2.7; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Obligors; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 9.2.17; (f) transactions with Affiliates (other than those described in clause (g) below) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to each Lender and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate; (g) payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto, (ii) Availability (as defined in the Revolver
 
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Agreement, as in effect on the date hereof) after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment); (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement; (i) transactions contemplated by the Term B/C/D/E/F Loan Agreement, and (j) payment of dividends or other distributions to Ultimate Parent (whether made to Ultimate Parent directly or to any Person directly or indirectly owned by Ultimate Parent and ultimately remitted to Ultimate Parent) in an amount sufficient to permit Ultimate Parent to pay (A) franchise taxes and other fees required to maintain Ultimate Holding’s corporate existence and (B) to pay consolidated or combined federal, state or local taxes, including estimated taxes, which payments in the aggregate by each Obligor and Domestic Subsidiary are not in excess of the aggregate tax liabilities that would have been payable by each Obligor and Domestic Subsidiary calculated on a stand-alone basis.
9.2.18 Plans . Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date or assumed in connection with any Permitted Acquisition.
9.2.19 Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt . (a) Amend, supplement or otherwise modify (i) the 2009 Indenture or the 2009 Indenture Guaranty or (ii) any Convertible Debenture or Convertible Debenture Agreement or Convertible Debenture Guaranty, in a manner that directly or indirectly accelerates the time of payment, increases the principal amount of or interest rate applicable to indebtedness issued or provides for more restrictive terms that adversely affect the Lenders;
(b) Amend, supplement or otherwise modify any other document, instrument or agreement relating to any Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that adversely affects the Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof; or
(c) Amend, supplement or otherwise modify the Revolver Agreement or the Second Lien Debt in violation of the Intercreditor Agreement.
9.2.20 Immaterial Subsidiaries . Permit or suffer any Immaterial Subsidiary to (a) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) have revenues in any Fiscal Year in excess of $1,000,000, unless Borrower Representative causes such Immaterial Subsidiary to execute a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has
 
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an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Collateral Agent, as it shall deem appropriate. Fixed Charge Coverage Ratio . At any time during a Covenant Testing Period, fail to have a Fixed Charge Coverage Ratio, measured on a month-end basis, of at least 0.85 to 1.00 for the 12 month period ending on the last day of each Fiscal Month.
9.2.22 Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock for any related purpose governed by Regulations T, U or X of the Board of Governors.
9.2.23 Investment Company Act of 1940 . Engage in any business, enter into any transaction, use any securities or take any other action that would cause any Obligor to become an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
9.2.24 2009 Debenture Intercreditor Agreement . Incur Debt after the Closing Date pursuant to Section 4.09(b)(1) of the 2009 Indenture and designate the holders of such Debt as additional holders of “Priority Obligations” (as defined in the 2009 Indenture Intercreditor Agreement).
Section 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
10.1 Events of Default . Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);
(b) Any representation, warranty or other written statement of any Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;
(c) Any Obligor breaches or fails to perform any covenant contained in Section 7.1, 7.6.2, 9.1.1, 9.1.2, 9.1.3 (other than Section 9.1.3(j)) 9.1.7, 9.1.11 or 9.2, or Section 6 of the Security Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Responsible Officer of such Obligor has knowledge thereof or a Responsible Officer of Borrower Representative receives notice thereof from any Lender, whichever is sooner; provided , however , that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;
(e) Any Guarantor repudiates, revokes or attempts to revoke its guaranty hereunder; any Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Collateral Agent (for the benefit of the Lenders); or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by the Required Lenders);
 
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(f) Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations, the Revolver Debt and the Second Lien Debt) in excess of $5,750,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;
(g) Any judgment or order for the payment of money remains outstanding for more than 30 days against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,750,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;
(h) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,750,000;
(i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting a portion of its business, which action could reasonably be expected to have a Material Adverse Effect; any Obligor suffers the loss, revocation or termination of one or more licenses, permits, leases or agreements, which loss, revocation or termination could reasonably be expected to have a Material Adverse Effect, except in connection with a Permitted Asset Disposition; there is a cessation of any part of an Obligor’s business for a period of time (other than in connection with a Permitted Asset Disposition), which cessation could reasonably be expected to have Material Adverse Effect; any Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs (other than in connection with a Permitted Asset Disposition); or any Obligor ceases to be Solvent;
(j) Any Insolvency Proceeding is commenced by any Obligor;
(k) Any Insolvency Proceeding is commenced against any Obligor and (i) such Obligor consents to the institution of the proceeding against it, (ii) the petition commencing the proceeding is not timely controverted by such Obligor, (iii) such petition is not dismissed within 60 days after its filing, or (iv) an order for relief is entered in the proceeding;
(1) A trustee (including an interim trustee) is appointed to take possession of any substantial Property of or to operate any of the business of any Obligor; or any Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally;
(m) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for any Multiemployer Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;
 
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(n) Any Obligor or any of its Responsible Officers is criminally indicted or convicted for (i) a felony committed in the conduct of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Collateral;
(o) A Change of Control occurs;
(p) The Obligations at any time fail to constitute “Priority Obligations” under and as defined in the 2009 Debenture Intercreditor Agreement; or
(q) (i) the Obligors shall fail to pay when due any principal of or interest or premium on the Revolver Debt or the Second Lien Debt (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, if the effect of such default is to accelerate the maturity of the Revolver Debt or the Second Lien Debt, as applicable, (ii) any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such other default or event is to accelerate the maturity of the Revolver Debt or the Second Lien Debt; or (iii) the Revolver Debt or the Second Lien Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease the Revolver Debt or the Second Lien Debt shall be required to be made, in each case, prior to the Stated Maturity thereof; provided that this clause (q) shall not apply to the Revolver Debt or the Second Lien Debt that becomes due as a result of the voluntary sale or transfer of property or assets permitted under the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, or as a result of the application (other than by reason of a breach or default by the Obligors) of any provision of the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, that requires the Obligors to prepay a portion (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding or that requires the Obligors to offer to redeem or repurchase some (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding.
10.2 Remedies upon Default . If an Event of Default described in Section 10.1(j) occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Loans shall terminate, without any action by any Lender or notice of any kind. In addition, or if any other Event of Default exists, the Required Lenders may do any one or more of the following from time to time, subject to the terms of the Intercreditor Agreement:
(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law; and
(b) instruct the Collateral Agent to exercise any other rights or remedies afforded under any Loan Document, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i)
 
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take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Collateral Agent at a place designated by Collateral Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Collateral Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days’ notice of any proposed sale or other disposition of Collateral by Collateral Agent shall be reasonable. Collateral Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law. Collateral Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Collateral Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations.
10.3 License . Collateral Agent for the benefit of each Lender is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Property of Obligors, including, without limitation, all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels and packaging materials, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral if and for so long as such non-exclusive license or other right to use, license or sub-license would not constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Obligor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such non-exclusive license or other right to use, license or sublicense, provided however, that at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, such grant shall include immediately and automatically any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (i) or (ii) above. Each Obligor’s rights and interests under Intellectual Property shall inure to Collateral Agent (for the benefit of the Lenders).
10.4 Setoff . Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor) are each authorized by Obligors at any time during an Event of Default, without notice to Obligors or any other Person, but subject to the Intercreditor Agreement, to set off and to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities or other Debt at any time held or owing by any Lender or any such Affiliate (other than an Obligor or any Subsidiary of an Obligor) to or for the account of any Obligor against any Obligations, whether or not demand for payment of such Obligation has been made, any Obligations have been declared due and payable, are then due, or are contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is adequate; it being understood and agreed, as between Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor), that all such deposits, funds or other moneys to be applied against any Obligations shall be allocated in accordance with the Intercreditor Agreement.
 
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10.5 Remedies Cumulative; No Waiver .
10.5.1 Cumulative Rights . All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of Obligors contained in the Loan Documents are cumulative and not in derogation or substitution of each other. In particular, the rights and remedies of Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and shall not be exclusive of any other rights or remedies that Lenders may have, whether under any agreement, by law, at equity or otherwise.
10.5.2 Waivers . The failure or delay of any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a course of dealing. All rights and remedies shall continue in full force and effect until Full Payment of all Obligations. No modification of any terms of any Loan Documents (including any waiver thereof) shall be effective, unless such modification is specifically provided in a writing directed to Obligors and executed by the Lenders or the requisite Lenders, and such modification shall be applicable only to the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of any other Default or Event of Default that may exist at such time, unless expressly stated. If any Lender accepts performance by any Obligor under any Loan Documents in a manner other than that specified therein, or during any Default or Event of Default, or if any Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or exercise shall not operate to waive any Default or Event of Default nor to preclude exercise of any other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.
Section 11. COLLATERAL AGENT
11.1 Appointment, Authority and Duties of Collateral Agent .
11.1.1 Appointment and Authority . Each Lender appoints and designates Sun Finance as Collateral Agent hereunder. Collateral Agent has and may further, and each Lender authorizes Collateral Agent to, enter into all Loan Documents (including, without limitation, the 2009 Debenture Intercreditor Agreement and Intercreditor Agreement, any amendments thereto, and any and all other subordination and/or intercreditor agreements required under the terms of this Agreement) to which Collateral Agent is intended to be a party and accept all Loan Documents, for Collateral Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Collateral Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Collateral Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Collateral Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Collateral Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor or other Person; (c) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other
 
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purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) exercise all rights and remedies given to Collateral Agent with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Collateral Agent shall be ministerial and administrative in nature, and Collateral Agent shall not have a fiduciary relationship with any Lender, Participant or other Person, by reason of any Loan Documents or any transaction relating thereto.
11.1.2 Duties . Collateral Agent shall not have any duties except those expressly set forth herein and in the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the extent directed to do so by Required Lenders in accordance with and pursuant to the terms of this Agreement and subject to the terms of the Intercreditor Agreement. The conferral upon Collateral Agent of any right shall not imply a duty on Collateral Agent’s part to exercise such right unless instructed to do so by Required Lenders in accordance with this Agreement and subject to the terms of the Intercreditor Agreement.
11.1.3 Collateral Agent Professionals . Collateral Agent may perform its duties through agents and employees. Collateral Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Collateral Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.
11.1.4 Instructions of Required Lenders . The rights and remedies conferred upon Collateral Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Collateral Agent may request instructions from Required Lenders with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from Lenders of their indemnification obligations under Section 11.5 against all Claims that could be incurred by Collateral Agent in connection with any act. Collateral Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Collateral Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action whatsoever against Collateral Agent as a result of Collateral Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of all Lenders shall be required in the circumstances described in Section 13.1.1, and in no event shall Required Lenders, without the prior written consent of each Lender, direct Collateral Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans. In no event shall Collateral Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Document or could subject any Agent Indemnitee to personal liability.
11.2 Agreements Regarding Collateral and Field Examination Reports .
11.2.1 Lien Releases; Care of Collateral . Lenders authorize Collateral Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations, (b) that is the subject of an Asset Disposition which Borrower Representative certifies in writing to Collateral Agent is a Permitted Asset Disposition or a Lien which Borrower Representative
 
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certifies is a Permitted Lien entitled to priority over Collateral Agent’s Liens (and Collateral Agent may rely conclusively on any such certificate without further inquiry), (c) that is within the limitations set forth in Section 13.1.1(c)(iii), (d) with the written consent of all Lenders or (e) in accordance with the terms of the Intercreditor Agreement; provided further, upon request of Borrower Representative, Collateral Agent will provide Borrower Representative with a release of the Collateral Agent’s security interest in any assets or Collateral in conjunction with a Permitted Asset Disposition. Collateral Agent shall have no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected, insured or encumbered, nor to assure that Collateral Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.
11.2.2 Possession of Collateral . Collateral Agent and Lenders appoint each other Lender as agent for the purpose of perfecting Liens (for the benefit of the Lenders) in any Collateral that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains possession of any such Collateral, it shall notify Collateral Agent thereof and, promptly upon Collateral Agent’s request, deliver such Collateral to Collateral Agent or otherwise deal with such Collateral in accordance with Collateral Agent’s instructions.
11.2.3 Reports . Collateral Agent shall promptly, upon receipt thereof, forward to each Lender copies of the results of any field audit prepared by or on behalf of Collateral Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees (a) that Collateral Agent make no representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Collateral Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Obligors books and records as well as upon representations of Obligors officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Collateral Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as any Claims arising in connection with any third parties that obtain all or any part of a Report through such Lender.
11.3 Reliance By Collateral Agent . Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.
11.4 Action Upon Default . Collateral Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Collateral Agent and the other Lenders thereof in writing. Each Lender agrees that, except as otherwise provided in any Loan
 
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Documents or with the written consent of Collateral Agent and Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.
11.5 Ratable Sharing . If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.4.1, as applicable, such Lender shall forthwith purchase from the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.4.1, as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 
11.6 Indemnification of Agent Indemnitees .
11.6.1 Indemnification . EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGOR (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ANY AND ALL LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ALL REASONABLE FEES AND EXPENSES OF COUNSEL TO SUCH AGENT INDEMNITEES), ADVANCES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE AGENT INDEMNITEES UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, BY REASON OF COLLATERAL AGENT’S ENTERING INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) other than liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the gross negligence or willful misconduct of Agent Indemnitees. If Collateral Agent is sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or fraudulent transfer, then any monies paid by Collateral Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Collateral Agent by Lenders to the extent of each Lender’s Pro Rata share.

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11.6.2 Proceedings . Without limiting the generality of the foregoing, if at any time (whether prior to or after the Termination Date) any proceeding is brought against any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for any act taken or omitted by Collateral Agent in connection with any Obligations, Collateral, Loan Documents or matters relating thereto, or otherwise to obtain any other relief of any kind on account of any transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required to pay under any judgment or other order entered in such proceeding or by reason of any settlement, including all interest, costs and expenses (including attorneys’ fees) incurred in defending same other than damages resulting from the gross negligence or willful misconduct of Agent Indemnitees. In Collateral Agent’s discretion, Collateral Agent may reserve for any such proceeding, and may satisfy any judgment, order or settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to Lenders subject to the Intercreditor Agreement.
11.7 Limitation on Responsibilities of Collateral Agent . Collateral Agent shall not be liable to Lenders for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Collateral Agent’s gross negligence or willful misconduct. Collateral Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor or Lender of any obligations under the Loan Documents. Collateral Agent does not make to Lenders any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectability, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectability of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.
11.8 Successor Agent and Co-Agents .
11.8.1 Resignation; Successor Collateral Agent . Collateral Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Representative. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Collateral Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a commercial bank that is organized under the laws of the United States or any state or district thereof, has a combined capital surplus of at least $500,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrower Representative; provided that if any such successor Collateral Agent is not a United Stated person within the meaning of Code Section 7701(a)(30), such appointment shall be subject to approval by the Borrower Representative. If no successor agent is appointed prior to the effective date of the resignation of Collateral Agent, then Collateral Agent may appoint a successor agent from among the Lenders. Immediately upon such appointment by Collateral Agent, such successor Collateral Agent shall
 
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thereupon succeed to and become vested with all the powers and duties of the retiring Collateral Agent without further act, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 11.5 and 13.2. Notwithstanding any Collateral Agent’s resignation, the provisions of this Section 11 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Collateral Agent. Any successor by merger or acquisition of the stock or assets of Sun Finance shall continue to be Collateral Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.
11.8.2 Separate Collateral Agent . It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Collateral Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Collateral Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If Collateral Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Collateral Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Collateral Agent. Lenders shall execute and deliver such documents as Collateral Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Collateral Agent until appointment of a new agent.
11.9 Due Diligence and Non-Reliance . Each Lender acknowledges and agrees that it has, independently and without reliance upon Collateral Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund the Loans hereunder. Each Lender has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and agrees that the other Lenders and Collateral Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Lender will, independently and without reliance upon the other Lenders or Collateral Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making the Loans, and in taking or refraining from any action under any Loan Documents. Collateral Agent shall have no duty or responsibility to provide any Lender with any notices, reports or certificates furnished to Collateral Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Collateral Agent or any of Collateral Agent’s Affiliates.
11.10 No Third Party Beneficiaries . This Section 11 is an agreement solely among Lenders and Collateral Agent, and does not confer any rights or benefits upon Obligor or any other Person. As between Obligors and Collateral Agent, any action that Collateral Agent may take under any Loan Documents shall be conclusively presumed to have been authorized and directed by Lenders as herein provided.
 
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11.11 Collateral Agent in its Individual Capacity . Each of Sun Finance and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide bank products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Sun Finance were any other financial institution, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the Lenders. In their individual capacity, Sun Finance and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Lender agrees that Sun Finance and its Affiliates (other than an Obligor or any Subsidiary of an Obligor) shall be under no obligation to provide such information to Lenders.
Section 12. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
12.1 Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of Obligors, Collateral Agent and Lenders and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents and any such assignment shall be absolutely void ab initio, and (b) any assignment by a Lender must be made in compliance with Section 12.3. Agent pay treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 12.3. Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.
12.2 Participations .
12.2.1 Permitted Participants; Effect . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a Person (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans for all purposes, all amounts payable by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Collateral Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Collateral Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant shall not be entitled to the benefits of Section 5.7 unless Borrowers agree otherwise in writing and unless such Participant shall have agreed to be treated as a Lender for purposes of, and subject to, Sections 5.6 and 5.7 and the definition of “Excluded Taxes”. In the event that a Lender sells participations in a Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Loan held by it (and the principal amount (and stated interest thereon) of the portion of the Loan that is subject to such participations) (the “Participant Register”). No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Borrower or any other Person (including the existence or identity of any participant or any information relating to a participant’s interest in the Loans or other obligations under this Agreement) except to the extent that such disclosure is necessary to
 
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establish that such Loans or other obligations are in registered form under Treas. Reg. Section 5f.103-1(c). A Loan (and the Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each note shall expressly so provide). Any participation of such Loan (and the note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
12.2.2 Voting Rights . Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loans in which such Participant has an interest, postpones the Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan, or releases any Borrower, Guarantor or substantial portion of the Collateral.
12.2.3 Benefit of Set-Off . Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 11.4 as if such Participant were a Lender.
12.3 Assignments .
12.3.1 Permitted Assignments . A Lender may assign to any Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $250,000 (unless otherwise agreed by the Required Lenders in their discretion) and integral multiples of $100,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Loans retained by the transferor Lender be at least $250,000 (unless otherwise agreed by the Required Lenders in their discretion); and (c) the parties to each such assignment shall execute and deliver to Lender, for its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans; provided, however, that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.
12.3.2 Effect; Effective Date . From the effective date of the assignment notice in the form of Exhibit C , (a) the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder, and (b) the transferor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to any indemnification provisions provided for the
 
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benefit of the Lenders hereunder or under the other Loan Documents or any other rights of the Lenders that are to survive the termination of this Agreement or any other Loan Documents) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of a transferor Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto). Upon consummation of an assignment, the transferor Lender, Collateral Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as appropriate.
12.4 Tax Treatment . If any interest in a Loan Document is transferred to a Eligible Assignee that is organized under the laws of any jurisdiction other than the United States or any state or district thereof, the Eligible Assignee, concurrently with the effectiveness of such transfer, shall have complied with the provisions of Section 5.7. Register . Collateral Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Obligations (and the principal amount and stated interest thereon) held by such Lender (each, a “Registered Loan”). Other than in connection with an assignment by a Lender of all or any portion of its portion of the Obligations to an Affiliate of such Lender (i) a Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Loans to an Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register. Collateral Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register to the extent it has one) available for review by Borrowers from time to time during normal business hours as Borrowers may reasonably request. It is intended that any Register and Participant Register comply with the requirements of Sections 163(f), 871(h), 881(c) and 4701 of the Code and the Treasury Regulations promulgated thereunder and shall be applied in a manner consistent therewith.
Section 13. MISCELLANEOUS
13.1 Consents, Amendments and Waivers .
13.1.1 Amendment . No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of the Required Lenders and each Obligor party to such Loan Document; provided, however, that
 
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(a) without the prior written consent of Collateral Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Collateral Agent;
(b) without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the amount set forth on Schedule 1.1 regarding such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;
(c) without the prior written consent of all Lenders, no modification shall be effective that would (i) extend the Termination Date; (ii) alter Section 5.4 or 13.1.1; (iii) except as currently contemplated by the Loan Documents (including, without limitation, in connection with a Permitted Asset Disposition or as provided in Section 11.2.1) release Collateral with a book value greater than $45,000,000 during any calendar year; or (iv) except in connection with a Permitted Asset Disposition, release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release.
(d) With the written acknowledgment (without implying a requirement of consent) of Collateral Agent, Borrower Representative, and (if applicable) the signature of a Domestic Subsidiary becoming a Borrower, Joinder Agreements may be entered into and Schedules 8.1.4, 8.1.5, 8.1.9, 8.1.12, 8.1.15, 8.1.16, 8.1.17, 8.1.19, 8.1.21 and 8.1.29 may be modified.
13.1.2 Limitations . The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders and/or Collateral Agent as among themselves. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing, and then only in the specific instance and for the specific purpose for which it is given.
13.1.3 Payment for Consents . No Obligors will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.
13.2 Indemnity . EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.
 
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13.3 Notices and Communications.
13.3.1 Notice Address . All notices, requests and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Representative’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 13.3 . Each such notice, request or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to any Lender pursuant to Section 2.1.4 shall be effective until actually received by the individual to whose attention at Lender such notice is required to be sent. Any written notice, request or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by the Borrower Representative shall be deemed received by all Obligors.
13.3.2 Electronic Communications; Voice Mail . Electronic mail and internet websites may be used only for routine communications, such as financial statements and other information required by Section 9.1.2, administrative matters and distribution of Loan Documents for execution. Collateral Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.
13.3.3 Non-Conforming Communications . Collateral Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of an Obligor.
13.4 Performance of Borrowers’ Obligations . Collateral Agent or Lenders may, in its/their discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Collateral Agent or any Lender to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Collateral Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Collateral Agent or any Lender under this Section shall be reimbursed to Collateral Agent and/or such Lender by Borrowers, on demand, with interest from the date incurred to the date of payment thereof at the Default Rate applicable to the Loans. Any payment made or action taken by Collateral Agent or Lenders under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.
 
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13.5 Credit Inquiries . Each Obligor hereby authorizes Collateral Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary in connection with the establishment of credit lines and/or trade credit or any verification of any Obligor’s Accounts. 
13.6 Severability . Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect. 
13.7 Cumulative Effect; Conflict of Terms . The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise specifically provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control. 
13.8 Counterparts; Facsimile Signatures . Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Collateral Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement. 
13.9 Entire Agreement . Time is of the essence of the Loan Documents. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. 
13.10 Obligations of Lenders . The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Loans of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Collateral Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Collateral Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute Collateral Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Borrower. 
13.11 Confidentiality . During the term of this Agreement and for 12 months thereafter, Lenders agree to take reasonable precautions to maintain the confidentiality of any information that Borrowers deliver to Lenders and identify as confidential at the time of delivery, except that Lenders may disclose such information (a) to their respective officers, directors, employees, Affiliates and agents, including legal counsel, auditors and other professional advisors; (b) to any party to the Loan Documents from time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the request of any Governmental Authority exercising regulatory authority over such Lender; (e) which ceases to be confidential, other than by an act or omission 
 
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of any Lender, or which becomes available to any Lender on a nonconfidential basis; (f) to the extent reasonably required in connection with any litigation relating to any Loan Documents or transactions contemplated thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the exercise of any rights or remedies under the Loan Documents; (h) to any Transferee, as long as such Person agrees to be bound by the provisions of this Section; (i) to the National Association of Insurance Commissioners or any similar organization, or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to any investor or potential investor in an Approved Fund that is a Lender or Transferee, but solely for use by such investor to evaluate an investment in such Approved Fund, or to any manager, servicer or other Person in connection with its administration of any such Approved Fund; or (k) with the consent of Borrower Representative. Notwithstanding the foregoing, Lenders may issue and disseminate to the public general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ names in advertising and other promotional materials.
13.12 GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS). 
13.13 Consent to Forum . EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES OF AMERICA LOCATED IN COOK COUNTY, ILLINOIS, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Collateral Agent or any Lender to bring proceedings against any Obligor in any other court. Nothing in this Agreement shall be deemed to preclude enforcement by Collateral Agent or any Lender of any judgment or order obtained in any forum or jurisdiction. 
13.14 Waivers by Obligors . To the fullest extent permitted by Applicable Law, Obligors waives (a) the right to trial by jury (which Collateral Agent and each Lender hereby also waives) in any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Collateral Agent on which Obligors may in any way be liable, and hereby ratifies anything Collateral Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Collateral Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Collateral Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive 
 
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damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a material inducement to Collateral Agent and Lenders entering into this Agreement and that Collateral Agent and Lenders are relying upon the foregoing in their dealings with Obligor. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
13.15 Patriot Act Notice . Collateral Agent and Lenders hereby notify Obligor that pursuant to the requirements of the Patriot Act, Collateral Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Collateral Agent and Lenders to identify it in accordance with the Patriot Act. Collateral Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor’s management and owners, such as legal name, address, social security number and date of birth. 
13.16 Subordination . Each Obligor covenants and agrees that the payment of all indebtedness, principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of any Obligor), fees, charges, expenses, reasonable attorneys’ fees and any other sum, obligation or liability owing by any other Obligor to such Obligor, including any intercompany trade payables or royalty or licensing fees (collectively, the “Intercompany Obligations”), is subordinated, to the extent and in the manner provided in this Section 13.16, to the prior payment in full of all Obligations (herein, the “Senior Obligations”) and that the subordination is for the benefit of Lenders, and Lenders may enforce such provisions directly (it being understood that nothing in this Section 13.16 shall prohibit any payment on any Intercompany Obligations so long as no Default or Event of Default has occurred and is continuing). 
(a) Each Obligor hereby (i) authorizes Lenders to demand specific performance of the terms of this Section 13.16 whether or not any other Obligor shall have complied with any of the provisions hereof applicable to it, at any time when such Obligor shall have failed to comply with any provisions of this Section 13.16 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.
(b) Upon any distribution of assets of any Obligor in any dissolution, winding-up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) and subject to the provisions of Section 13.16:
(i) Lenders shall first be entitled to receive payment in full in cash of the Senior Obligations before any Obligor is entitled to receive any payment on account of the Intercompany Obligations.
 
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(ii) Any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, to which any other Obligor would be entitled except for the provisions of Section 13.16, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to Lenders, to the extent necessary to make payment in full of all Senior Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to Lenders.
(iii) In the event that notwithstanding the foregoing provisions of Section 13.16, any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, shall be received by any other Obligor on account of the Intercompany Obligations before all Senior Obligations are paid in full, such payment or distribution shall be received and held in trust for and shall be paid over to Lenders for application to the payment of the Senior Obligations until all of the Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to Lenders.
(c) No right of the Lenders or any other present or future holders of any Senior Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Obligor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Obligor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
13.17 Advertisement . Each Obligor hereby authorizes Lenders to publish the names of Borrowers and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Lenders elect to publish. 
13.18 Intercreditor Agreement . Notwithstanding anything contained herein, this Agreement and the other Loan Documents and the rights, remedies, duties and obligations evidenced hereby and thereby are subject in all respects to the terms and conditions of the Intercreditor Agreement. Furthermore, without limitation of the sentence above, the rights of the Lenders and the duty and/or obligation of Collateral Agent to take any enforcement action hereunder and/or under or with respect to any other Loan Documents is subject in all respects to the terms and conditions of the Intercreditor Agreement. In the event there is a conflict between this Agreement and/or any other Loan Documents and the Intercreditor Agreement, the Intercreditor Agreement shall control and govern. 
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
 
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

BORROWERS:
 
KELLWOOD COMPANY
KWD HOLDINGS, INC.
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
PHAT FASHIONS LLC
PHAT LICENSING LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
ZOBHA, LLC
AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION
CORPORATION
ROYAL ROBBINS, INC.	
		
By:	 		
Name:	 	Adrian Kowalewski	
Title:	 	Senior Vice President	
 
[Signature Page to Second Amended and Restated Term A Loan Agreement]

			
LENDERS:
 
SCSF KELLWOOD FINANCE, LLC

By:	 		
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	

SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	

COLLATERAL AGENT :
 
SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Maxwell Curtis Lentz	
Title:	 	Vice President	
 
[Signature Page to Second Amended and Restated Term A Loan Agreement]

Exhibit 10.28
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT (this “ Amendment ”) is entered into as of July     , 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), SUN KELLWOOD FINANCE, LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Second Amended and Restated Term A Loan Agreement dated as of April 20, 2012 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested that Agent and Lenders amend the Credit Agreement to extend the period of time to deliver financial statements in respect of the Vince business for the Fiscal Year ending January 31, 2012 until 225 days after the close of such Fiscal Year;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 9.1.2(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 225 days of the close of such Fiscal Year), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in

accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;”
(b) Section 9.2.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with (i)  Section 9.1.9 or (ii) in connection with Permitted Acquisitions, Section 9.2.9 ; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.”
3. Continuing Effect . Except as expressly set forth in Section 2 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
4. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
5. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents;

(c) Agent shall have received a fully executed copy of an amendment to the Second Lien Term Loan Agreement; and
(d) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
6. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
7. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.3 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
8. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other

legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]

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

BORROWERS:	
	
KELLWOOD COMPANY	
KELLWOOD FINANCIAL RESOURCES, INC.	
(formerly known as Newkell, Inc.)	
KWD HOLDINGS, INC.	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
ZOBHA, LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, INC.	
SIERRA DESIGNS ACQUISITION CORPORATION	
ROYAL ROBBINS, INC.	
		
By:	 		
Name:	 	 
Adrian Kowalewski	
Title:	 	Senior Vice President	

			
AGENT:	
	
SUN KELLWOOD FINANCE, LLC,	
as Agent	
		
By:	 		
Name:	 	 
Michael J. McConvery	
Title:	 	Vice President	

LENDERS:	
		
	 	SUN KELLWOOD FINANCE, LLC	
			
	 	By:	 		
	 		 	 
Name: Michael J. McConvery	
	 		 	Title:   Vice President	
		
	 	SCSF KELLWOOD FINANCE, LLC	
			
	 	By:	 		
	 		 	 
Name: Michael J. McConvery	
	 		 	Title:   Vice President	

Exhibit 10.29
CONSENT AND AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED
TERM A LOAN AGREEMENT
THIS CONSENT AND AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT (this “ Amendment ”) is entered into as of December 31, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), SUN KELLWOOD FINANCE, LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, the “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Second Amended and Restated Term A Loan Agreement dated as of April 20, 2012 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have notified Agent and the Lenders that Parent and Canadian Recreation Products Inc. (“ Canadian RR Sub ”) desire to enter into a Purchase Agreement in the form of Exhibit A hereto (the “ Royal Robbins Purchase Agreement ”) pursuant to which Parent will sell all of the issued and outstanding equity interests of Royal Robbins, LLC (“ Royal Robbins ” and all such issued and outstanding equity interests of Royal Robbins the “ Royal Robbins Transferred Equity Interests ”) to RR Acquisition Corporation (“ US RR Purchaser ”) and Canadian RR Sub will sell the assets described on Exhibit B hereto (the “ RR Transferred Assets ”) to RR Canada, Inc. (“ Canadian RR Purchaser ”);
WHEREAS, the Loan Parties have also notified Agent and the Lenders that Phat Fashions LLC (“ Phat Fashions ”) has entered into a Purchase Agreement in the form of Exhibit C hereto (the “ Phat Fashions Purchase Agreement ”) pursuant to which Phat Fashions will sell the assets described on Exhibit D hereto (the “ PF Transferred Assets ”) to Baby Phat Holding Company, LLC (“ PF Purchaser ”);
WHEREAS, the Loan Parties have requested that Agent and the Lenders consent to (i) the sale by Parent of all of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement, (iii) the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case upon receipt of the Initial RR Consideration (as defined below), (iv) the release of Agent’s Lien on the PF Transferred Assets upon receipt of the Initial PF Consideration (as defined below), and (v) the prepayment of the Second Lien Debt in an aggregate amount not less than $10,000,000, with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement;
WHEREAS, the Agent and Lenders are willing to provide such consent on the terms provided herein;

WHEREAS, the Loan Parties, Agent and Lenders have also agreed to amend the Credit Agreement in certain respects on the terms provided herein;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Consent and Release . In reliance on the representations and warranties of the Loan Parties set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, (a) Agent and the Lenders consent to (i) the sale by Parent of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Royal Robbins Purchase Agreement) for the Royal Robbins Transferred Equity Interests (such amount, the “ Initial RR Consideration ”) is at least $17,500,000 and (C) $10,000,000 of Initial RR Consideration is remitted directly to the Second Lien Agent and the remaining portion of the Initial RR Consideration is remitted directly to the Revolver Agent for application to the outstanding Revolver Debt, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement and the release of Agent’s Lien on the PF Transferred Assets, in each case, so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of the Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Phat Fashions Purchase Agreement) for the PF Transferred Assets (such amount, the “ Initial PF Consideration ”) is at least $5,000,000 and (C) the Initial PF Consideration is remitted directly to Revolver Agent for application to the outstanding Revolver Debt, and (iii) the prepayment of the Second Lien Debt in an aggregate amount not less than $10,000,000 with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement and (b) the Agent hereby acknowledges, confirms and agrees that (i) Royal Robbins is released from all obligations under the Credit Agreement, Security Agreement and each other Loan Document and (ii) all liens, encumbrances or security interests of Agent covering the assets of Royal Robbins are released. The foregoing consent shall not be deemed to be a consent to any other deviation from the express terms of the Credit Agreement and the Loan Documents.
3. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Borrower set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended to add the following definitions in appropriate alphabetical order, as follows:
Initial RR Consideration – as defined in the Second Amendment.
 
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Initial PF Consideration – as defined in the Second Amendment.
PF Transferred Assets – as defined in the Second Amendment.
Phat Fashions Purchase Agreement – as defined in the Second Amendment.
Royal Robbins Investment – collectively, the “Seller Notes” (as defined in the Royal Robbins Purchase Agreement) and the “Earnout Cash” (as defined in the Royal Robbins Purchase Agreement).
Royal Robbins Purchase Agreement – as defined in the Second Amendment.
Royal Robbins Transferred Equity Interests – as defined in the Second Amendment.
Second Amendment – that certain Consent and Amendment No. 2 to Second Amended and Restated Term A Loan Agreement dated as of December     , 2012 among Agent, Lenders and Loan Parties.
(b) The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“ Consolidated EBITDA – for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring
 
- 3 -

restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (l) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate, (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) the aggregate amount of all audit, tax, consulting and legal costs and expenses paid by the Loan Parties during such period associated with Project Victory, plus retention payments during such period for Rea Laccone and Christopher LaPolice less estimated pro forma costs for replacement executives for Rea Laccone and Christopher LaPolice during such period. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Agent.”
(c) The definition of “Permitted Investment” in Section 1.1 of the Credit Agreement is hereby amended to replace the reference to “(i)” with a reference to “(j)”.
 
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(d) The definition of “Restricted Investment” in Section 1.1 of the Credit Agreement is hereby amended to (i) replace the “and” after the clause (h) with “,”, (ii) reletter clause “(i)” as “(j)”, and (iii) add the following clause (i):
“(i) the Royal Robbins Investment, and”.
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reaffirmation and Confirmation; Covenant .
(a) Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects.
6. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement;
(c) Agent shall have received a fully executed copy of an amendment to the Second Lien Debt Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement; and
(d) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
7. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
 
- 5 -

(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally; and
(d) The transactions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement and the application of the Net Cash Proceeds from such transactions as described herein are in compliance with the 2009 Indenture. Parent has received an opinion as to fairness to Parent of the transactions contemplated by the Royal Robbins Purchase Agreement from a financial point of view issued by an accounting, appraisal or investment banking firm of material standing.
8. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
9. Other Agreements .
(a) Effective simultaneously with receipt of the Initial RR Consideration pursuant to Section 2 hereof, (i) the release in the form of Exhibit E hereto shall be automatically effective, (ii) Agent authorizes the filing of a UCC termination statement with respect to the UCC financing statement listed on Exhibit F hereto, and (iii) Agent agrees to take such further actions as may be reasonably requested by Borrowers to evidence the termination of the Liens of Agent in the assets of Royal Robbins and the release of Royal Robbins as a Borrower.
 
- 6 -

(b) Effective simultaneously with receipt of the Initial PF Consideration pursuant to Section 2 hereof, (i) Agent authorizes the filing of the partial release in the form of Exhibit G hereto and the filing of the UCC financing statement listed on Exhibit H hereto and (ii) Agent agrees to take such further actions as may be reasonably requested by Obligors to evidence the termination of the Liens of Agent in the PF Transferred Assets.
10. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
- 7 -

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

BORROWERS:
 
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, LLC
SIERRA DESIGNS ACQUISITION COMPANY, LLC
ROYAL ROBBINS, LLC
VINCE, LLC	
		
By:	 		
Name:	 	Keith A. Grypp	
Title:	 	Senior Vice President	

					
	 	AGENT:	
		
	 	SUN KELLWOOD FINANCE, LLC,
as Agent 	
			
	 	By:	 		
	 		 	Name: Michael J. McConvery	
	 		 	Title: Vice President	
	
LENDERS:	
		
	 	SUN KELLWOOD FINANCE, LLC	
			
	 	By:	 		
	 		 	Name: Michael J. McConvery	
	 		 	Title: Vice President	
		
	 	SCSF KELLWOOD FINANCE, LLC	
			
	 	By:	 		
	 		 	Name: Michael J. McConvery	
	 		 	Title: Vice President	

Exhibit 10.30
EXECUTION VERSION
AMENDMENT NO. 3 TO SECOND AMENDED AND RESTATED
TERM A LOAN AGREEMENT
This AMENDMENT NO. 3 TO SECOND AMENDED AND RESTATED TERM A LOAN AGREEMENT (this “ Amendment ”), dated as of June 28, 2013, amends that certain Second Amended and Restated Term A Loan Agreement, dated as of April 20, 2012, as amended, restated or otherwise modified from time to time, the “ Loan Agreement ”), by and among KELLWOOD COMPANY, a Delaware corporation (the “ Borrower Representative ” or “ Parent ”), its Domestic Subsidiaries from time to time party thereto (each a “ Borrower ” and collectively with Borrower Representative, the “ Borrowers ”), the other Obligors (as defined therein) party thereto, SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF Finance ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (“ Sun Finance ” and, together with the SCSF Finance, each a “ Lender ” and collectively, the “ Lenders ”) and Sun Finance, in its capacity as collateral agent for each Lender (the “ Collateral Agent ”).
Preamble
Each of the Borrowers, Lenders, Obligors and the Collateral Agent wishes to amend the Loan Agreement. Accordingly, the parties hereto hereby agree as follows:
1. Definitions in this Amendment . All capitalized terms used herein which are defined in the Loan Agreement and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement.
2. Amendments to Loan Agreement .
(a) Definitions . Section 1.1 of the Loan Agreement is hereby amended as follows:
(i) Existing Terms. Deleting the definitions of the below terms in their entirety and substituting therefor the following new definitions:
Consolidated EBITDA - for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs,

contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (1) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) the aggregate amount of all audit, tax, consulting and legal costs and expenses paid by the Loan Parties during such period associated with Project Victory, plus retention payments during such period for Rea Laccone and Christopher La Police during such period. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Collateral Agent.
 
2

Fixed Charge Coverage Ratio - the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except (x) those financed with Permitted Debt (other than Revolver Loan or the Second Lien Debt) and (y) with respect to the fiscal quarters ending on July 31, 2013, October 31, 2013 and January 31, 2014, up to $7,500,000 of capital expenditures for a new IT system, new headquarters, and new shop and store openings related to Project Victory, shall be disregarded for purposes of this clause (i), provided , however , that only a maximum of $4,000,000 may be used for new store and shop openings) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrowers to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Term A Loans – the loans made pursuant to Section 2.1.1 of this Agreement. The amount of each Lender’s Pro Rata share of the Term A Loans as of the Closing Date is set forth on Schedule 1.1 .
(ii) Added Terms . Adding the following new terms and definitions:
Term B/C/D/E/F/G Loan Agreement – means that certain Fifth Amended and Restated Term Loan Agreement, dated as of the date hereof, by and among Parent, Borrowers, the other obligors party thereto, SCSF Finance, Sun Finance and the Collateral Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Term B/C/D/E/F/G Loan Debt – means the ‘Obligations’ as defined in the Term B/C/D/E/F/G Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Intercreditor Agreement.
(b) Defined Terms . The Loan Agreement is hereby amended as follows:
(i) Deleting every instance of the term “Term B/C/D/E/F Loan Agreement” and replacing such deleted term with the term “Term B/C/D/E/F/G Loan Agreement”.
(ii) Deleting every instance of the term “Term B/C/D/E/F Loan Debt” and replacing such term with the term “Term B/C/D/E/F/G Loan Debt”.
 
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(c) Section 9.2.21 (Fixed Charge Coverage Ratio) . Section 9.2.21 is hereby amended and restated in its entirety as follows:
“Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries for which the last quarter ends nearest to the date set forth below to be less than the amount set forth opposite such date:

Fiscal Quarter End	  	Fixed Charge Coverage Ratio	
		
July 31, 2012	  	0.14:1.00	
		
October 31, 2012	  	0.41:1.00	
		
January 31, 2013	  	0.67:1.00	
		
April 30, 2013	  	0.89:1.00	
		
July 31, 2013	  	1.10:1.00	
		
October 31, 2013	  	1.175:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter”	  	1.25:1.00	
3. Representations and Warranties . In order to induce the Lenders and the Collateral Agent, to enter into this Amendment, each Borrower and each of the other Obligors from time to time party to the Loan Agreement hereby represents and warrants on behalf of itself, that:
(a) Organization and Qualification . Each Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Borrower is duly qualified, authorized to do business and is in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
(b) Representations and Warranties True and Correct . At and as of the date of this Amendment after giving effect to this Amendment, each of the representations and warranties contained in Section 8 of the Loan Agreement and in each of the other Loan Documents, certificate or other writing delivered to any Lender pursuant hereto or thereto on or prior to the date hereof are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof (except to the extent that any such representations or warranties expressly relate solely to an earlier date in which case such representations and warranties are true and correct in all material respects as of such earlier date).
(c) Authorization: No Conflict. The execution, delivery and performance by each Borrower of this Amendment, (i) has been duly authorized by all necessary
 
4

action, (ii) does not and will not contravene its operating agreement or its certificate of formation, or any applicable law or any material contractual restriction binding on or otherwise affecting it or any of its properties, (iii) does not and will not result in or require the creation of any Lien upon or with respect to any of its properties, and (iv) does not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to its operations or any of its properties except where any such default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to result in a Material Adverse Effect.
(d) Binding Effect . This Amendment has been duly executed and delivered by each Borrower and constitutes the legal, valid and binding obligation of each such Borrower, enforceable against such party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally.
4. Conditions Precedent . This Amendment shall be effective as of the first date upon which the parties hereto have fulfilled in a manner satisfactory to the Lenders, all of the following conditions precedent set forth in this Section 4 (such date being the “ Amendment No. 1 Effective Date ”):
(a) Execution of the Amendment . The Borrowers shall have executed original counterparts of this Amendment and shall have delivered (including by way of facsimile transmission or other electronic transmission) the same to the Lenders.
(b) Delivery of Other Documents . The Lenders shall have received each of the following documents, in each case, in form and substance satisfactory to the Lenders:
(i) Fifth Amended and Restated Term Loan Agreement, duly executed by each party thereto, substantially similar to this Amendment and otherwise in form and substance acceptable to the Lenders; and
(ii) such other agreements, instruments, approvals or other documents, each satisfactory to the Lenders in form and substance, as the Lenders may reasonably request.
(c) Other Agreement . The Lenders shall have received evidence, in form and substance satisfactory to the Lenders, of the consummation of the transactions related to the amendment of the Revolver Agreement and Second Lien Debt Documents.
(d) Representations and Warranties . As of the date hereof, the representations and warranties set forth in Section 3 hereof shall be true and correct in all material respects.
5. Security Reaffirmation . The Obligors acknowledge that Section 7 of the Revolver Agreement grants a security interest in favor of the Collateral Agent which secures (i) the Revolver Debt and (ii) the Obligations under the Loan Agreement. The Obligors, subject to the terms and limits contained in the Loan Documents, reaffirm their Liens created in favor of
 
5

the Collateral Agent, for the benefit of the Lenders, on the Collateral to secure the Obligations under the Loan Agreement and other Loan Documents. The Obligors hereby acknowledge that they have reviewed the terms and provisions of this Amendment and hereby (i) confirm that the Loan Documents to which they are a party or are otherwise bound continues to be in full force and effect, and all Collateral encumbered thereby will guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents, the payment and performance of the Obligations, as the case may be, including without limitation the payment and performance of all such applicable Obligations that are joint and several obligations of the each Obligor now or hereafter existing, and all of their obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of the Loan Documents and (ii) grant to Collateral Agent a continuing lien on and security interest in and to the Obligor’s right, title and interest in, to and under all the Collateral, pursuant to and in accordance with the Loan Documents as collateral security for the prompt payment and performance in full when due of all applicable Obligations subject to the terms and limits contained in the Loan Documents (whether at stated maturity, by acceleration or otherwise).
6. Miscellaneous . 
(a) Continuing Effect . Except as specifically provided herein, each Borrower confirms and agrees that (i) the Loan Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects, provided that on and after the Amendment No. 1 Effective Date, all references in the Loan Agreement to “this Agreement”, “hereto”, “hereof” or “hereunder” and all references in any other Loan Documents to “the Loan Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Loan Agreement shall mean the Loan Agreement as amended by this Amendment, (ii) to the extent that any such Loan Document purports to assign or pledge to the Collateral Agent, or to grant to the Collateral Agent, a Lien on any collateral as security for the Obligations of the Borrowers or any other Obligor from time to time existing in respect of the Loan Agreement and the Loan Documents, such pledge, assignment and/or grant of a Lien is hereby ratified and confirmed in all respects and (iii) this Amendment constitutes a Loan Document.
(b) No Waiver; Reservation of Rights . This Amendment is limited as specified herein and the execution, delivery and effectiveness of this Amendment shall not operate as a modification or amendment of any provision of the Loan Agreement or any other Loan Document, except as specifically set forth herein. Notwithstanding anything contained in this Amendment to the contrary, the Collateral Agent and the Lenders party hereto expressly reserve the right to exercise any and all of their rights and remedies under the Loan Agreement, any other Loan Document and applicable law in respect of any Default or Event of Default now in existence or hereinafter arising.
(c) Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.
 
6

(d) Severability . The provisions of this Amendment are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Amendment in any jurisdiction.
(e) Counterparts . This Amendment may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart. A complete set of counterparts shall be lodged with the Borrower Representative and each of the Lenders and the Collateral Agent.
(f) Headings . Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(g) Binding Effect; Assignment . This Amendment shall be binding upon and inure to the benefit of the Borrowers, other Obligors, from time to time party hereto, the Lenders party hereto, the Collateral Agent and their respective and permitted successors and assigns.
(h) Expenses . The Borrower agrees that it will pay the Lenders, upon demand, for all reasonable expenses, including reasonable fees and charges of counsel, incurred by the Lenders in connection with the preparation, negotiation, execution and delivery of this Amendment and any document required to be furnished herewith.
(i) Integration . This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.
(j) Release . Each Obligor hereby acknowledges and agrees on behalf of itself that such Obligor has no defense, counterclaim, offset, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of its liability to repay the obligations or to seek affirmative relief or damages of any kind or nature from the Collateral Agent or the Lenders. Each Obligor hereby voluntarily and knowingly releases and forever discharges the Collateral Agent, the Lenders and each of their respective predecessors, agents, employees, attorneys, successors and assigns (collectively, the “ Released Parties ”) from all possible claims, demands, actions, causes of action, damages, costs, expenses and liabilities whatsoever, whether known or unknown, anticipated or unanticipated, suspected or unsuspected, fixed, contingent or conditional, or at law or in equity, in any case originating in whole or in part on or before the date this Amendment is executed that any Obligor may now or hereafter have against the Released Parties, if any, irrespective of whether any such claims arise out of contract, tort, violation of law or regulations, or otherwise, and that arise from any Loans, the exercise of any rights and remedies under the Loan Agreement or other Loan Documents, and/or negotiation for and execution of this Amendment, including, without limitation, any contracting for, charging, taking, reserving, collecting or receiving interest in excess of the highest lawful rate applicable.
[Remainder of page left intentionally blank; signature pages to follow.]
 
7

IN WITNESS WHEREOF , this Amendment has been executed and delivered as of the date set forth above.

BORROWERS :	
	
KELLWOOD COMPANY	
KWD HOLDINGS, INC.	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, LLC	
SIERRA DESIGNS ACQUISITION COMPANY,	
LLC	
ZOBHA, LLC	
VINCE, LLC	
		
By:	 		
Name:	 	Keith A. Grypp	
Title:	 	Senior Vice President, Secretary and General Counsel	
[Signature Page to Amendment No. 3 to Term Loan Agreement]

			
LENDERS :	
		
	 	SCSF KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	
		
	 	SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	
	
COLLATERAL AGENT :	
		
	 	SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	
[Signature Page to Amendment No. 3 to Term Loan Agreement]

Exhibit 10.31
EXECUTION VERSION

KELLWOOD COMPANY
and
each of its Domestic Subsidiaries party hereto,
as Borrowers

FIFTH AMENDED AND RESTATED TERM LOAN AGREEMENT
Dated as of June 28, 2013
Term B Loan: $28,186,052.45
Term C Loan: $18,387,694.55
Term D Loan: $11,881,263.38
Term E Loan: $5,764,923.63
Term F Loan: $28,146,391.86
Term G Loan: $5,000,000

SCSF KELLWOOD FINANCE, LLC
and
SUN KELLWOOD FINANCE, LLC,
as Lenders
and
SUN KELLWOOD FINANCE, LLC,
as Collateral Agent

TABLE OF CONTENTS

 	 	  	 	  	 	  	PAGE	 	
 	Section 1.	  	  	DEFINITIONS; RULES OF CONSTRUCTION	  	 	1	  	
			
 	1.1	  	  	Definitions	  	 	1	  	
 	1.2	  	  	Accounting Terms	  	 	25	  	
 	1.3	  	  	Uniform Commercial Code	  	 	25	  	
 	1.4	  	  	Certain Matters of Construction	  	 	26	  	
			
 	Section 2.	  	  	CREDIT FACILITIES	  	 	26	  	
			
 	2.1	  	  	Term Loans	  	 	26	  	
			  	2.1.1	  	Term B Loans	  	 	26	  	
			  	2.1.2	  	Term C Loans	  	 	26	  	
			  	2.1.3	  	Term D Loans	  	 	26	  	
			  	2.1.4	  	Term E Loans	  	 	26	  	
			  	2.1.5	  	Term F Loans	  	 	27	  	
			  	2.1.6	  	Term Notes	  	 	27	  	
			  	2.1.7	  	Use of Proceeds	  	 	27	  	
			  	2.1.8	  	Prepayments	  	 	27	  	
			
 	Section 3.	  	  	INTEREST AND CHARGES	  	 	28	  	
			
 	3.1	  	  	Rates and Payment of Interest	  	 	28	  	
 	3.2	  	  	Computation of Interest and Yield Protection	  	 	28	  	
 	3.3	  	  	Reimbursement Obligations	  	 	28	  	
 	3.4	  	  	Capital Adequacy	  	 	29	  	
 	3.5	  	  	Mitigation	  	 	29	  	
 	3.6	  	  	Maximum Interest	  	 	29	  	
			
 	Section 4.	  	  	LOAN ADMINISTRATION	  	 	30	  	
			
 	4.1	  	  	Borrower Representative	  	 	30	  	
 	4.2	  	  	One Obligation	  	 	30	  	
 	4.3	  	  	Effect of Termination	  	 	30	  	
			
 	Section 5.	  	  	PAYMENTS	  	 	31	  	
			
 	5.1	  	  	General Payment Provisions	  	 	31	  	
 	5.2	  	  	Payment of Other Obligations	  	 	31	  	
 	5.3	  	  	Marshaling; Payments Set Aside	  	 	31	  	
 	5.4	  	  	Post-Default Allocation of Payments	  	 	31	  	
			  	5.4.1	  	Allocation	  	 	31	  	
			  	5.4.2	  	Erroneous Application	  	 	32	  	
 	5.5	  	  	Loan Account	  	 	32	  	
 	5.6	  	  	Taxes	  	 	32	  	
			  	5.6.1	  	Payments Free of Taxes	  	 	32	  	
			  	5.6.2	  	Payment	  	 	33	  	
			  	5.6.3	  	Refunds	  	 	33	  	
 
i

											
 	5.7	  	  	Lender Tax Information	  	 	33	  	
			  	5.7.1	  	Status of Lenders	  	 	33	  	
			  	5.7.2	  	Documentation	  	 	33	  	
			  	5.7.3	  	Lender Obligations	  	 	34	  	
 	5.8	  	  	Nature and Extent of Each Borrower’s Liability	  	 	34	  	
			  	5.8.1	  	Joint and Several Liability	  	 	34	  	
			  	5.8.2	  	Waivers	  	 	35	  	
			  	5.8.3	  	Extent of Liability; Contribution	  	 	36	  	
			  	5.8.4	  	Joint Enterprise	  	 	36	  	
			  	5.8.5	  	Subordination	  	 	36	  	
			
 	Section 6.	  	  	CONDITIONS PRECEDENT	  	 	37	  	
			
 	6.1	  	  	Conditions Precedent to Initial Loans	  	 	37	  	
			
 	Section 7.	  	  	COLLATERAL	  	 	38	  	
			
 	7.1	  	  	Security Reaffirmation	  	 	38	  	
 	7.2	  	  	Administration of Accounts	  	 	38	  	
 	7.3	  	  	Administration of Inventory	  	 	39	  	
			  	7.3.1	  	Records and Reports of Inventory	  	 	39	  	
			  	7.3.2	  	Returns of Inventory	  	 	39	  	
			  	7.3.3	  	Acquisition, Sale and Maintenance	  	 	39	  	
 	7.4	  	  	[Intentionally Omitted]	  	 	39	  	
 	7.5	  	  	Administration of Deposit Accounts and Securities Accounts	  	 	39	  	
 	7.6	  	  	General Provisions	  	 	40	  	
			  	7.6.1	  	Location of Collateral	  	 	40	  	
			  	7.6.2	  	Insurance of Collateral	  	 	40	  	
			
 	Section 8.	  	  	REPRESENTATIONS AND WARRANTIES	  	 	41	  	
			
 	8.1	  	  	General Representations and Warranties	  	 	41	  	
			  	8.1.1	  	Organization and Qualification	  	 	41	  	
			  	8.1.2	  	Power and Authority	  	 	41	  	
			  	8.1.3	  	Enforceability	  	 	41	  	
			  	8.1.4	  	Capital Structure	  	 	41	  	
			  	8.1.5	  	Corporate Names; Locations	  	 	42	  	
			  	8.1.6	  	Title to Properties; Priority of Liens	  	 	42	  	
			  	8.1.7	  	Financial Statements	  	 	42	  	
			  	8.1.8	  	Surety Obligations	  	 	42	  	
			  	8.1.9	  	Taxes	  	 	43	  	
			  	8.1.10	  	Brokers	  	 	43	  	
			  	8.1.11	  	Intellectual Property	  	 	43	  	
			  	8.1.12	  	Governmental Approvals	  	 	43	  	
			  	8.1.13	  	Compliance with Laws	  	 	43	  	
			  	8.1.14	  	Compliance with Environmental Laws	  	 	43	  	
			  	8.1.15	  	Burdensome Contracts	  	 	44	  	
			  	8.1.16	  	Litigation	  	 	44	  	
 
ii

											
			  	8.1.17	  	No Defaults	  	 	44	  	
			  	8.1.18	  	ERISA	  	 	44	  	
			  	8.1.19	  	Trade Relations	  	 	44	  	
			  	8.1.20	  	Labor Relations	  	 	45	  	
			  	8.1.21	  	Payable Practices	  	 	45	  	
			  	8.1.22	  	Not a Regulated Entity	  	 	45	  	
			  	8.1.23	  	Margin Stock	  	 	45	  	
			  	8.1.24	  	Plan Assets	  	 	45	  	
			  	8.1.25	  	Immaterial Subsidiaries	  	 	45	  	
			  	8.1.26	  	Patriot Act	  	 	45	  	
			  	8.1.27	  	OFAC	  	 	46	  	
			  	8.1.28	  	Nature of Business	  	 	46	  	
			  	8.1.29	  	Material Contracts	  	 	46	  	
			  	8.1.30	  	No Bankruptcy Filing	  	 	46	  	
			  	8.1.31	  	Reserved	  				
 	8.2	  	  	Complete Disclosure	  	 	46	  	
			
 	Section 9.	  	  	COVENANTS AND CONTINUING AGREEMENTS	  	 	46	  	
			
 	9.1	  	  	Affirmative Covenants	  	 	46	  	
			  	9.1.1	  	Inspections	  	 	46	  	
			  	9.1.2	  	Financial and Other Information	  	 	47	  	
			  	9.1.3	  	Notices	  	 	49	  	
			  	9.1.4	  	Landlord and Storage Agreements	  	 	49	  	
			  	9.1.5	  	Compliance with Laws	  	 	49	  	
			  	9.1.6	  	Taxes	  	 	50	  	
			  	9.1.7	  	Insurance	  	 	50	  	
			  	9.1.8	  	Licenses	  	 	50	  	
			  	9.1.9	  	Future Subsidiaries	  	 	50	  	
			  	9.1.10	  	Additional Guarantors	  	 	50	  	
			  	9.1.11	  	Preservation of Existence, Etc	  	 	51	  	
			  	9.1.12	  	Keeping of Records and Books of Account	  	 	51	  	
			  	9.1.13	  	Maintenance of Properties, Etc	  	 	51	  	
			  	9.1.14	  	Obtaining of Permits, Etc	  	 	51	  	
			  	9.1.15	  	Further Assurances	  	 	51	  	
 	9.2	  	  	Negative Covenants	  	 	52	  	
			  	9.2.1	  	Permitted Debt	  	 	52	  	
			  	9.2.2	  	Permitted Liens	  	 	53	  	
			  	9.2.3	  	[Intentionally Omitted]	  	 	54	  	
			  	9.2.4	  	Distributions; Upstream Payments	  	 	54	  	
			  	9.2.5	  	Restricted Investments	  	 	54	  	
			  	9.2.6	  	Disposition of Assets	  	 	54	  	
			  	9.2.7	  	Loans; Extensions of Credit	  	 	54	  	
			  	9.2.8	  	Restrictions on Payment of Certain Debt	  	 	55	  	
			  	9.2.9	  	Fundamental Changes	  	 	55	  	
			  	9.2.10	  	Subsidiaries	  	 	55	  	
			  	9.2.11	  	Organic Documents	  	 	56	  	
 
iii

											
			  	9.2.12	  	Tax Consolidation	  	 	56	  	
			  	9.2.13	  	Accounting Changes	  	 	56	  	
			  	9.2.14	  	Restrictive Agreements	  	 	56	  	
			  	9.2.15	  	Hedging Agreements	  	 	56	  	
			  	9.2.16	  	Conduct of Business	  	 	56	  	
			  	9.2.17	  	Affiliate Transactions	  	 	56	  	
			  	9.2.18	  	Plans	  	 	57	  	
			  	9.2.19	  	Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt	  	 	57	  	
			  	9.2.20	  	Immaterial Subsidiaries	  	 	57	  	
			  	9.2.21	  	Fixed Charge Coverage Ratio	  	 	57	  	
			  	9.2.22	  	Federal Reserve Regulations	  	 	58	  	
			  	9.2.23	  	Investment Company Act of 1940	  	 	58	  	
			  	9.2.24	  	2009 Debenture Intercreditor Agreement	  	 	58	  	
			
 	Section 10.	  	  	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	  	 	58	  	
			
 	10.1	  	  	Events of Default	  	 	58	  	
 	10.2	  	  	Remedies upon Default	  	 	61	  	
 	10.3	  	  	License	  	 	61	  	
 	10.4	  	  	Setoff	  	 	62	  	
 	10.5	  	  	Remedies Cumulative; No Waiver	  	 	62	  	
			  	10.5.1	  	Cumulative Rights	  	 	62	  	
			  	10.5.2	  	Waivers	  	 	62	  	
			
 	Section 11.	  	  	COLLATERAL AGENT	  	 	62	  	
			
 	11.1	  	  	Appointment, Authority and Duties of Collateral Agent	  	 	62	  	
			  	11.1.1	  	Appointment and Authority	  	 	62	  	
			  	11.1.2	  	Duties	  	 	63	  	
			  	11.1.3	  	Collateral Agent Professionals	  	 	63	  	
			  	11.1.4	  	Instructions of Required Lenders	  	 	63	  	
 	11.2	  	  	Agreements Regarding Collateral and Field Examination Reports	  	 	64	  	
			  	11.2.1	  	Lien Releases; Care of Collateral	  	 	64	  	
			  	11.2.2	  	Possession of Collateral	  	 	64	  	
			  	11.2.3	  	Reports	  	 	64	  	
 	11.3	  	  	Reliance By Collateral Agent	  	 	65	  	
 	11.4	  	  	Action Upon Default	  	 	65	  	
 	11.5	  	  	Ratable Sharing	  	 	65	  	
 	11.6	  	  	Indemnification of Agent Indemnitees	  	 	65	  	
			  	11.6.1	  	Indemnification	  	 	65	  	
			  	11.6.2	  	Proceedings	  	 	66	  	
 	11.7	  	  	Limitation on Responsibilities of Collateral Agent	  	 	66	  	
 	11.8	  	  	Successor Agent and Co-Agents	  	 	67	  	
			  	11.8.1	  	Resignation; Successor Collateral Agent	  	 	67	  	
			  	11.8.2	  	Separate Collateral Agent	  	 	67	  	
 
iv

											
 	11.9  	  	  	Due Diligence and Non-Reliance	  	 	67	  	
 	11.10	  	  	No Third Party Beneficiaries	  	 	68	  	
 	11.11	  	  	Collateral Agent in its Individual Capacity	  	 	68	  	
			
 	Section 12.	  	  	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	  	 	68	  	
			
 	12.1  	  	  	Benefit of Agreement	  	 	68	  	
 	12.2  	  	  	Participations	  	 	68	  	
			  	12.2.1	  	Permitted Participants; Effect	  	 	68	  	
			  	12.2.2	  	Voting Rights	  	 	69	  	
			  	12.2.3	  	Benefit of Set-Off	  	 	69	  	
 	12.3  	  	  	Assignments	  	 	69	  	
			  	12.3.1	  	Permitted Assignments	  	 	69	  	
			  	12.3.2	  	Effect; Effective Date	  	 	70	  	
 	12.4  	  	  	Tax Treatment	  	 	70	  	
 	12.5  	  	  	Register	  	 	70	  	
			
 	Section 13.	  	  	MISCELLANEOUS	  	 	71	  	
			
 	13.1  	  	  	Consents, Amendments and Waivers	  	 	71	  	
			  	13.1.1	  	Amendment	  	 	71	  	
			  	13.1.2	  	Limitations	  	 	71	  	
			  	13.1.3	  	Payment for Consents	  	 	72	  	
 	13.2  	  	  	Indemnity	  	 	72	  	
 	13.3  	  	  	Notices and Communications	  	 	72	  	
			  	13.3.1	  	Notice Address	  	 	72	  	
			  	13.3.2	  	Electronic Communications; Voice Mail	  	 	72	  	
			  	13.3.3	  	Non-Conforming Communications	  	 	72	  	
 	13.4  	  	  	Performance of Borrowers’ Obligations	  	 	73	  	
 	13.5  	  	  	Credit Inquiries	  	 	73	  	
 	13.6  	  	  	Severability	  	 	73	  	
 	13.7  	  	  	Cumulative Effect; Conflict of Terms	  	 	73	  	
 	13.8  	  	  	Counterparts; Facsimile Signatures	  	 	73	  	
 	13.9  	  	  	Entire Agreement	  	 	73	  	
 	13.10	  	  	Obligations of Lenders	  	 	74	  	
 	13.11	  	  	Confidentiality	  	 	74	  	
 	13.12	  	  	GOVERNING LAW	  	 	74	  	
 	13.13	  	  	Consent to Forum	  	 	74	  	
 	13.14	  	  	Waivers by Obligors	  	 	75	  	
 	13.15	  	  	Patriot Act Notice	  	 	75	  	
 	13.16	  	  	Subordination	  	 	75	  	
 	13.17	  	  	Advertisement	  	 	76	  	
 	13.18	  	  	Intercreditor Agreement	  	 	76	  	
 
v

LIST OF EXHIBITS AND SCHEDULES

	 	Exhibit A	  	Form of Term B/C/D/E/F/G Note	
	 	Exhibit B	  	Assignment and Acceptance	
	 	Exhibit C	  	Assignment Notice	
	 	Exhibit D	  	Joinder Agreement	
	 	Exhibit E	  	Compliance Certificate	

	 	Schedule 1.1A	  	Lender Term B Loan Amounts	
	 	Schedule 1.1B	  	Lender Term C Loan Amounts	
	 	Schedule 1.1C	  	Lender Term D Loan Amounts	
	 	Schedule 1.1D	  	Lender Term E Loan Amounts	
	 	Schedule 1.1E	  	Lender Term F Loan Amounts	
	 	Schedule 1.1F	  	Lender Term G Loan Amounts	
	 	Schedule 7.5	  	Deposit Accounts	
	 	Schedule 7.6.1	  	Business Locations	
	 	Schedule 8.1.4	  	Names and Capital Structure	
	 	Schedule 8.1.5	  	Corporate Names; Locations	
	 	Schedule 8.1.8	  	Surety Obligations	
	 	Schedule 8.1.11	  	Patents, Trademarks, Copyrights and Licenses	
	 	Schedule 8.1.14	  	Environmental Matters	
	 	Schedule 8.1.15	  	Restrictive Agreements	
	 	Schedule 8.1.16	  	Litigation	
	 	Schedule 8.1.18	  	Pension Plans	
	 	Schedule 8.1.20	  	Labor Contracts	
	 	Schedule 8.1.29	  	Material Contracts	
	 	Schedule 9.2.1	  	Existing Indebtedness	
	 	Schedule 9.2.2	  	Existing Liens	
	 	Schedule 9.2.5	  	Investments	
	 	Schedule 9.2.17	  	Existing Affiliate Transactions	
 
vi

FIFTH AMENDED AND RESTATED TERM LOAN AGREEMENT
THIS FIFTH AMENDED AND RESTATED TERM LOAN AGREEMENT (this “ Agreement ”) is dated as of June 28, 2013 among KELLWOOD COMPANY , a Delaware corporation (“ Borrower Representative ” or “ Parent ”) and its Domestic Subsidiaries from time to time a party hereto (each a “ Borrower ” and collectively with Borrower Representative, “ Borrowers ”), other Obligors (as defined below) party hereto, SCSF Kellwood Finance, LLC, a Delaware limited liability company (“ SCSF Finance ”) and Sun Kellwood Finance, LLC, a Delaware limited liability company (“ Sun Finance ” and, together with the SCSF Finance, each a “ Lender ” and collectively, the “ Lenders ”) and Sun Finance, in its capacity as collateral agent for each Lender (the “ Collateral Agent ”).
RECITALS:
WHEREAS , Parent, Borrowers, the other Obligors party thereto, the Lenders and Collateral Agent, are party to that certain Fourth Amended and Restated Term Loan Agreement dated as of April 20, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ Existing Agreement ”) pursuant to which the Lenders made certain (i) Term E Loans the proceeds of which were used by the Borrowers to finance costs and expenses and earnout payments in respect of certain acquisitions consummated by the Borrowers and (ii) Term F Loans to provide for working capital, capital expenditures and other general corporate purposes of the Borrowers;]
WHEREAS , the Parties hereto have agreed to amend and restate the Existing Agreement to, among other things, make available to Borrowers additional term loan facilities (the “ Term G Loans ”) subject to the terms and conditions set forth herein, such Term G Loans to provide working capital, capital expenditures and other general corporate purposes of the Borrowers;
WHEREAS , it is the intent of the parties hereto that this Agreement not constitute a novation of the Loans existing under the Existing Agreement or evidence repayment of any of such Loans and that this Agreement amend and restate in its entirety the Existing Agreement and re-evidence the Loans of the Borrowers outstanding thereunder;
NOW, THEREFORE , for valuable consideration hereby acknowledged, the parties agree as follows:
Section 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions . As used herein, the following terms have the meanings set forth
below:
2009 Debentures —the 2009 notes issued pursuant to the 2009 Indenture.
2009 Debenture Intercreditor Agreement —that certain Amended and Restated Intercreditor Agreement of even date herewith, by and between Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as collateral agent under the 2009 Indenture, the Revolver Agent, the Second Lien Agent and Collateral Agent.
 
-1-

2009 Indenture —that certain indenture, dated as of July 23, 2009, by and between Parent and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee and collateral agent, pursuant to which Parent issued $120,590,000 in aggregate principal amount of 12.875% Second-Priority Senior Secured PIK Notes due December 31, 2014.
2009 Indenture Guaranty —that certain Guaranty Agreement (and including any guaranty agreement executed pursuant to the terms thereof and any replacement guaranty) dated as of July 23, 2009, by and among the Guarantors and Wells Fargo Bank, National Association (or such other person reasonably acceptable to Collateral Agent), as trustee, for the holders of the 2009 Debentures, as amended or supplemented from time to time.
Account —as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.
Account Debtor —a Person who is obligated under an Account, Chattel Paper or General Intangible.
Acquisition —the acquisition of (a) a controlling Equity Interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such Equity Interest or upon exercise of an option or warrant for, or conversion of securities into, such Equity Interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.
Affiliate —with respect to any Person, another Person (a) who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person; (b) who beneficially owns 10% or more of the voting securities or any class of Equity Interests of such first Person; (c) at least 10% of whose voting securities or any class of Equity Interests is beneficially owned, directly or indirectly, by such first Person; or (d) who is an executive or financial officer, director, partner or managing member of such first Person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.
Agent Indemnitees —Collateral Agent and its officers, directors, employees, Affiliates, agents and attorneys.
Agent Professionals —attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Collateral Agent.
 
-2-

Agreement —as defined in the preamble hereto.
Allocable Amount —as defined in Section 5.8.3.
Anti-Terrorism Laws —any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law —all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
Approved Fund —any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of business and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.
Asset Disposition —a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.
Assignment and Acceptance —an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B.
Bankruptcy Code —Title 11 of the United States Code.
Board of Governors —the Board of Governors of the Federal Reserve System.
Borrower Representative —as defined in the preamble to this Agreement.
Borrowers —Borrower and its Domestic Subsidiaries (other than Immaterial Subsidiaries) from time to time parties hereto.
Business Day —any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of—or are in fact closed in, Florida, or Illinois.
Capital Adequacy Regulation —any law, rule, regulation, guideline, request or directive of any central bank or other Governmental Authority, whether or not having the force of law, regarding capital adequacy of a bank or any Person controlling a bank.
Capital Expenditures —all liabilities incurred, expenditures made or payments due (whether or not made) for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.
 
-3-

Capital Lease —any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP (but without giving effect to FASB ASC 840).
Capital Lease Obligations —with respect to any Person, obligations of such Person and its Subsidiaries under Capital Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP (but without giving effect to FASB ASC 840).
Cash Collateral —cash, and any interest or other income earned thereon, that is delivered to Collateral Agent to Cash Collateralize any Obligations.
Cash Collateralize —the delivery of cash to Collateral Agent, as security for the payment of Obligations, in an amount equal to with respect to any inchoate or contingent Obligations, Collateral Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. “Cash Collateralization” has a correlative meaning.
Cash Equivalents —(a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.
CERCLA —the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq .).
Change in Law —the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided , however , that for purposes of this definition, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith and (y) all requests, rules, guidelines 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, in each case, pursuant to Basell III, shall be deemed to have been adopted and gone into effect after the date of this Agreement.
 
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Change of Control —the occurrence of any of the following events: (a) Sponsor ceases to own and control, beneficially and of record, directly or indirectly, more than 50.1% of the voting and economic Equity Interests in Parent on a fully diluted basis, or (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have acquired beneficial ownership on a fully diluted basis of the voting Equity Interests of Parent sufficient to (whether or not exercised) elect a majority of the members of the board of directors (or similar governing body) of Parent.
Chattel Paper —as defined in the UCC.
Claims —all liabilities, obligations, losses, damages, penalties, judgments, proceedings, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.
Closing Date —as defined in Section 6.1.
Code —the Internal Revenue Code of 1986, as amended.
Collateral —‘Collateral’ as defined in the Security Agreement.
Collateral Agent —as defined in the preamble hereto.
Compliance Certificate —a certificate, substantially in the form of Exhibit E and in substance reasonably satisfactory to Collateral Agent, by which Borrower Representative certifies the absence of any Default or Event of Default and sets forth a reasonably detailed calculation of the Fixed Charge Coverage Ratio for the 12 Fiscal Month period most recently ended (regardless of whether Fixed Charge Coverage Ratio is to be tested for such period).
Consolidated EBITDA —for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes,
 
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based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (l) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate(o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) the aggregate amount of all audit, tax, consulting and legal costs and expenses paid by the Loan Parties during such period
 
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associated with Project Victory, plus retention payments during such period for Rea Laccone and Christopher La Police during such period. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Collateral Agent.
Consolidated Net Income —for any period of computation thereof, the gross revenues from operations of Parent and its Subsidiaries (including payments received by Parent and its Subsidiaries of (a) interest income, and (b) Distributions made in the Ordinary Course of Businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP; but excluding (without duplication): (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of Parent or any Subsidiary, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up or write-down of any asset (provided, that write-downs of Accounts and/or Inventory shall not be so excluded), (v) any net gains resulting from repurchases of Debt, and (vi) any other net gain or loss of an extraordinary nature as determined in accordance with GAAP.
Consolidated Net Interest Expense —for any period, for Parent and its Subsidiaries on a consolidated basis, the sum of (a) all interest and similar expenses that are treated as interest in accordance with GAAP, and (b) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP. For each period of 12 consecutive Fiscal Months ending next following the date of each Acquisition (whether consummated before or after the Closing Date), Consolidated Net Interest Expense as a component of Consolidated EBITDA shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Obligations) incurred, acquired or assumed in connection with such Acquisition (“ Incremental Debt ”) calculated (A) as if all such Incremental Debt had been incurred as of the first day of such 12 consecutive Fiscal Month period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such 12 consecutive Fiscal Months, as the case may be.
Contingent Obligation —any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any
 
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(a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.
Convertible Debentures —those certain $200,000,000 3.50% Convertible Senior Debentures maturing June 15, 2034, issued pursuant to that certain Indenture dated as of June 22, 2004 by and between the Parent and Union Bank of California, N.A. or any of its successors, as trustee (as amended or supplemented from time to time, the “ Convertible Debenture Agreement ”).
Copyright Security Agreement —each copyright security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of the Lenders, a Lien on such Obligor’s interest in copyrights as security for the Obligations.
Covenant Testing Period —has the meaning assigned to such term in the Revolver Agreement.
Covenant Testing Trigger Date —has the meaning assigned to such term in the Revolver Agreement.
CWA —the Clean Water Act (33 U.S.C. §§ 1251 et seq .).
Debt —as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, credit documents or similar instruments, (c) all Capital Leases, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred and being paid in the Ordinary Course of Business, (e) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination, (f) all Contingent Obligations; (g) all reimbursement obligations in connection with (i) letters of credit, bank guarantees or bankers’ acceptances issued for the account of such Person or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the Ordinary Course of Business, (h) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse and (i) in the case of Borrowers, the Obligations.
 
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The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer. Notwithstanding anything herein to the contrary, the term “Debt” shall not include any operating leases that, as a result of changes in GAAP, would classify such operating leases as Capitalized Lease Obligations, required to be reflected on a consolidated balance sheet of Borrowers in accordance with GAAP.
Default —an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.
Default Rate —as defined in Section 3.1(b).
Deposit Account —as defined in the UCC, but excluding the Excluded Accounts.
Deposit Account Control Agreements —the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
Distribution —any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest; or any payment of management or advisory fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by any Borrower to any holder of any Equity Interest of Parent or any Affiliate of such holder.
Document —as defined in the UCC.
Dollars —lawful money of the United States.
Domestic Subsidiary —a Subsidiary (other than an Immaterial Subsidiary) which is created or organized under the laws of the United States of America, any of its states or the District of Columbia.
Eligible Assignee —a Person that is (a) a Lender, U.S. based Affiliate of a Lender (other than an Obligor or any Subsidiary of an Obligor) or Approved Fund; (b) any other financial institution approved by Required Lenders and the Borrower Representative (which approval by the Borrower Representative shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within ten (10) Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Required Lenders in their discretion.
Enforcement Action —any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).
 
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Environmental Laws —all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
Environmental Notice —a notice from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release —a release as defined in CERCLA or under any other Environmental Law.
Equipment —as defined in the UCC, including all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory), and all parts, accessories and special tools therefor, and accessions thereto.
Equity Interest —the interest of any (a) shareholder in a corporation, (b) partner in a partnership (whether general, limited, limited liability or joint venture), (c) member in a limited liability company, or (d) other Person having any other form of equity security or ownership interest.
ERISA —the Employee Retirement Income Security Act of 1974.
Event of Default —as defined in Section 10.
Exchange Act —the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Exchange Offer —that certain offer by Borrower Representative, completed as of July 23, 2009, pursuant to which Borrower Representative exchanged $117,832,000 in aggregate principal amount of its 7.875% debentures maturing July 15, 2009 and $13,790,000 in aggregate principal amount of its 7.625% debentures maturing October 15, 2017 for $120,590,000 in aggregate principal amount of its 2009 Debentures.
Excluded Accounts —as defined in Section 7.5.
Excluded Tax —with respect to Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which any Borrower is a resident for tax
 
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purposes on the Closing Date; (c) any backup withholding Tax required by the Code to be withheld from amounts payable to a Payee that has failed or is unable to comply with Section 5.7; (d) in the case of a Foreign Payee, any United States withholding Tax that is (i) required pursuant to laws in force at the time such Payee becomes a Payee (or designates a new Lending Office) hereunder, or (ii) attributable to such Payee’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.7, except to the extent that such Foreign Payee (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrowers with respect to such withholding Tax; and (e) any Taxes imposed on amounts payable by Borrowers under Sections 1471-1474 of the Code.
Existing Agreement —as defined in the recitals hereto.
Extraordinary Expenses —all costs, expenses or advances that Collateral Agent or a Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Borrower (which shall be reasonable under the circumstances in which they are incurred), including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Collateral Agent, any Lender, any Borrower, any representative of creditors of a Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Collateral Agent’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Collateral Agent, any Lender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; or (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations. Such costs, expenses and advances include transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Borrower or independent contractors in liquidating any Collateral, and travel expenses.
Fiscal Month —one of the three fiscal periods in a Fiscal Quarter each of which is approximately one month in duration. There are 12 Fiscal Months in each Fiscal Year.
Fiscal Quarter —one of the four 13-week, or, if applicable, 14-week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on a Saturday of the thirteenth (or fourteenth, if applicable) week in such quarter.
Fiscal Year —the fiscal year of the Parent for financial accounting purposes.
 
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Fixed Charge Coverage Ratio —the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except (x) those financed with Permitted Debt (other than Revolver Loan or the Second Lien Debt) and (y) with respect to the fiscal quarters ending on July 31, 2013, October 31, 2013 and January 31, 2014, up to $7,500,000 of capital expenditures for a new IT system, new headquarters, and new shop and store openings related to Project Victory, shall be disregarded for purposes of this clause (i), provided , however , that only a maximum of $4,000,000 may be used for new store and shop openings) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrowers to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Fixed Charges —the sum, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated Net Interest Expense paid or payable in cash (and, for the avoidance of doubt, excluding those paid-in-kind or capitalized), plus (b) scheduled principal payments made on Debt in cash and earnout payments paid in cash (other than earnout payments made in Fiscal Year 2011 in an aggregate amount not to exceed $58,500,000 by Parent and its Subsidiaries with respect to the “Vince” brand).
FLSA —the Fair Labor Standards Act of 1938.
Foreign Lender —any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Payee —any Payee that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Plan —any employee benefit plan or arrangement maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States, or any employee benefit plan or arrangement mandated by a government other than the United States for employees of any Obligor or Subsidiary.
Foreign Subsidiary —a Subsidiary that is not a Domestic Subsidiary or an Immaterial Subsidiary.
Full Payment —with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding) and (b) a release of any Claims of Obligors arising in connection with the Loan Documents against Collateral Agent and Lenders arising on or before the payment date.
GAAP —generally accepted accounting principles in the United States in effect from time to time.
 
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General Intangibles —as defined in the UCC, including choses in action, causes of action, company or other business records, inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer lists, permits, tax refund claims, computer programs, operational manuals, internet addresses and domain names, insurance refunds and premium rebates, all rights to indemnification, and all other intangible Property of any kind.
Governmental Approvals —all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.
Governmental Authority —any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.
Guarantor Payment —as defined in Section 5.8.3.
Guarantors —each Person who guarantees payments or performance of any Obligations pursuant to Section 5.8 hereof and after the date hereof pursuant to a Joinder Agreement. It is understood that the Obligations shall not be guaranteed by any existing or future Foreign Subsidiary, including any Foreign Subsidiary of any Guarantor.
Hedging Agreement —an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.
Immaterial Subsidiaries —American Recreation Products International, Inc., a Delaware corporation, The Kellwood Foundation, an Illinois charitable foundation, Kellwood Financial Services, Inc., a Delaware corporation, XCSI, Inc., a Delaware corporation, Kellwood Retail Group, Inc., a Delaware corporation, MJF Imports, Inc., a New York corporation, Tri W Corporation, a North Carolina corporation, Halmode Apparel, Inc., a Delaware corporation, New Campaign, Inc., a Delaware corporation; and any other Domestic Subsidiary formed or acquired after the Closing Date (a) which is designated as such by the Borrower Representative in a written notice delivered to the Lenders from time to time and (b) which does not (i) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America and (ii) have revenues in any Fiscal Year in excess of $1,000,000 unless such Immaterial Subsidiary has become a Borrower pursuant to Section 9.2.20 or is an Obligor under the Revolver Agreement.
Indemnified Taxes —all Taxes imposed on a Payee with respect to the Obligations other than Excluded Taxes.
Indemnitees —Agent Indemnitees and Lender Indemnitees.
 
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Indenture —that certain Indenture dated September 30, 1997 by and between The Chase Manhattan Bank, as trustee, or any successor trustee and the Parent, as amended, supplemented or restated from time to time, pursuant to which certain debt securities have been issued by the Parent.
Insolvency Proceeding —any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for reorganization or other similar relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.
Instrument —as defined in the UCC.
Insurance Assignment —each collateral assignment of insurance pursuant to which an Obligor assigns to Collateral Agent, for the benefit of the Lenders, such Obligor’s rights under business interruption or other insurance policies as Collateral Agent and Required Lenders reasonably deems it appropriate to be assigned, as security for the Obligations.
Intellectual Property —all intellectual and similar Property of a Person, including inventions, designs, patents, patent applications, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, registrations and franchises; all books and records describing or used in connection with the foregoing; and all licenses or other rights to use any of the foregoing.
Intellectual Property Claim —any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Domestic Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Intellectual Property or other Property violates another Person’s Intellectual Property.
Intercreditor Agreement —means that certain Intercreditor Agreement dated as of the date hereof, by and among each Lender, Parent, Wells Fargo Bank, National Association, Cerberus Business Finance, LLC and any other parties thereto, as may be amended from time to time.
Inventory —as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in an Obligor’s business (but excluding Equipment).
Investment —any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
 
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Joinder Agreement —an agreement substantially in the form of Exhibit D hereto by which a Domestic Subsidiary of Parent becomes a Borrower hereunder.
Lender Indemnitees —Lenders and their officers, directors, employees, Affiliates (other than an Obligor or any Subsidiary of an Obligor), agents and attorneys.
Lenders —as defined in the preamble to this Agreement, including any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.
Lending Office —the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Collateral Agent and Borrower Representative.
License —any license or agreement under which a Borrower is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.
Licensor —any Person from whom a Borrower obtains the right to use any Intellectual Property.
Lien —any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.
Loan (s)—the Term B Loans, the Term C Loans, the Term D Loans, the Term E Loans, the Term F Loans and the Term G Loans.
Loan Account —the loan account established by each Lender on its books pursuant to Section 5.6.
Loan Documents —this Agreement, Other Agreements and the Security Documents.
Loan Year —each calendar year commencing on the Closing Date and on each anniversary of the Closing Date.
Management Services Agreement —that certain Management Services Agreement dated as of May 29, 2008 by and between Parent and Sun Capital Partners Management V, LLC, as in effect on the date hereof.
Margin Stock —as defined in Regulation U of the Board of Governors.
Material Adverse Effect —the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, or condition (financial or otherwise) of Borrowers taken as a whole, on the value of any
 
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material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Collateral Agent’s Liens on any Collateral; (b) impairs the ability of Borrowers taken as a whole to repay the Obligations or materially impairs the ability of any Borrower to perform any other obligation under the Loan Documents, or (c) otherwise impairs the ability of any Lender to enforce or collect any Obligations or of the Collateral Agent to realize upon any Borrowing Base Collateral (under and as defined in the Revolver Agreement).
Material Contract —any agreement or arrangement to which an Obligor is party (other than the Loan Documents, the Second Lien Debt Documents or Revolver Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, or (b) that relates to Subordinated Debt, Debt under the 2009 Indenture or Debt in an aggregate amount of $46,000,000 or more.
Moody’s —Moody’s Investors Service, Inc., and its successors.
Multiemployer Plan —any employee benefit plan or arrangement described in Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor.
Notes —each Term B Note, Term C Note, Term D Note, Term E Note, Term F Note, Term G Note or other promissory note executed by a Borrower to evidence any Obligations.
Obligations —all (a) principal of and premium, if any, on the Loans, (b) interest (which shall include any capitalized interest), expenses, fees and other sums payable by Obligors under Loan Documents, (c) obligations of Obligors under any indemnity for Claims, (d) Extraordinary Expenses, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
Obligor —each Borrower, any Guarantor and any other Person that is liable for payment of the Obligations or that has granted a Lien in favor of Collateral Agent on its assets to secure the Obligations.
OFAC —The Office of Foreign Assets Control of the U.S. Department of the Treasury.
Ordinary Course of Business —the ordinary course of business of any Borrower or Subsidiary and undertaken in good faith.
Organic Documents —with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.
 
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OSHA —the Occupational Safety and Hazard Act of 1970.
Other Agreement —each Note, financial statement, report delivered hereunder, 2009 Debenture Intercreditor Agreement, Intercreditor Agreement, the Security Documents or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter executed by an Obligor or other Person in favor of Collateral Agent or a Lender in connection with any transactions relating hereto, but excluding, for the avoidance of doubt, the Management Services Agreement or any documents executed in connection with any equity investment in any Obligor.
Other Taxes —all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
Parent —as defined in the preamble to this Agreement.
Participant —as defined in Section 12.2.
Patent Security Agreement —each patent security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in its patents, as security for the Obligations.
Patriot Act —the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Payee —Collateral Agent, any Lender or any other recipient of a payment to be made by or on account of any Obligation.
Payment Item —each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.
Permitted Acquisition —any Acquisition effected with the consent and approval of the board of directors or other applicable governing body of the Person being acquired, and with the duly obtained approval of such shareholders or other holders of equity or other ownership interest as such Person may be required to obtain, so long as (i) immediately prior to and immediately after the consummation of such Acquisition, no Default or Event of Default has occurred and is continuing, (ii) substantially all of the sales and operating profits generated by such Person (or assets) so acquired or invested are derived from a line or lines of business that are part of, or complementary, to the business as then conducted by Borrowers and Subsidiaries and (iii) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
 
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Permitted Asset Disposition —an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) one or more dispositions of Equipment or Real Estate so long as the net book value, as determined in accordance with GAAP, in the aggregate for all such dispositions does not to exceed $5,000,000 over the term of the Agreement; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) a termination of a lease of real or personal Property or License that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition of Investments of the type described in clause (c) of the definition of “Restricted Investments” in the ordinary course of management of the investment portfolio of Borrowers and Subsidiaries; (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens; (g) the sale of the Phat Farm business and related intellectual property, so long as no Event of Default exists and the gross cash proceeds from such sale are not less than $3,500,000 or (h) otherwise permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Contingent Obligations —Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) guarantee obligations of a Borrower or any Domestic Subsidiary in respect of Debt or operating leases and other non-Debt obligations otherwise permitted under this Agreement of a Borrower or any wholly-owned Domestic Subsidiary.
Permitted Distributions —any Distribution permitted under the Revolver Agreement, as in effect on the date hereof.
Permitted Investment —investments described in clauses (a) - (i) of the definition of Restricted Investment.
Permitted Lien —as defined in Section   9.2.2.
Permitted Purchase Money Debt —Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, provided that the aggregate outstanding amount of such Purchase Money Debt shall not exceed $5,750,000 at any time.
Person —any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.
 
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PIK Interest —as defined in Section 3.1.
Plan —an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which an Obligor is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions.
Pro Rata —with respect to any Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the amount of such Lender’s Loan amount as set forth on Schedule 1.1 by all outstanding Loans.
Properly Contested —with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or such Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any Collateral of such Obligor with a value in excess of $287,500; (e) no Lien is imposed on Collateral of such Obligor, unless bonded and stayed to the satisfaction of the Required Lenders; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.
Property —any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Purchase Money Debt —(a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets which does not exceed on the date of acquisition the cost or fair market value, whichever is lower, of the Property being acquired on the date of acquisition; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) of items described in the preceding clauses (a) and (b).
Purchase Money Lien —a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.
RCRA —the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate —all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.
 
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Refinancing Conditions —the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount (including, any capitalized interest with respect thereto that does not exceed the principal amount (to the extent such interest was permitted to be capitalized hereunder)) of the Debt being extended, renewed or refinanced; (b) if the original Debt was subordinated to the Obligations, it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (c) the representations, covenants and defaults applicable to it are no less favorable in any material respect to Obligors than those applicable to the Debt being extended, renewed or refinanced; (d) no Lien is granted to secure it other than Liens securing the original Debt; (e) if the original Debt was the obligation of a Foreign Subsidiary, no Obligor becomes obligated on such Debt; (f) upon giving effect to it, no Default or Event of Default exists; (g) if the Stated Maturity of the Debt being extended, renewed or refinanced is earlier than the Stated Maturity of the Obligations, it has a Stated Maturity no earlier than the Stated Maturity of the Debt being extended, renewed or refinanced; and (h) it has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Debt being extended, renewed or refinanced.
Refinancing Debt —Debt that is the result of an extension, renewal or refinancing of Debt permitted under Section 9.2.1(b), (d) or (j).
Reportable Event —any event set forth in Section 4043(b) of ERISA.
Required Lenders —the Lenders having Loans in excess of 51% of all outstanding Loans.
Responsible Officer —with respect to all certificates and financial matters hereunder, President, Chief Executive Officer, and Chief Financial Officer of a Borrower (the “ Principal Responsible Officers ”) and, with respect to all notices and other matters hereunder, any Principal Responsible Officer, the Vice President, Finance and Controller, Vice President, Treasurer or General Counsel of the Borrower Representative or any other officer expressly designated by the Board of Directors of the Borrower Representative (or the appropriate committee thereof) or a Principal Responsible Officer as a Responsible Officer of the Borrower Representative. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower Representative shall be conclusively presumed to have been authorized by all necessary corporate and/or other action on the part of the Borrower Representative and each other Borrower on whose behalf it is delivered and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower Representative and each such Borrower.
Restricted Investment —any Investment by an Obligor, other than (a) Investments (other than those permitted by clause (b) through (g)  of this definition) that are existing on the Closing Date and are listed on Schedule 9.2.5; (b) Investments in Subsidiaries to the extent existing on the Closing Date; (c) cash and Cash Equivalents that are subject to Collateral Agent’s Lien and, subject to the Intercreditor Agreement, control; provided that, the cash consisting of collected funds and Cash Equivalents held by the Obligors shall not exceed $11,500,000 in the aggregate (excluding amounts held in employee trust accounts) for more than three (3) consecutive Business Days so long as any Revolver Debt is outstanding, (d) loans, advances and credit extensions permitted under Section 9.2.7; (e) Investments of (i) any Subsidiary in a Borrower or (ii) any Obligor in another
 
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Obligor or (iii) any Subsidiary which is not an Obligor in another Subsidiary which is not an Obligor; (f) with respect to any Obligor, Permitted Acquisitions; (g) Investments permitted by Section 9.2.9; (h) other Investments and Acquisitions consummated after the Closing Date by any Subsidiary which is not an Obligor which Investments or Acquisitions do not contain any Contingent Obligations, or any direct or contingent liabilities, of any Obligor and which have not been financed in whole or in part by any Obligor and (i) any other Investment permitted under the Revolver Agreement, as in effect on the date hereof.
Restrictive Agreement —an agreement (other than a Loan Document, Revolver Loan Documents and Second Lien Debt Documents) that conditions or restricts the right of any Borrower, Domestic Subsidiary or other Obligor to incur or repay the Obligations, to grant Liens on the Collateral, to declare or make Distributions to an Obligor, to modify, extend or renew the Obligations, or to repay any intercompany Debt owed to an Obligor.
Revolver Agreement —means that certain Credit Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the financial institutions party thereto and Wells Fargo Bank, National Association (the “ Revolver Agent ”), as agent for the Lenders (as defined therein) (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Debt —shall mean the ‘Obligations’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Revolver Loan Documents —means ‘Loan Documents’ as defined in the Revolver Agreement (as may be amended, restated, supplemented, refunded, refinanced, replaced or otherwise modified from time to time subject to the terms of this Agreement and the Intercreditor Agreement).
Royalties —all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.
S&P —Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Sanctioned Entity —(a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.
Sanctioned Person —a person named on the list of Specially Designated Nationals maintained by OFAC.
 
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Second Lien Agent —Cerberus Business Finance, LLC or its successors or assigns.
Second Lien Debt —indebtedness and other obligations evidenced by the Second Lien Debt Documents and subject to the Intercreditor Agreement.
Second Lien Debt Documents —Term Loan Agreement dated as of the date hereof, among the Parent and its Domestic Subsidiaries from time to time party thereto, the Second Lien Agent and lenders from time to time party thereto (the “ Second Lien Term Loan Agreement ”) and the “Loan Documents” as defined therein.
Securities Account Control Agreements —the Securities Account control agreements to be executed by each securities intermediary maintaining a Securities Account for a Borrower, in favor of Collateral Agent, for the benefit of Lenders, as security for the Obligations.
Securities Account —as defined in the UCC.
Security Agreement —the security agreement dated as of the date hereof made by each Obligor in favor of Collateral Agent, for the benefit of Lenders, securing the Obligations.
Security Documents —the Security Agreement, the Copyright Security Agreement, the Patent Security Agreement, Trademark Security Agreements, insurance assignments, control agreements, and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.
Software —as defined in the UCC.
Solvent —as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any loan documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.
Sponsor —means Sun Capital Partners, Inc. or any of its Affiliates.
 
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Stated Maturity —with respect to any installment of interest or principal on any series of Debt, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Debt as of the date of this Agreement, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
Subordinated Debt —Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations in a manner and form satisfactory to each Lender, and is unsecured and does not amortize prior to the Termination Date.
Subsidiary —any entity at least 50% of whose voting securities or Equity Interests is owned by an Obligor or any combination of Obligors (including indirect ownership by an Obligor through other entities in which such Obligor directly or indirectly owns 50% of the voting securities or Equity Interests).
Taxes —all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Trademark Security Agreement —each trademark security agreement pursuant to which an Obligor grants to Collateral Agent, for the benefit of Lenders, a Lien on such Obligor’s interests in trademarks, as security for the Obligations.
Term A Loan Agreement —means that certain Amended and Restated Term Loan Agreement, dated as of April 20, 2012, by and among Parent, Borrowers, the other obligors party thereto, SCSF Finance, Sun Finance and the Collateral Agent, as amended, restated, supplemented or otherwise modified from time to time.
Term A Loan Debt —means the ‘Obligations’ as defined in the Term A Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Intercreditor Agreement.
Term B Loans —the loans made pursuant to Section 2.1.1 of this Agreement. The amount of each Lender’s Pro Rata share of the Term B Loans as of the Closing Date is set forth on Schedule 1.1A.
Term C Loans —the loans made pursuant to Section 2.1.2 of this Agreement. The amount of each Lender’s Pro Rata share of the Term C Loans as of the Closing Date is set forth on Schedule 1.1B.
Term D Loans —the loans made pursuant to Section 2.1.3 of this Agreement. The amount of each Lender’s Pro Rata share of the Term D Loans as of the Closing Date is set forth on Schedule 1.1C.
 
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Term E Loans —the loans made pursuant to Section 2.1.4 of this Agreement. The amount of each Lender’s Pro Rata share of the Term E Loans as of the Closing Date is set forth on Schedule 1.1D.
Term F Loans —the loans made pursuant to Section 2.1.5 of this Agreement. The amount of each Lender’s Pro Rata share of the Term F Loans as of the Closing Date is set forth on Schedule 1.1E.
Term G Loans —the loans made pursuant to Section 2.1.6 of this Agreement. The amount of each Lender’s Pro Rata share of the Term G Loans as of the Closing Date is set forth on Schedule 1.1F.
Term B Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term B Loan amount as set forth on Schedule 1.1A.
Term C Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term C Loan amount as set forth on Schedule 1.1B.
Term D Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term D Loan amount as set forth on Schedule 1.1C.
Term E Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term E Loan amount as set forth on Schedule 1.1D.
Term F Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term F Loan amount as set forth on Schedule 1.1E.
Term G Notes —a promissory note by Borrowers in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term G Loan amount as set forth on Schedule 1.1F.
Termination Date —shall mean the earlier of (i) January 19, 2017, (ii) the date on which the Second Lien Debt under the Second Lien Term Loan Agreement has been paid in full in cash and all commitments to lend under the Second Lien Term Loan Agreement have been terminated; provided that, if the stated maturity date of the Second Lien Debt is extended, the stated maturity date set forth in clause (i) of this definition of the Loans shall be extended by a period of the same duration and (iii) the date on which all the Loans and Obligations are accelerated pursuant to Section 10.2.
Transferee —any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.
 
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UCC —the Uniform Commercial Code as in effect in the State of Illinois or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.
Ultimate Parent —Kellwood Holding Corp., a Delaware corporation.
Upstream Payment —a Distribution by a Subsidiary of a Borrower to such Borrower.
US Foreign Holdco —any Domestic Subsidiary that is a holding company and whose assets consist solely of Stock or other equity of a Foreign Subsidiary and other assets of de minimis value (it being understood that such Domestic Subsidiary does not own any Accounts or Inventory).
Weighted Average Life to Maturity —when applied to any Debt at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Debt, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Debt.
1.2 Accounting Terms . Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to the Lenders before the Closing Date and using the same inventory valuation method as used in such financial statements. If GAAP changes during the term of this Agreement, or if the Borrowers interpret or apply GAAP differently (and Borrowers’ certified public accountants concur in such interpretation or application) from how it was interpreted or applied in preparing the financial statements provided to the Lenders prior to the Closing Date, such that any financial ratios or covenants contained herein would then be calculated in a different manner or with different components, then Borrowers shall provide the Lenders with prior written notice of any such changes and upon the request of either the Borrowers or the Lenders, the Borrowers and the Lenders agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those financial ratios or covenants as criteria for evaluating the Obligors’ financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided, however, that, until the Borrowers, the Lenders so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change.
1.3 Uniform Commercial Code . As used herein, the following terms are defined in accordance with the UCC in effect in the State of Illinois from time to time: “Chattel Paper,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles” and “Instrument.”
 
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1.4 Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Lenders’ notice addresses under Section 13.3.1; or (g) discretion of any Lender mean the sole and absolute discretion of such Person. All calculations of fundings of the Loans, and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
Section 2. CREDIT FACILITIES
2.1 Term Loans
2.1.1 Term B Loans . Each Lender severally made a Term B Loan to the Borrowers prior to the date hereof. The amount of Term B Loans outstanding as of the date hereof is set forth on Schedule 1.1A hereto, such amount comprises the outstanding principal amount of Term B Loans and the PIK Interest paid through the date hereof.
2.1.2 Term C Loans . Each Lender severally made a Term C Loan to the Borrowers prior to the date hereof. The amount of Term C Loans outstanding as of the date hereof is set forth on Schedule 1.1B hereto, such amount comprises the outstanding principal amount of Term C Loans and the PIK Interest paid through the date hereof.
2.1.3 Term D Loans . Each Lender severally made a Term D Loan to the Borrowers prior to the date hereof. The amount of Term D Loans outstanding as of the date hereof is set forth on Schedule 1.1C hereto, such amount comprises the outstanding principal amount of Term D Loans and the PIK Interest paid through the date hereof.
2.1.4 Term E Loans . Each Lender severally made a Term E Loan to the Borrowers prior to the date hereof, The amount of, Term E Loans outstanding as of the date hereof is set forth on Schedule 1.1D hereto, such amount comprises the outstanding principal amount of Term E Loans and the PIK Interest paid through the date hereof.
 
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2.1.5 Term F Loans . Each Lender severally made the Term F Loans to the Borrowers prior to the date hereof. The amount of, Term F Loans outstanding as of the date hereof is set forth on Schedule 1.1E hereto, such amount comprises the outstanding principal amount of Term F Loans and the PIK Interest paid through the date hereof.
2.1.6 Term G Loans. Each Lender agrees, severally to make the Term G Loans to the Borrowers as of the date hereof on the terms set forth herein and in the amount set forth on Schedule 1.1D hereto. Term Notes . The Term B Loans, Term C Loans, Term D Loans, Term E Loans, Term F Loans and Term G Loans made by each Lender and interest accruing thereon shall be evidenced by the records of such Lender. At the request of any Lender, Borrowers shall deliver a Term B Note, Term C Note, Term D Note, Term E Note, Term F Note or Term G Note in the principal amount equal to such Lender’s Term B Loans, Term C Loans, Term D Loans, Term E Loans, Term F Loans or Term G Loans, as applicable, to such Lender.
2.1.8 Use of Proceeds . The proceeds of the Term B Loans were used by the Borrowers solely to finance the transactions contemplated by the Purchase Agreement and any fees and expenses related thereto. The proceeds of the Term C Loans were used by Borrowers for working capital, capital expenditures and other general corporate purposes of the Borrowers. The proceeds of the Term D Loans were used by Borrowers for financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of such assets or the acquisition of capital stock of any Person owning such assets) used in the business of the Borrowers. The proceeds of the Term E Loans were used by the Borrowers to finance costs and expenses and earnout payments in respect of acquisitions consummated by the Borrowers. The proceeds of the Term F Loans were used by the Borrowers for working capital, capital expenditures and other general corporate purposes of the Borrowers. The proceeds of the Term G Loans will be used by the Borrowers for working capital, capital expenditures and other general corporate purposes of the Borrowers.
2.1.9 Prepayments , (a)  Voluntary Prepayments . Borrowers may at any time on at least five (5) days’ prior written notice by Borrower Representative to each Lender voluntarily prepay all or part of the Loans; provided that any such prepayments or reductions shall be in a minimum amount of $500,000 and integral multiples of $250,000 in excess of such amount.
(b) Mandatory Prepayments .
(i) Upon the occurrence of a Change of Control, the Borrowers shall make Full Payment of all Obligations;
(ii) Upon the sale of all or substantially all of the assets of the Borrowers and their Subsidiaries taken as a whole, in a transaction or a series of transactions, the Borrowers shall make Full Payment of all Obligations; and
(iii) On Termination Date, the Borrowers shall make Full Payment of all Obligations.
 
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Section 3. INTEREST AND CHARGES
3.1 Rates and Payment of Interest . (a) The Obligations shall bear interest as follows: (i) with respect to each of the Term B Loans, Term C Loans and Term D Loans, 10% per annum will be payable by adding such accrued interest (the “ PIK Interest ”), to the principal amount of such Loans on the last day of the Fiscal Quarter then ended; provided , that Borrowers may elect, at their option, so long as Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is not less than $45,000,000, to pay a portion of such interest equal to 5% per annum in cash and (ii) with respect to each of the Term E Loans, the Term F Loans and the Term G Loans, 12% per annum will be payable by adding the PIK Interest to the principal amount of such Loans on the last day of the Fiscal Quarter then ended; provided that the Borrowers may elect at their option, so long as Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is not less than $45,000,000, to pay a portion of such interest equal to 6% per annum in cash. Interest shall accrue from the date the Loans are advanced or the Obligation is incurred or payable, until paid by Borrowers.
(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if the Required Lenders in their discretion so elect, Obligations shall bear interest at a rate equal to the rates set forth in Section 3.1(a) plus 2.0% (the “ Default Rate ”). To the extent permitted by the Intercreditor Agreement, the Default Rate shall be payable in cash. To the extent the Intercreditor Agreement does not permit the Default Rate to be paid in cash, the Default Rate shall be paid in kind by capitalizing such amount to the principal amount of the Loans on the last day of the Fiscal Quarter then ended. Each Borrower acknowledges that the costs and expenses to each Lender due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate the Lenders for such added cost and expense.
(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the last day of each Fiscal Quarter, (ii) on any date of prepayment, with respect to the principal amount of the Loans being prepaid; and (iii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.
3.2 Computation of Interest and Yield Protection . All computations of interest shall be computed for the actual days elapsed, based on a 365-day or 366-day year as applicable. Each determination by the Lenders of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
3.3 Reimbursement Obligations . Subject to the terms of the Intercreditor Agreement, Borrowers shall reimburse Collateral Agent and Lenders, without duplication, for all Extraordinary Expenses. Borrowers shall also reimburse the Collateral Agent and each Lender for all reasonable out-of-pocket and invoiced legal fees (which invoice may omit information that such counsel reasonably deems privileged) and all reasonable out-of-pocket accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Collateral Agent’s Liens on any Collateral, to maintain any insurance
 
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required hereunder or to verify Collateral; and (c) subject to the limits of Section 9.1.1, each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Collateral Agent’s or Lender’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Collateral Agent’s or a Lender’s professionals at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Collateral Agent, any Lender or any of their Affiliates (other than an Obligor or any Subsidiary of an Obligor) may have with such professionals with respect to this or any other transaction. All amounts reimbursable by Borrowers under this Section shall constitute Obligations secured by the Collateral and shall be payable on demand.
3.4 Capital Adequacy . If a Lender determines that any introduction of or any change in a Capital Adequacy Regulation, any change in the interpretation or administration of a Capital Adequacy Regulation by a Governmental Authority charged with interpretation or administration thereof, or any compliance by such Lender or any Person controlling such Lender with a Capital Adequacy Regulation, increases the amount of capital required or expected to be maintained by such Lender or Person (taking into consideration its capital adequacy policies and desired return on capital) as a consequence of such Lender’s Loans or other Obligations under the Loan Documents, then Borrowers shall, subject to the Intercreditor Agreement, within five days following demand therefor, pay such Lender an amount sufficient to compensate for such increase. A Lender’s demand for payment (delivered to Borrower Representative) shall set forth the nature of the occurrence giving rise to such compensation and a calculation of the amount to be paid. In determining such amount, the Lender may use any reasonable averaging and attribution method.
3.5 Mitigation . Each Lender agrees that (i) upon becoming aware that it is subject to Section 3.4 or 5.6, it will take reasonable measures to reduce Borrowers’ obligations under such Sections, including funding or maintaining its Loans through another office, as long as use of such measures would not adversely affect the Lender’s Loans, business or interests, and would not be inconsistent with any internal policy or applicable legal or regulatory restriction and (ii) Borrowers shall have no obligation to reimburse any Lender under Sections 3.4 or 5.7 for costs or taxes incurred more than 90 days prior to notice to Borrower Representative with respect thereto.
3.6 Maximum Interest . In no event shall interest, charges or other amounts that are contracted for, charged or received by the Lenders pursuant to any Loan Documents and that are deemed interest under Applicable Law (“interest”) exceed the highest rate permissible under Applicable Law (“maximum rate”). If, in any month, any interest rate, absent the foregoing limitation, would have exceeded the maximum rate, then the interest rate for that month shall be the maximum rate and, if in a future month, that interest rate would otherwise be less than the maximum rate, then the rate shall remain at the maximum rate until the amount of interest actually paid equals the amount of interest which would have accrued if it had not been limited by the maximum rate during prior periods. If, upon Full Payment of the Obligations, the total amount of interest actually paid under the Loan Documents is less than the total amount of interest that would, but for this Section, have accrued under the Loan Documents, then Borrowers shall, to the extent permitted by Applicable Law, pay to each Lender (a) the lesser of (i) the amount of interest that would have been charged if the maximum rate had been in effect at all times, or (ii) the amount of interest that would have accrued had the interest rate otherwise set
 
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forth in the Loan Documents been in effect, minus (b) the amount of interest actually paid under the Loan Documents. If a court of competent jurisdiction determines that any Lender has received interest in excess of the maximum amount allowed under Applicable Law, such excess shall be deemed received on account of, and shall automatically be applied to reduce, Obligations other than interest (regardless of any erroneous application thereof by any Lender), and upon Full Payment of the Obligations, any balance shall be refunded to Borrowers. In determining whether any excess interest has been charged or received by any Lender, all interest at any time charged or received from Borrowers in connection with the Loan Documents shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Obligations.
Section 4. LOAN ADMINISTRATION.
4.1 Borrower Representative . Each Borrower hereby designates the Borrower Representative as its representative and agent for all purposes under the Loan Documents, including delivery or receipt of communications with any Lender, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with any Lender. Borrower Representative hereby accepts such appointment. Collateral Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication delivered by Borrower Representative on behalf of any Borrower. Lenders may send any notice or communication with a Borrower hereunder to Borrower Representative on behalf of such Borrower. Lenders shall have the right, in its discretion, to deal exclusively with Borrower Representative for any or all purposes under the Loan Documents. Each Borrower agrees that any notice election, communication, representation, agreement or undertaking made on its behalf by Borrower Representative shall be binding upon and enforceable against it.
4.2 One Obligation . The Loans and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Collateral Agent’s Lien upon all Collateral; provided, however that Collateral Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.
4.3 Effect of Termination . Subject to the Intercreditor Agreement, the principal amount of each Loan and all other Obligations shall be due and payable on the Termination Date. All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Collateral Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, Collateral Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Collateral Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Collateral Agent receives (a) a written agreement, executed by Borrower Representative and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Collateral Agent and Lenders from any such damages; or (b) such Cash Collateral as Collateral Agent, in its discretion, deems necessary to protect against any such damages. The provisions of Sections 3.3, 3.4, 5.3, 5.7, 11, 13.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.
 
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Section 5. PAYMENTS.
5.1 General Payment Provisions . All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Indemnified Taxes, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time shall be deemed made on the next Business Day. Borrower Representative may, at the time of payment, specify to each Lender the Obligations to which such payment is to be applied, but each Lender shall in all events retain the right to apply such payment in such manner as the Lenders, subject to the provisions hereof, may determine to be appropriate. If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees. All payments received by the Lenders pursuant to this Agreement shall be applied in accordance with such Lender’s applicable Pro Rata portion of the aggregate outstanding Loans as of such date.
5.2 Payment of Other Obligations . Subject to the Intercreditor Agreement, Obligations other than the Loans, including Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.
5.3 Marshaling; Payments Set Aside . None of the Collateral Agent or the Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any payment by or on behalf of Borrowers is made to the Lenders, or if Collateral Agent or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
5.4 Post-Default Allocation of Payments
5.4.1 Allocation . Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows and subject to the Intercreditor Agreement:
(a) first , to all costs and expenses, including Extraordinary Expenses, owing to Collateral Agent and then to Lenders;
(b) second , to all Obligations constituting unpaid fees;
(c) third , to all Obligations constituting accrued and unpaid interest; and
 
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(d) last, to all other Obligations.
Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a Pro Rata basis among the Obligations in the category. The allocations set forth in this Section are solely to determine the rights and priorities of the Collateral Agent and Lenders as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.
5.4.2 Erroneous Application . Collateral Agent and the Lenders shall not be liable for any application of amounts made by it/them in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).
5.5 Loan Account . Each Lender shall maintain in accordance with its usual and customary practices an account or accounts (“ Loan Account ”) evidencing the Debt of Borrowers resulting from each Loan. Any failure of a Lender to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Each Lender may maintain a single Loan Account in the name of the Borrower Representative for such Lender’s Loans, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.
Entries made in a Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Accounts is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies the applicable Lender in writing within 60 days after receipt or inspection that specific information is subject to dispute.
5.6 Taxes .
5.6.1 Payments Free of Taxes . All payments by Obligors of Obligations shall be free and clear of and without reduction for any Indemnified Taxes. If Applicable Law requires any Obligor or any Payee to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be, to the extent permitted by applicable law, based on information provided pursuant to Section 5.7 and the applicable Obligor or Payee shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that the applicable Payee receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.
 
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5.6.2 Payment . Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) each Payee for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Payee, or paid by any Payee, with respect to any Obligations, whether or not such Indemnified Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto; provided , however , that Borrowers shall not be required to compensate Collateral Agent or any Lender for any Indemnified Taxes or Other Taxes incurred more than six months prior to the date that the applicable Payee notifies Borrower Representative of such Indemnified Taxes or Other Taxes and of such Payee’s intention to claim compensation therefor; provided , further , that, if the circumstances giving rise to such Indemnified Taxes or Other Taxes is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to the amount of any such payment or liability delivered to Borrower Representative by any Payee (with a copy to Collateral Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Indemnified Taxes by a Borrower, Borrower Representative shall deliver to Collateral Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Collateral Agent. This Section 5.6 shall survive the repayment of the Loans and the termination of this Agreement.
5.6.3 Refunds . So long as no Event of Default is then in existence, if Collateral Agent or any Lender determines, in its sole discretion acting in good faith, that is has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts hereunder, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by Borrowers hereunder with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses and without interest (other than any interest by the relevant Governmental Authority with respect to such refund); provided that the Borrowers, upon request of Collateral Agent or such Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Collateral Agent or such Lender in the event Collateral Agent or such Lender is required to repay such refund to such Governmental Authority. This Section 5.6.3 shall not be construed to require Collateral Agent or any Lender to make available its tax returns to the Borrowers or any other person.
5.7 Lender Tax Information .
5.7.1 Status of Lenders . Each Payee shall deliver documentation and information to Collateral Agent and Borrower Representative, at the times and in form required by Applicable Law or reasonably requested by Collateral Agent or Borrower Representative, sufficient to permit Collateral Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Payee’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Payee’s status for withholding tax purposes in the applicable jurisdiction.
5.7.2 Documentation . If a Borrower is resident for tax purposes in the United States, any Payee that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Agent
 
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or Borrower Representative, but only if such Payee is legally entitled to do so) IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Collateral Agent or Borrower Representative to determine whether such Payee is subject to backup withholding or information reporting requirements. If any Foreign Payee is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Collateral Agent and Borrower Representative, on or prior to the date on which it becomes a Payee hereunder (and from time to time thereafter upon request by Collateral Agent or Borrower Representative, but only if such Foreign Payee is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Payee claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, IRS Form W-8BEN and a certificate stating such Foreign Payee is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of Section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Collateral Agent and Borrowers to determine the withholding or deduction required to be made.
5.7.3 Lender Obligations . Each Payee shall promptly notify Borrower Representative and Collateral Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Payee shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Collateral Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Collateral Agent by any Governmental Authority due to such Payee’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Payee authorizes Collateral Agent to set off any amounts due to Collateral Agent under this Section against any amounts payable to such Payee under any Loan Document. The obligation of a Payee under this subsection to Collateral Agent shall survive the payment of all Obligations and the resignation or replacement of Collateral Agent. This section shall survive the repayment of the Loans and the termination of this Agreement.
5.8 Nature and Extent of Each Borrower’s Liability
5.8.1 Joint and Several Liability . Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by
 
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any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Collateral Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Collateral Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Collateral Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.
5.8.2 Waivers . (a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel the Collateral Agent or the Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Collateral Agent and the Lenders that the provisions of this Section are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Collateral Agent and the Lenders would decline to make Loans. Notwithstanding anything to the contrary in any Loan Document, and except as set forth in Section 5.6, each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.
(b) The Collateral Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.7 . If, in the exercise of any rights or remedies, any Collateral Agent or Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action by Collateral Agent or such Lender and waives any claim based upon such action, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had but for such action. Any election of remedies that results in denial or impairment of the right of Collateral Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. If a Lender bids at any foreclosure or trustee’s sale or at any private sale, such Lender may bid all or a portion of the Obligations and the amount of such bid need not be paid by such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether a Lender or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.7, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which any Lender might otherwise be entitled but for such bidding at any such sale.
 
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5.8.3 Extent of Liability; Contribution. (a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.7 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.
(b) If any Borrower makes a payment under this Section 5.7 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “ Allocable Amount ” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.7 without rendering such payment voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.
(c) Nothing contained in this Section 5.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.
5.8.4 Joint Enterprise . Each Borrower has requested that the Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that and Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.
5.8.5 Subordination . Each Borrower hereby subordinates any claims it may have as a result of this Section 5.7, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution and indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.
 
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Section 6. CONDITIONS PRECEDENT
6.1 Conditions Precedent to Initial Loans . The amendment and restatement of the Existing Agreement pursuant to the terms hereof shall be subject to satisfaction of each of the following conditions (except to the extent that such conditions are permitted by each Lender to be satisfied on a post-closing basis pursuant to a post-closing agreement) (the date such conditions are satisfied or waived, the “Closing Date”):
(a) Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to the Lenders by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.
(b) The Lenders shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Responsible Officer of Borrower Representative certifying that (i) each Obligor is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 8 are true and correct in all material respects; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(c) The Lenders shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment expect as shown, (ii) that an attached copy of resolutions (to the extent necessary under Applicable Law or applicable Organic Documents) authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility, and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. The Lenders may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.
(d) The Lenders shall have received copies of the charter documents of each Obligor, certified as appropriate by the Secretary of State or another official of such Obligor’s jurisdiction of organization. The Lenders shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.
(e) No material adverse change in the business, assets, properties, liabilities, financial condition or prospects of any Obligor shall have occurred since January 28, 2013.
(f) No action, suit, investigation, litigation or proceeding shall have been pending or threatened in any court or before any arbitrator or governmental instrumentality that in Collateral Agent’s judgment (i) could reasonably be expected to have a material adverse effect on Borrowers’ business, operations, properties, or condition (financial or otherwise) or could materially and adversely impair Borrowers’ ability to perform satisfactorily under this Agreement; or (ii) could reasonably be expected to materially and adversely affect this Agreement or the transactions contemplated hereby.
 
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(g) Borrowers shall have paid all legal fees and expenses to be paid to Lenders on the Closing Date.
(h) The Revolver Loan Documents and the Second Lien Debt Documents shall have been amended in a manner reasonably acceptable to the Lenders in order to permit the incurrence by the Borrowers of the Term G Loans hereunder.
(i) Lenders shall have received evidence that the Loans under this Agreement have been designated as “Additional Priority Permitted Debt” under the 2009 Indenture.
Section 7. COLLATERAL
7.1 Security Reaffirmation . The Obligors acknowledge that the Existing Agreement and the documents entered into in connection therewith granted a security interest in favor of the Collateral Agent which secured the Obligations under this Agreement. The Obligors, subject to the terms and limits contained in the Loan Documents, acknowledge the Collateral Agent’s rights in the Collateral and reaffirm their Liens created in favor of Collateral Agent, for the benefit of the Lenders, on the Collateral to secure the Obligations hereunder. The Obligors hereby acknowledge that they have reviewed the terms and provisions of this Agreement and hereby (i) confirm that the Loan Documents to which they are a party or are otherwise bound continues to be in full force and effect, and all Collateral encumbered thereby will guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents, the payment and performance of the Obligations, as the case may be, including without limitation the payment and performance of all such applicable Obligations that are joint and several obligations of the each Obligor now or hereafter existing, and all of their obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of the Loan Documents and (ii) grant to Collateral Agent a continuing lien on and security interest in and to the Obligor’s right, title and interest in, to and under all the Collateral, pursuant to and in accordance with the Loan Documents as collateral security for the prompt payment and performance in full when due of all applicable Obligations subject to the terms and limits contained in the Loan Documents (whether at stated maturity, by acceleration or otherwise).
7.2 Administration of Accounts . Each Obligor shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Collateral Agent, on such periodic basis as Collateral Agent may request, an Account roll-forward, a sales and collections report, in form reasonably satisfactory to Collateral Agent. Borrower Representative shall also provide to Collateral Agent a summary aged trial balance of all Accounts as of the end of the preceding Fiscal Month, and as Collateral Agent may reasonably request, information related to Accounts, including Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information.
 
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7.3 Administration of Inventory .
7.3.1 Records and Reports of Inventory . Each Obligor shall keep accurate and complete records of its Inventory, including costs, and shall submit to Collateral Agent inventory reports in form reasonably satisfactory to Collateral Agent, on such periodic basis as Collateral Agent may request, including Inventory perpetual reports. Each Obligor shall conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by Collateral Agent when an Event of Default exists) or periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Collateral Agent may request. Collateral Agent may participate in and observe each inventory or physical count. Borrower Representative shall also provide to Collateral Agent, concurrently with delivery of financial statements pursuant to Section 9.1.2(b), (i) a summary of the Royalties payments owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) and (ii) as requested by Collateral Agent, a summary of charges owing by each Obligor as of the last day of the applicable Fiscal Quarter or Fiscal Month (as the case may be) to shippers or freight forwarders for the overseas transportation of goods of Obligors and customs brokers which clear customs with respect thereto.
7.3.2 Returns of Inventory . No Obligor shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Collateral Agent is promptly notified if the aggregate Value of all Inventory returned in any Fiscal Month exceeds $2,625,000; and (d) any payment received by an Obligor for a return is promptly remitted to Collateral Agent for application to the Obligations.
7.3.3 Acquisition, Sale and Maintenance . No Obligor shall acquire or accept any Inventory on consignment or approval, and shall take reasonable steps to assure that all Inventory is produced in accordance with Applicable Law, including, in the case of Inventory produced in the United States of America, the FLSA. No Obligor shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require an Obligor to repurchase such Inventory. Obligors shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.
7.4 [Intentionally Omitted] .
7.5 Administration of Deposit Accounts and Securities Accounts . Schedule 7.5 sets forth all Deposit Accounts and Securities Accounts maintained by Obligors as of the Closing Date. Each Borrower shall take all actions, if not already taken, necessary to establish Collateral Agent’s control of each such Deposit Account and Securities Account (other than an account exclusively used for payroll, payroll taxes or employee benefits, or trust or escrow accounts, or accounts containing not more than $650,000 in the aggregate for all such accounts at any time and not more than $30,000 in any single account at any time (collectively, the “ Excluded Accounts ”)). Each Obligor shall be the sole account holder of each Deposit Account and Securities Accounts and shall not allow any other Person (other than Collateral Agent) to have
 
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control (as defined in Article 9 of the UCC) over a Deposit Account, a Securities Account or any Property deposited therein. Borrower Representative shall promptly notify Collateral Agent of any opening, or closing of a Deposit Account or a Securities Account and, with the consent of Collateral Agent, will amend Schedule 7.5 to reflect same. Subject to the Intercreditor Agreement, following the occurrence and during the continuation of an Event of Default (and until such time as no Event of Default exists) or from any date on which Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is less than 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) and until the last day of a period of ninety (90) consecutive days thereafter during which average daily Excess Availability (as defined in the Revolver Agreement, as in effect on the date hereof) is equal to or exceeds 12.5% of the Maximum Revolver Amount (as defined in the Revolver Agreement, as in effect on the date hereof) (each such period, a “ Cash Dominion Period ”), Collateral Agent may (subject to any notice requirements in the applicable Control Agreement) deliver written instructions to the depository banks and securities intermediaries at which such Deposit Accounts and Securities Accounts are maintained directing them to transfer on a daily basis all payments, deposits or other Property received in the Deposit Accounts or Securities Accounts to the Collection Account or as otherwise instructed by Collateral Agent; provided that upon the termination or expiration of all Cash Dominion Periods, Collateral Agent shall promptly rescind such instructions to such depository banks and securities intermediaries. At all times, other than during a Cash Dominion Period, Borrowers may withdraw cash or cash equivalents from Deposit Accounts and Securities Accounts and use such cash and cash equivalents for purposes not prohibited hereunder at such time.
7.6 General Provisions .
7.6.1 Location of Collateral . All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Obligors at the business locations set forth in Schedule 7.6.1 (as such schedule may be amended or modified from time to time), except that Obligors may (a) make sales or other dispositions of Collateral in accordance with Section 9.2.6; and (b) move Collateral to another location in the United States set forth on Schedule 7.6.1 (as such schedule may be amended or modified from time to time).
7.6.2 Insurance of Collateral . Each Obligor shall maintain insurance with respect to the Collateral (other than Accounts and trademarks), covering casualty, hazard, public liability, theft, malicious mischief, and such other risks, in such amounts and with such endorsements as are in each case reasonably satisfactory to Collateral Agent, and with such insurers as are reasonably satisfactory to Collateral Agent or with any other insurers rated A+ or better by A.M. Best Rating Guide. All proceeds under each policy relating to Collateral shall be payable to Collateral Agent. From time to time upon reasonable request, Obligors, shall deliver to Collateral Agent the originals or certified copies of its insurance policies. Unless Collateral Agent shall agree otherwise, each policy shall include reasonably satisfactory endorsements (i) showing Collateral Agent as loss payee or additional insured, as appropriate; (ii) requiring 10 days prior written notice to Collateral Agent in the event of cancellation of the policy for non-payment of premium and requiring 30 days prior written notice to Collateral Agent in the event of cancellation of the policy for any other reason; and (iii) specifying that the interest of Collateral Agent shall not be impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than
 
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are permitted by the policy. If any Obligor fails to provide and pay for such insurance, Collateral Agent may, at its option, but shall not be required to, procure the insurance and charge Obligors therefor. Each Obligor agrees to deliver to Collateral Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists, Obligors may settle, adjust or compromise any insurance claim. If an Event of Default exists, only Collateral Agent (subject to the Intercreditor Agreement) shall be authorized to settle, adjust and compromise such claims.
Section 8. REPRESENTATIONS AND WARRANTIES
8.1 General Representations and Warranties . To induce Lenders to enter into this Agreement, each Obligor represents and warrants that:
8.1.1 Organization and Qualification . Each Obligor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
8.1.2 Power and Authority . Each Obligor is duly authorized to execute, deliver and perform its Loan Documents and has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.
8.1.3 Enforceability . Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
8.1.4 Capital Structure . Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following) shows, for each Obligor, its name and its jurisdiction of organization and its authorized and issued Equity Interests, and for each Domestic Subsidiary only, the holders of its Equity Interests and all agreements binding on such holders with respect to their Equity Interests. Each Obligor has good title to the Equity Interests of its Domestic Subsidiaries, free and clear of all Liens (other than Permitted Liens) and all such Equity Interests are duly issued, fully paid and non-assessable. Except as set forth on Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following), there are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any Obligor or Domestic Subsidiary.
 
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8.1.5 Corporate Names; Locations . During the five years preceding the Closing Date, except as shown on Schedule 8.1.5 , no Person that is an Obligor as of the Closing Date has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person. The chief executive offices and other locations of Collateral of Obligors as of the Closing Date are shown on Schedule 8.1.5 (as such schedule may be amended or supplemented from time to time).
8.1.6 Title to Properties; Priority of Liens . Each Obligor has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Lenders, in each case free of Liens except Permitted Liens. Each Obligor has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.
8.1.7 Financial Statements . (a) The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries and consolidating balance sheets and related statements of income for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries, copies of which have been delivered to Collateral Agent and each Lender prior to the Closing Date, fairly present in all material respects the consolidated financial condition of the Parent and its Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. Since January 29, 2012 there has been no change in the condition, financial or otherwise, of any Obligor or Domestic Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to Collateral Agent or any Lender at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Obligor and Domestic Subsidiary is Solvent, both before and after giving effect to the transactions contemplated by this Agreement and the Loans.
(b) All projections furnished to Collateral Agent prior to the Closing Date are believed by the Borrower Representative at the time furnished to be reasonable, have been prepared on a reasonable basis and in good faith by the Borrower Representative, and have been based on assumptions believed by the Borrower Representative to be reasonable at the time made and upon the best information then reasonably available to the Borrower Representative, and the Borrower Representative is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material.
8.1.8 Surety Obligations . Except as set forth on Schedule 8.1.8 (as such schedule may be amended or supplemented from time to time), no Obligor is obligated as indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.
 
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8.1.9 Taxes . Each Obligor has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested and except where the failure to file or pay the same could not reasonably be expected to have a Material Adverse Effect. The provision for Taxes on the books of each Obligor is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.
8.1.10 Brokers . There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents, except for the payment of transaction fees to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement.
8.1.11 Intellectual Property . Each Obligor owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others, except where the failure to own or have rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect. There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with respect to any Obligor or any of its Property (including any Intellectual Property, except for Intellectual Property Claims which could not reasonably be expected to have a Material Adverse Effect). Except as disclosed on Schedule 8.1.11 (as such schedule may be amended or supplemented from time to time), no Obligor pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Obligor is shown on Schedule 8.1.11.
8.1.12 Governmental Approvals . Each Obligor has, is in compliance with, and is in good standing with respect to, all Governmental Approvals, licenses and permits necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance or failure to be in good standing could not reasonably be expected to have a Material Adverse Effect. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
8.1.13 Compliance with Laws . Each Obligor has duly complied, and its Properties and business operations are in compliance, with all Applicable Laws, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, there have been no citations, notices or orders of material noncompliance issued to Obligor under any Applicable Law.
8.1.14 Compliance with Environmental Laws . Except as disclosed on Schedule 8.1.14 , no Obligor’s past or present operations, Real Estate or other Properties are subject to any on-going federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, no Obligor has received any Environmental Notice. As of the Closing Date, no Obligor has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.
 
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8.1.15 Burdensome Contracts . No Obligor is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 8.1.15 (as such schedule may be amended or supplemented from time to time), none of which prohibit the execution or delivery of any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.
8.1.16 Litigation . Except as shown on Schedule 8.1.16 , there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor. No Obligor is in default with respect to any order, injunction or judgment of any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
8.1.17 No Defaults . No event or circumstance has occurred or exists that constitutes a Default or Event of Default. As of the Closing Date, no Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Debt in excess of $23,000,000 (other than Debt issued under the Revolver Loan Documents). As of the Closing Date, there is no basis upon which any party (other than an Obligor or Domestic Subsidiary) could terminate a Material Contract prior to its scheduled termination date.
8.1.18 ERISA . Except as disclosed on Schedule 8.1.18 (as such schedule may be amended or supplemented from time to time), no Obligor has any Multiemployer Plan. Each Obligor is in full compliance with the requirements of all Applicable Law, including ERISA, relating to each Multiemployer Plan. As of the Closing Date, no Obligor has any obligations under a Foreign Plan. No fact or situation exists that could reasonably be expected to result in a Material Adverse Effect in connection with any Multiemployer Plan. No Obligor has any withdrawal liability in connection with a Multiemployer Plan or Foreign Plan. All employer and employee contributions to Foreign Plans, to the extent required by law or the terms of such plans, have been made or accrued in accordance with normal accounting principles. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance and/or the book reserve established for each Foreign Plan, together with any accrued contributions, are sufficient to provide the accrued benefit obligations of all participants in such plans according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles.
8.1.19 Trade Relations . There exists no actual or threatened termination, limitation or modification of any business relationship between any Obligor and any customer or supplier, or any group of customers or suppliers, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Obligor to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.
 
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8.1.20 Labor Relations . Except as described on Schedule 8.1.20 (as such schedule may be amended or supplemented from time to time), no Obligor is party to or bound by any collective bargaining agreement. As of the Closing Date, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.
8.1.21 Payable Practices . No Obligor has made any material change in its historical accounts payable practices from those in effect on the Closing Date.
8.1.22 Not a Regulated Entity . No Obligor is an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.
8.1.23 Margin Stock . No Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Loans proceeds have not been and will not be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
8.1.24 Plan Assets . As of the Closing Date, no Obligor is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code), and the execution of this Agreement is not a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
8.1.25 Immaterial Subsidiaries . No Immaterial Subsidiary (a) owns or generates any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) has revenues (other than from intercompany Accounts) in any Fiscal Year in excess of $1,000,000.
8.1.26 Patriot Act . To the extent applicable, each Obligor is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Patriot Act. No part of the proceeds of the loans made hereunder will be used by any Obligor or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as
 
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amended. OFAC . No Obligor nor any of its Subsidiaries is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Obligor nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any loan made hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
8.1.28 Nature of Business . No Obligor is engaged in any business other than the business it is engaged in on the Closing Date or any activities ancillary or related thereto, or logical extensions thereof.
8.1.29 Material Contracts . Set forth on Schedule 8.1.29 is a complete and accurate list as of the Closing Date of all Material Contracts of each Obligor, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (a) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the knowledge of such Obligor, all other parties thereto in accordance with its terms, (b) has not been otherwise amended or modified, and (c) is not in default due to the action of any Obligor or, to the best knowledge of any Obligor, any other party thereto.
8.1.30 No Bankruptcy Filing . No Obligor is contemplating either an Insolvency Proceeding or the liquidation of all or a major portion of such Obligor’s assets or property, and no Obligor has any knowledge of any Person contemplating an Insolvency Proceeding against it.
8.2 Complete Disclosure . No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to a Lender in writing that could reasonably be expected to have a Material Adverse Effect.
Section 9. COVENANTS AND CONTINUING AGREEMENTS
9.1 Affirmative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall, and shall cause each Domestic Subsidiary to:
9.1.1 Inspections . (a) Permit Lenders from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligors or Domestic Subsidiary, inspect, audit and make extracts from any Borrowers’ or Domestic Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Domestic Subsidiary’s business, financial condition, assets, prospects and results of operations. No Lender shall have any duty to any Obligors to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligors. To the extent any other information is shared by a Lender with any Obligor, such Obligors acknowledge that it was prepared by the Lenders for their purposes and Obligors shall not be entitled to rely upon it.
 
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(b) Reimburse Lenders for all charges, costs and expenses of each Lender in connection with examinations of any Obligor’s books and records or any other financial or Collateral matters as the Lenders deem appropriate up to two times per Loan Year; provided , however , that if an examination is initiated during a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits.
9.1.2 Financial and Other Information . Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to each Lender:
(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year, (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Required Lenders, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;
(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) (x) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (y) unaudited balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month (A) unaudited consolidated balance sheets as of the end of such Fiscal Month and a related consolidated profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) unaudited balance sheets as of the end of such Fiscal Month and a related profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis (excluding discontinued operations), setting forth in comparative form corresponding figures for the
 
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preceding Fiscal Year and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year end adjustments and the absence of footnotes;
(c) concurrently with delivery of financial statements under clauses (a) and (b) above, or more frequently if requested by Collateral Agent while a Default or Event of Default exists, a Compliance Certificate executed by the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative;
(d) to the extent available and upon Lenders’ request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements, including any such management letters and material reports with respect to the Vince business on a standalone basis;
(e) not later than 30 days after the end of each Fiscal Year, projections of (i) Borrowers’ consolidated balance sheets, results of operations and cash flow, (ii) the Vince business’ balance sheets, results of operations and cash flow on a standalone basis, in each case, for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to the Collateral Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(f) at Collateral Agent’s request, a listing of each Obligor’s trade payables, specifying the trade creditor and balance due, all in form satisfactory to Collateral Agent;
(g) promptly after the sending or filing thereof, copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; provided , that each statement or report required to be delivered pursuant to this clause (g) shall be deemed to have been delivered on the date on which the Borrower Representative posts such document on the Borrower Representative’s website on the Internet at the website address www.kellwood.com, or when such document is posted on the Securities and Exchange Commission’s website at www.sec.gov (the “ SEC Website ”) or on an Internet website established by the Lenders with Intralinks, Inc. or other similarly available electronic media (each of the foregoing an “ Informational Website ”); provided , further , that (i) the Borrower Representative shall deliver paper copies of all such documents to any Lender that requests the Borrower Representative to deliver such paper copies (without impairment of the effectiveness of any document previously delivered in electronic media form) until a request to cease delivering paper copies is given by such Lender and (ii) each Lender shall be notified by
 
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electronic mail of the applicable Informational Website and of the posting of each such document; it being understood and agreed that (x) Collateral Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this clause (e), and in any event shall have no responsibility to monitor compliance by the Borrower Representative with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents and (y) Borrowers shall be responsible for (other than with respect to the SEC Website) and shall incur all risks associated with (including with respect to the SEC Website) the security and confidentiality of the Informational Websites and its information posted thereon;
(h) not later than 15 days after the Collateral Agent’s request, such information regarding actions undertaken and/or completed to ensure that the Vince business is working towards reporting its financial performance on a standalone basis such that it could be marketed and sold on a standalone basis; and
(i) such other reports and information (financial or otherwise) as any Lender may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
9.1.3 Notices . Notify the Lenders in writing, promptly (but in any event within 5 Business Days) after an Obligor obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if it is reasonably likely that an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any adverse judgment not covered by insurance in an amount exceeding $5,750,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution is reasonably likely to have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice, which could reasonably be expected to have a Material Adverse Effect; (i) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; or (j) any opening of a new office or place of business where Collateral is located, within 30 days after such opening.
9.1.4 Landlord and Storage Agreements . Upon request, provide the Lenders with copies of all existing agreements, and promptly after execution thereof provide the Lenders with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral having a book value in excess of $1,150,000 in the aggregate at any time.
9.1.5 Compliance with Laws . Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure
 
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to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Domestic Subsidiary, it shall act promptly and diligently to investigate and report to the Lenders and, to the extent required by Applicable Law, all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.
9.1.6 Taxes . Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, except for Taxes which in the aggregate do not exceed $250,000 or unless such Taxes are being Properly Contested.
9.1.7 Insurance . In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers reasonably satisfactory to the Required Lenders or other insurers rated A+ or better by Best Rating Guide, (a) with respect to the Properties and business of the Obligors of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated, and (b) business interruption insurance with deductibles and subject to an Insurance Assignment in favor of the Collateral Agent reasonably satisfactory to the Required Lenders.
9.1.8 Licenses . Keep each License affecting any material portion of the Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors in full force and effect subject to non-renewal or termination by the applicable Obligor in the Ordinary Course of Business, or otherwise in its reasonable judgment; notify Lenders of any proposed modification to any such License increasing the Royalties payable thereunder, or entry into any new License, in each case at least 10 days prior to the effective date of such License or modification, pay all Royalties when due; and notify Lenders of any material default or breach asserted by any Person to have occurred under any License.
9.1.9 Future Subsidiaries . Promptly notify the Lenders upon any Person becoming a Domestic Subsidiary and cause any such Subsidiary to execute and deliver to Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to the Required Lenders, as they shall deem appropriate; provided that prior to any Person becoming a Borrower hereunder, Borrower Representative shall provide at least 5 days written notice to Collateral Agent.
9.1.10 Additional Guarantors . In the event that any Person becomes party to the 2009 Indenture Guaranty or guaranties any part of the Second Lien Debt and such Person is not a Borrower hereunder, Borrower Representative shall immediately notify each Lender thereof and cause such Person to execute and deliver to the Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of the Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance satisfactory to Collateral Agent, as it shall deem appropriate.
 
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9.1.11 Preservation of Existence, Etc. Maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except as permitted by Section 9.2.9 or except to the extent failure to be so qualified or in good standing could not reasonably be likely to have a Material Adverse Effect.
9.1.12 Keeping of Records and Books of Account . Keep accurate records and books of account, with entries made to permit the preparation of financial statements in accordance with GAAP.
9.1.13 Maintenance of Properties, Etc. Maintain and preserve all of its properties which are necessary for the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation losses excepted.
9.1.14 Obtaining of Permits, Etc. Obtain, maintain and preserve and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except to the extent failure to do so could not reasonably be likely to have a Material Adverse Effect.
9.1.15 Further Assurances . Take such action and execute, acknowledge and deliver at its sole cost and expense, such agreements, instruments or other documents as Collateral Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected Liens any of the Collateral, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto Collateral Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Obligor (i) authorizes Collateral Agent to execute any such agreements, instruments or other documents in such Obligor’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes Collateral Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Obligor, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Obligor prior to the date hereof, in each case to the extent such filings are necessary or desirable in order to perfect or maintain the perfection of Collateral Agent’s security interest in the Collateral.
 
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9.2 Negative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall not, and shall cause each Domestic Subsidiary not to:
9.2.1 Permitted Debt . Create, incur, guarantee or suffer to exist any Debt, except:
(a) the Obligations;
(b) Subordinated Debt;
(c) Permitted Purchase Money Debt;
(d) Debt (other than the Obligations, Revolver Debt, Subordinated Debt, Permitted Purchase Money Debt, the 2009 Debentures, the Second Lien Debt and Term A Loan Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans and which is listed on Schedule 9.2.1;
(e) Bank Product Debt (as defined in the Revolver Agreement);
(f) Permitted Contingent Obligations, provided no Obligor or any Domestic Subsidiary thereof shall incur any Contingent Obligations in respect of the obligations of any Foreign Subsidiary;
(g) Refinancing Debt as long as each Refinancing Condition is satisfied in respect of such Refinancing Debt at the time such Refinancing Debt is incurred;
(h) the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;
(i) unsecured intercompany Debt for loans and advances made by any Borrower or wholly owned Subsidiary to (i) a Borrower, (ii) any other Obligor or (iii) if such wholly owned Subsidiary making such loan or advance is not an Obligor, any other wholly owned Subsidiary, provided that such intercompany Debt of any Obligor is subordinated pursuant to Section 13.16;
(j) financing of insurance premiums;
(k) unsecured Debt in an amount not to exceed $5,750,000 at any time outstanding;
(l) other unsecured Debt of any Domestic Subsidiary which is not an Obligor, provided that, in connection with such Debt, no Obligor has incurred a Contingent Obligation or any direct or contingent liability with respect thereto unless such Contingent Obligation is unsecured and is expressly permitted hereunder;
(m) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date as long as it is permitted under the Revolver Agreement as in effect on the date hereof;
 
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(n) (i) the 2009 Debentures, as long as such Debt is subject to the 2009 Debenture Intercreditor Agreement; provided that , the principal amount of the Debt owing under the 2009 Debentures shall not exceed at any time an amount equal to the principal amount outstanding under the 2009 Debentures as of the date of the consummation of the Exchange Offer, plus any interest thereon that is paid-in-kind in accordance with the terms thereof and added to the outstanding principal thereof; (ii) the Revolver Debt, as long as such Debt is subject to the Intercreditor Agreement, and (iii) the Second Lien Debt, as long as such Debt is subject to the Intercreditor Agreement; and
(o) Term A Loan Debt.
9.2.2 Permitted Liens . Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):
(a) Liens in favor of Collateral Agent securing the Obligations;
(b) Purchase Money Liens securing Permitted Purchase Money Debt;
(c) Liens for Taxes not yet due or being Properly Contested;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA but including carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;
(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt), statutory obligations (including in connection with workers’ compensation, unemployment insurance and other social security legislation (other than Liens for Taxes or imposed under ERISA)) and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Collateral Agent’s Liens;
(f) Liens securing judgments for the payment of money in an aggregate amount not in excess of $5,750,000 (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 10 consecutive days during which execution is not effectively stayed;
(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(h) normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;
(i) existing Liens shown on Schedule 9.2.2 and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby does not increase the maximum outstanding principal amount of such obligations;
 
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(j) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as such Liens were existing at the time of such Acquisition by a Borrower or Subsidiary and were not incurred, extended or renewed in contemplation of such Acquisition; provided that (i) the Lien shall attach solely to the property acquired, and (ii) at the time of acquisition of such fixed assets, the aggregate amount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed by a Borrower or Subsidiary shall not exceed an amount equal to the lesser of the total purchase price or fair market value at the time of acquisition of such fixed assets;
(k) other Liens that are created upon any of its Property (other than Collateral) after the Closing Date so long as the fair market value of such property subject to such liens does not exceed $5,750,000 at any time outstanding;
(l) Liens on deposits and unearned insurance premiums securing Debt permitted under Section 9.2(j); and
(m) (i) Liens on Collateral securing the Debt owing under the 2009 Debentures, as long as such Liens are subject to the 2009 Debenture Intercreditor Agreement; (ii) Liens on Collateral securing the Debt owing under the Revolver Agreement, as long as such Debt is subject to the Intercreditor Agreement, (iii) Liens on Collateral securing the Second Lien Debt as long as such liens are subject to the Intercreditor Agreement and (iv) Liens on Collateral securing the Term A Loan Debt and, in each case, such Debt is permitted under Section 9.2.1(n) or Section 9.2.1(o).
9.2.3 [Intentionally Omitted]
9.2.4 Distributions; Upstream Payments .
(a) Declare or make any Distributions, except (i) Permitted Distributions and (ii) Upstream Payments; or
(b) Create or suffer to exist any encumbrance or restriction on the ability of a Domestic Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Revolver Loan Documents and the Second Lien Debt Documents and under Applicable Law or restrictions in effect on the Closing Date as shown on Schedule 8.1.15.
9.2.5 Restricted Investments . Make any Restricted Investment.
9.2.6 Disposition of Assets . Make any Asset Disposition, except a Permitted Asset Disposition or a transfer of Property by a Subsidiary or Obligor to a Borrower.
9.2.7 Loans; Extensions of Credit . Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial
 
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institutions permitted hereunder; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled Account Debtors to the extent reasonably necessary in the relevant Obligor’s reasonable business judgment to prevent or limit loss; (e) intercompany loans permitted by Section 9.2.1(i); and (f) loans or extensions of credit made in the ordinary course of business after the Closing Date as long as they are permitted under the Revolver Agreement as in effect on the date hereof.
9.2.8 Restrictions on Payment of Certain Debt . Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Responsible Officer of Borrower Representative shall certify to each Lender, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (b) other Debt (other than the Obligations, Revolver Debt, the Second Lien Debt and Term A Loan Debt) prior to its due date under the agreements evidencing such Debt, except for any such prepayment with respect to the currently issued and outstanding notes under the Convertible Debentures, Indenture or 2009 Indenture to the extent such prepayment is permitted under the Revolver Agreement.
9.2.9 Fundamental Changes. (a) Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except:
(i) any Subsidiary may merge (x) with a Borrower, provided that such Borrower shall be the continuing or surviving Person, or (y) with any one or more Subsidiaries, provided that when any wholly-owned Subsidiary or Guarantor is merging with another Subsidiary, the wholly-owned Subsidiary or Guarantor shall be the continuing or surviving Person, or (z) with any other Person in connection with any Permitted Acquisition, provided that the continuing or surviving Person shall be a wholly-owned Subsidiary and, if such Subsidiary was a Guarantor or Borrower, also a Guarantor or Borrower;
(ii) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to a Borrower or to another Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary or a Guarantor, then the purchaser must also be a wholly-owned Subsidiary or Guarantor, respectively; or
(iii) in connection with a Permitted Asset Disposition.
(b) Except following thirty (30) days prior written notice to each Lender, change its name or conduct business under any fictitious name; change its tax or other organizational identification number; or change its form or state of organization.
9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with Section 9.1.9 or Section 9.2.9 in connection with Permitted Acquisitions; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.
 
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9.2.11 Organic Documents . Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except for any amendment, modification or other change that does not adversely affect any Lender or any duty to pay Obligations.
9.2.12 Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Ultimate Parent and its Subsidiaries.
9.2.13 Accounting Changes . Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2 ; or change its Fiscal Year.
9.2.14 Restrictive Agreements . Become a party to or permit any Subsidiary to become a party to any Restrictive Agreement, except a Restrictive Agreement as in effect on the Closing Date and shown on Schedule 8.1.16, the 2009 Indenture, the 2009 Indenture Guaranty, the Convertible Debentures, the Indenture, the Second Lien Debt Documents or the Revolver Loan Documents.
9.2.15 Hedging Agreements . Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.
9.2.16 Conduct of Business . Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.
9.2.17 Affiliate Transactions . Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 9.2.7; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Obligors; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 9.2.17; (f) transactions with Affiliates (other than those described in clause (g) below) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to each Lender and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate; (g) payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto, (ii) Availability (as defined in the Revolver Agreement, as in effect on the date hereof) after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment); (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement; (i) transactions contemplated by the Term A Loan Agreement, and (j) payment of dividends or other distributions to Ultimate Parent (whether made
 
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to Ultimate Parent directly or to any Person directly or indirectly owned by Ultimate Parent and ultimately remitted to Ultimate Parent) in an amount sufficient to permit Ultimate Parent to pay (A) franchise taxes and other fees required to maintain Ultimate Holding’s corporate existence and (B) to pay consolidated or combined federal, state or local taxes, including estimated taxes, which payments in the aggregate by each Obligor and Domestic Subsidiary are not in excess of the aggregate tax liabilities that would have been payable by each Obligor and Domestic Subsidiary calculated on a stand-alone basis.
9.2.18 Plans . Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date or assumed in connection with any Permitted Acquisition.
9.2.19 Amendments to the Indenture, Convertible Debenture, the Convertible Debenture Agreement, the Indenture Guaranty, the Convertible Debenture Guaranty, Revolver Agreement or Subordinated Debt. (a) Amend, supplement or otherwise modify (i) the 2009 Indenture or the 2009 Indenture Guaranty or (ii) any Convertible Debenture or Convertible Debenture Agreement or Convertible Debenture Guaranty, in a manner that directly or indirectly accelerates the time of payment, increases the principal amount of or interest rate applicable to indebtedness issued or provides for more restrictive terms that adversely affect the Lenders;
(b) Amend, supplement or otherwise modify any other document, instrument or agreement relating to any Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that adversely affects the Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof; or
(c) Amend, supplement or otherwise modify the Revolver Agreement or the Second Lien Debt in violation of the Intercreditor Agreement.
9.2.20 Immaterial Subsidiaries . Permit or suffer any Immaterial Subsidiary to (a) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) have revenues in any Fiscal Year in excess of $1,000,000, unless Borrower Representative causes such Immaterial Subsidiary to execute a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Collateral Agent, as it shall deem appropriate.
9.2.21 Fixed Charge Coverage Ratio . Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries for which the last quarter ends nearest to the date set forth below to be less than the amount set forth opposite such date:
 
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   	 	Fiscal Quarter End	  	Fixed Charge Coverage Ratio	  	   	
				
	 	July 31, 2012	  	0.14:1.00	  		
				
	 	October 31, 2012	  	0.41:1.00	  		
				
	 	January 31, 2013	  	0.67:1.00	  		
				
	 	April 30, 2013	  	0.89:1.00	  		
				
	 	July 31, 2013	  	1.10:1.00	  		
				
	 	October 31, 2013	  	1.175:1.00	  		
				
	 	January 31, 2014 and as of the last day of each fiscal quarter thereafter	  	1.25:1.00	  		
9.2.22 Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock for any related purpose governed by Regulations T, U or X of the Board of Governors.
9.2.23 Investment Company Act of 1940 . Engage in any business, enter into any transaction, use any securities or take any other action that would cause any Obligor to become an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
9.2.24 2009 Debenture Intercreditor Agreement . Incur Debt after the Closing Date pursuant to Section 4.09(b)(1) of the 2009 Indenture and designate the holders of such Debt as additional holders of “Priority Obligations” (as defined in the 2009 Indenture Intercreditor Agreement).
Section 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
10.1 Events of Default . Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);
(b) Any representation, warranty or other written statement of any Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;
 
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(c) Any Obligor breaches or fails to perform any covenant contained in Section 7.1, 7.6.2, 9.1.1, 9.1.2, 9.1.3 (other than Section 9.1.3(j)) 9.1.7, 9.1.11 or 9.2, or Section 6 of the Security Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Responsible Officer of such Obligor has knowledge thereof or a Responsible Officer of Borrower Representative receives notice thereof from any Lender, whichever is sooner; provided , however , that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;
(e) Any Guarantor repudiates, revokes or attempts to revoke its guaranty hereunder; any Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Collateral Agent (for the benefit of the Lenders); or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by the Required Lenders);
(f) Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations, the Revolver Debt and the Second Lien Debt) in excess of $5,750,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;
(g) Any judgment or order for the payment of money remains outstanding for more than 30 days against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,750,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;
(h) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,750,000;
(i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting a portion of its business, which action could reasonably be expected to have a Material Adverse Effect; any Obligor suffers the loss, revocation or termination of one or more licenses, permits, leases or agreements, which loss, revocation or termination could reasonably be expected to have a Material Adverse Effect, except in connection with a Permitted Asset Disposition; there is a cessation of any part of an Obligor’s business for a period of time (other than in connection with a Permitted Asset Disposition), which cessation could reasonably be expected to have Material Adverse Effect; any Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs (other than in connection with a Permitted Asset Disposition); or any Obligor ceases to be Solvent;
(j) Any Insolvency Proceeding is commenced by any Obligor;
(k) Any Insolvency Proceeding is commenced against any Obligor and (i) such Obligor consents to the institution of the proceeding against it, (ii) the petition commencing the proceeding is not timely controverted by such Obligor, (iii) such petition is not dismissed within 60 days after its filing, or (iv) an order for relief is entered in the proceeding;
 
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(l) A trustee (including an interim trustee) is appointed to take possession of any substantial Property of or to operate any of the business of any Obligor; or any Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally;
(m) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for any Multiemployer Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;
(n) Any Obligor or any of its Responsible Officers is criminally indicted or convicted for (i) a felony committed in the conduct of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Collateral;
(o) A Change of Control occurs;
(p) The Obligations at any time fail to constitute “Priority Obligations” under and as defined in the 2009 Debenture Intercreditor Agreement; or
(q) (i) the Obligors shall fail to pay when due any principal of or interest or premium on the Revolver Debt or the Second Lien Debt (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, if the effect of such default is to accelerate the maturity of the Revolver Debt or the Second Lien Debt, as applicable, (ii) any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such other default or event is to accelerate the maturity of the Revolver Debt or the Second Lien Debt; or (iii) the Revolver Debt or the Second Lien Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased or an offer to prepay, redeem, purchase or defease the Revolver Debt or the Second Lien Debt shall be required to be made, in each case, prior to the Stated Maturity thereof; provided that this clause (q) shall not apply to the Revolver Debt or the Second Lien Debt that becomes due as a result of the voluntary sale or transfer of property or assets permitted under the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, or as a result of the application (other than by reason of a breach or default by the Obligors) of any provision of the Revolver Agreement or the Second Lien Term Loan Agreement, as applicable, that requires the Obligors to prepay a portion (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding or that requires the Obligors to offer to redeem or repurchase some (but less than substantially all) of the Revolver Debt or the Second Lien Debt then outstanding.
 
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10.2 Remedies upon Default . If an Event of Default described in Section 10.1(j) occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Loans shall terminate, without any action by any Lender or notice of any kind. In addition, or if any other Event of Default exists, the Required Lenders may do any one or more of the following from time to time, subject to the terms of the Intercreditor Agreement:
(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law; and
(b) instruct the Collateral Agent to exercise any other rights or remedies afforded under any Loan Document, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Collateral Agent at a place designated by Collateral Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Collateral Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days’ notice of any proposed sale or other disposition of Collateral by Collateral Agent shall be reasonable. Collateral Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law. Collateral Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Collateral Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations.
10.3 License . Collateral Agent for the benefit of each Lender is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Property of Obligors, including, without limitation, all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels and packaging materials, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral if and for so long as such non-exclusive license or other right to use, license or sub-license would not constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of such Obligor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such non-exclusive license or other right to use, license or sublicense, provided however, that at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, such grant shall include immediately and automatically any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (i) or (ii) above. Each Obligor’s rights and interests under Intellectual Property shall inure to Collateral Agent (for the benefit of the Lenders).
 
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10.4 Setoff . Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor) are each authorized by Obligors at any time during an Event of Default, without notice to Obligors or any other Person, but subject to the Intercreditor Agreement, to set off and to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities or other Debt at any time held or owing by any Lender or any such Affiliate (other than an Obligor or any Subsidiary of an Obligor) to or for the account of any Obligor against any Obligations, whether or not demand for payment of such Obligation has been made, any Obligations have been declared due and payable, are then due, or are contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is adequate; it being understood and agreed, as between Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor), that all such deposits, funds or other moneys to be applied against any Obligations shall be allocated in accordance with the Intercreditor Agreement.
10.5 Remedies Cumulative; No Waiver .
10.5.1 Cumulative Rights . All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of Obligors contained in the Loan Documents are cumulative and not in derogation or substitution of each other. In particular, the rights and remedies of Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and shall not be exclusive of any other rights or remedies that Lenders may have, whether under any agreement, by law, at equity or otherwise.
10.5.2 Waivers . The failure or delay of any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a course of dealing. All rights and remedies shall continue in full force and effect until Full Payment of all Obligations. No modification of any terms of any Loan Documents (including any waiver thereof) shall be effective, unless such modification is specifically provided in a writing directed to Obligors and executed by the Lenders or the requisite Lenders, and such modification shall be applicable only to the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of any other Default or Event of Default that may exist at such time, unless expressly stated. If any Lender accepts performance by any Obligor under any Loan Documents in a manner other than that specified therein, or during any Default or Event of Default, or if any Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or exercise shall not operate to waive any Default or Event of Default nor to preclude exercise of any other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.
Section 11. COLLATERAL AGENT
11.1 Appointment, Authority and Duties of Collateral Agent .
11.1.1 Appointment and Authority . Each Lender appoints and designates Sun Finance as Collateral Agent hereunder. Collateral Agent has and may further, and each Lender authorizes Collateral Agent to, enter into all Loan Documents (including, without limitation, the 2009 Debenture Intercreditor Agreement and Intercreditor Agreement, any amendments thereto,
 
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and any and all other subordination and/or intercreditor agreements required under the terms of this Agreement) to which Collateral Agent is intended to be a party and accept all Loan Documents, for Collateral Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Collateral Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Collateral Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Collateral Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Collateral Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor or other Person; (c) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) exercise all rights and remedies given to Collateral Agent with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Collateral Agent shall be ministerial and administrative in nature, and Collateral Agent shall not have a fiduciary relationship with any Lender, Participant or other Person, by reason of any Loan Documents or any transaction relating thereto.
11.1.2 Duties . Collateral Agent shall not have any duties except those expressly set forth herein and in the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the extent directed to do so by Required Lenders in accordance with and pursuant to the terms of this Agreement and subject to the terms of the Intercreditor Agreement. The conferral upon Collateral Agent of any right shall not imply a duty on Collateral Agent’s part to exercise such right unless instructed to do so by Required Lenders in accordance with this Agreement and subject to the terms of the Intercreditor Agreement.
11.1.3 Collateral Agent Professionals . Collateral Agent may perform its duties through agents and employees. Collateral Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Collateral Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.
11.1.4 Instructions of Required Lenders . The rights and remedies conferred upon Collateral Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Collateral Agent may request instructions from Required Lenders with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from Lenders of their indemnification obligations under Section 11.5 against all Claims that could be incurred by Collateral Agent in connection with any act. Collateral Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Collateral Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action whatsoever against Collateral Agent as a result of Collateral Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and
 
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consent of all Lenders shall be required in the circumstances described in Section 13.1.1, and in no event shall Required Lenders, without the prior written consent of each Lender, direct Collateral Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans. In no event shall Collateral Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Document or could subject any Agent Indemnitee to personal liability.
11.2 Agreements Regarding Collateral and Field Examination Reports .
11.2.1 Lien Releases; Care of Collateral . Lenders authorize Collateral Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations, (b) that is the subject of an Asset Disposition which Borrower Representative certifies in writing to Collateral Agent is a Permitted Asset Disposition or a Lien which Borrower Representative certifies is a Permitted Lien entitled to priority over Collateral Agent’s Liens (and Collateral Agent may rely conclusively on any such certificate without further inquiry), (c) that is within the limitations set forth in Section 13.1.1(c)(iii), (d) with the written consent of all Lenders or (e) in accordance with the terms of the Intercreditor Agreement; provided further, upon request of Borrower Representative, Collateral Agent will provide Borrower Representative with a release of the Collateral Agent’s security interest in any assets or Collateral in conjunction with a Permitted Asset Disposition. Collateral Agent shall have no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected, insured or encumbered, nor to assure that Collateral Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.
11.2.2 Possession of Collateral . Collateral Agent and Lenders appoint each other Lender as agent for the purpose of perfecting Liens (for the benefit of the Lenders) in any Collateral that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains possession of any such Collateral, it shall notify Collateral Agent thereof and, promptly upon Collateral Agent’s request, deliver such Collateral to Collateral Agent or otherwise deal with such Collateral in accordance with Collateral Agent’s instructions.
11.2.3 Reports . Collateral Agent shall promptly, upon receipt thereof, forward to each Lender copies of the results of any field audit prepared by or on behalf of Collateral Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees (a) that Collateral Agent make no representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Collateral Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Obligors books and records as well as upon representations of Obligors officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Collateral Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as any Claims arising in connection with any third parties that obtain all or any part of a Report through such Lender.
 
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11.3 Reliance By Collateral Agent . Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.
11.4 Action Upon Default . Collateral Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Collateral Agent and the other Lenders thereof in writing. Each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of Collateral Agent and Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.
11.5 Ratable Sharing . If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.4.1, as applicable, such Lender shall forthwith purchase from the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.4.1, as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
11.6 Indemnification of Agent Indemnitees .
11.6.1 Indemnification . EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGOR (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ANY AND ALL LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ALL REASONABLE FEES AND EXPENSES OF COUNSEL TO SUCH AGENT INDEMNITEES), ADVANCES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE AGENT INDEMNITEES UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTIONS
 
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CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, BY REASON OF COLLATERAL AGENT’S ENTERING INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) other than liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the gross negligence or willful misconduct of Agent Indemnitees. If Collateral Agent is sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or fraudulent transfer, then any monies paid by Collateral Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Collateral Agent by Lenders to the extent of each Lender’s Pro Rata share.
11.6.2 Proceedings . Without limiting the generality of the foregoing, if at any time (whether prior to or after the Termination Date) any proceeding is brought against any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for any act taken or omitted by Collateral Agent in connection with any Obligations, Collateral, Loan Documents or matters relating thereto, or otherwise to obtain any other relief of any kind on account of any transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required to pay under any judgment or other order entered in such proceeding or by reason of any settlement, including all interest, costs and expenses (including attorneys’ fees) incurred in defending same other than damages resulting from the gross negligence or willful misconduct of Agent Indemnitees. In Collateral Agent’s discretion, Collateral Agent may reserve for any such proceeding, and may satisfy any judgment, order or settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to Lenders subject to the Intercreditor Agreement.
11.7 Limitation on Responsibilities of Collateral Agent . Collateral Agent shall not be liable to Lenders for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Collateral Agent’s gross negligence or willful misconduct. Collateral Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor or Lender of any obligations under the Loan Documents. Collateral Agent does not make to Lenders any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.
 
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11.8 Successor Agent and Co-Agents .
11.8.1 Resignation; Successor Collateral Agent . Collateral Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Representative. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Collateral Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a commercial bank that is organized under the laws of the United States or any state or district thereof, has a combined capital surplus of at least $500,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrower Representative; provided that if any such successor Collateral Agent is not a United Stated person within the meaning of Code Section 7701(a)(30), such appointment shall be subject to approval by the Borrower Representative. If no successor agent is appointed prior to the effective date of the resignation of Collateral Agent, then Collateral Agent may appoint a successor agent from among the Lenders. Immediately upon such appointment by Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Collateral Agent without further act, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 11.5 and 13.2. Notwithstanding any Collateral Agent’s resignation, the provisions of this Section 11 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Collateral Agent. Any successor by merger or acquisition of the stock or assets of Sun Finance shall continue to be Collateral Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.
11.8.2 Separate Collateral Agent . It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Collateral Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Collateral Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If Collateral Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Collateral Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Collateral Agent. Lenders shall execute and deliver such documents as Collateral Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Collateral Agent until appointment of a new agent.
11.9 Due Diligence and Non-Reliance . Each Lender acknowledges and agrees that it has, independently and without reliance upon Collateral Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund the Loans hereunder. Each Lender has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and agrees that the other Lenders and Collateral Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Lender will, independently and
 
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without reliance upon the other Lenders or Collateral Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making the Loans, and in taking or refraining from any action under any Loan Documents. Collateral Agent shall have no duty or responsibility to provide any Lender with any notices, reports or certificates furnished to Collateral Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Collateral Agent or any of Collateral Agent’s Affiliates.
11.10 No Third Party Beneficiaries . This Section 11 is an agreement solely among Lenders and Collateral Agent, and does not confer any rights or benefits upon Obligor or any other Person. As between Obligors and Collateral Agent, any action that Collateral Agent may take under any Loan Documents shall be conclusively presumed to have been authorized and directed by Lenders as herein provided.
11.11 Collateral Agent in its Individual Capacity . Each of Sun Finance and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide bank products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Sun Finance were any other financial institution, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the Lenders. In their individual capacity, Sun Finance and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Lender agrees that Sun Finance and its Affiliates (other than an Obligor or any Subsidiary of an Obligor) shall be under no obligation to provide such information to Lenders.
Section 12. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
12.1 Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of Obligors, Collateral Agent and Lenders and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents and any such assignment shall be absolutely void ab initio , and (b) any assignment by a Lender must be made in compliance with Section 12.3. Agent pay treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 12.3. Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.
12.2 Participations .
12.2.1 Permitted Participants; Effect . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a Person (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans for all purposes, all amounts payable by Borrowers shall be determined as if
 
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such Lender had not sold such participating interests, and Borrowers and Collateral Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Collateral Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant shall not be entitled to the benefits of Section 5.7 unless Borrowers agree otherwise in writing and unless such Participant shall have agreed to be treated as a Lender for purposes of, and subject to, Sections 5.6 and 5.7 and the definition of “Excluded Taxes”. In the event that a Lender sells participations in a Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Loan held by it (and the principal amount (and stated interest thereon) of the portion of the Loan that is subject to such participations) (the “Participant Register”). No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Borrower or any other Person (including the existence or identity of any participant or any information relating to a participant’s interest in the Loans or other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Loans or other obligations are in registered form under Treas. Reg. Section 5f.103-1(c). A Loan (and the Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each note shall expressly so provide). Any participation of such Loan (and the note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
12.2.2 Voting Rights . Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loans in which such Participant has an interest, postpones the Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan, or releases any Borrower, Guarantor or substantial portion of the Collateral.
12.2.3 Benefit of Set-Off . Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 11.4 as if such Participant were a Lender.
12.3 Assignments .
12.3.1 Permitted Assignments . A Lender may assign to any Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $250,000 (unless otherwise agreed by the Required Lenders in their discretion) and integral multiples of $100,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Loans retained by the transferor Lender be at least $250,000 (unless otherwise agreed by the Required Lenders in their discretion); and (c) the parties to each such assignment shall execute and deliver to Lender, for
 
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its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans; provided, however, that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.
12.3.2 Effect; Effective Date . From the effective date of the assignment notice in the form of Exhibit C, (a) the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder, and (b) the transferor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to any indemnification provisions provided for the benefit of the Lenders hereunder or under the other Loan Documents or any other rights of the Lenders that are to survive the termination of this Agreement or any other Loan Documents) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of a transferor Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto). Upon consummation of an assignment, the transferor Lender, Collateral Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as appropriate.
12.4 Tax Treatment . If any interest in a Loan Document is transferred to a Eligible Assignee that is organized under the laws of any jurisdiction other than the United States or any state or district thereof, the Eligible Assignee, concurrently with the effectiveness of such transfer, shall have complied with the provisions of Section 5.7.
12.5 Register . Collateral Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Obligations (and the principal amount and stated interest thereon) held by such Lender (each, a “Registered Loan”). Other than in connection with an assignment by a Lender of all or any portion of its portion of the Obligations to an Affiliate of such Lender (i) a Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Loans to an
 
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Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register. Collateral Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register to the extent it has one) available for review by Borrowers from time to time during normal business hours as Borrowers may reasonably request. It is intended that any Register and Participant Register comply with the requirements of Sections 163(f), 871(h), 881(c) and 4701 of the Code and the Treasury Regulations promulgated thereunder and shall be applied in a manner consistent therewith.
Section 13. MISCELLANEOUS
13.1 Consents, Amendments and Waivers .
13.1.1 Amendment . No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of the Required Lenders and each Obligor party to such Loan Document; provided, however, that
(a) without the prior written consent of Collateral Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Collateral Agent;
(b) without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the amount set forth on Schedule 1.1 regarding such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;
(c) without the prior written consent of all Lenders, no modification shall be effective that would (i) extend the Termination Date; (ii) alter Section 5.4 or 13.1.1; (iii) except as currently contemplated by the Loan Documents (including, without limitation, in connection with a Permitted Asset Disposition or as provided in Section 11.2.1 ) release Collateral with a book value greater than $45,000,000 during any calendar year; or (iv) except in connection with a Permitted Asset Disposition, release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release.
(d) With the written acknowledgment (without implying a requirement of consent) of Collateral Agent, Borrower Representative, and (if applicable) the signature of a Domestic Subsidiary becoming a Borrower, Joinder Agreements may be entered into and Schedules 8.1.4, 8.1.5, 8.1.9, 8.1.12, 8.1.15, 8.1.16, 8.1.17, 8.1.19, 8.1.21 and 8.1.29 may be modified.
13.1.2 Limitations . The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders and/or Collateral Agent as among themselves. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing, and then only in the specific instance and for the specific purpose for which it is given.
 
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13.1.3 Payment for Consents . No Obligors will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.
13.2 Indemnity . EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.
13.3 Notices and Communications.
13.3.1 Notice Address . All notices, requests and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Representative’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 13.3. Each such notice, request or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to any Lender pursuant to Section 2.1.6 shall be effective until actually received by the individual to whose attention at Lender such notice is required to be sent. Any written notice, request or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by the Borrower Representative shall be deemed received by all Obligors.
13.3.2 Electronic Communications; Voice Mail . Electronic mail and internet websites may be used only for routine communications, such as financial statements and other information required by Section 9.1.2, administrative matters and distribution of Loan Documents for execution. Collateral Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.
13.3.3 Non-Conforming Communications . Collateral Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of an Obligor.
 
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13.4 Performance of Borrowers’ Obligations . Collateral Agent or Lenders may, in its/their discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Collateral Agent or any Lender to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Collateral Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Collateral Agent or any Lender under this Section shall be reimbursed to Collateral Agent and/or such Lender by Borrowers, on demand, with interest from the date incurred to the date of payment thereof at the Default Rate applicable to the Loans. Any payment made or action taken by Collateral Agent or Lenders under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.
13.5 Credit Inquiries . Each Obligor hereby authorizes Collateral Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary in connection with the establishment of credit lines and/or trade credit or any verification of any Obligor’s Accounts.
13.6 Severability . Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.
13.7 Cumulative Effect; Conflict of Terms . The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise specifically provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.
13.8 Counterparts; Facsimile Signatures . Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Collateral Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.
13.9 Entire Agreement . Time is of the essence of the Loan Documents. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
 
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13.10 Obligations of Lenders . The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Loans of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Collateral Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Collateral Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute Collateral Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Borrower.
13.11 Confidentiality . During the term of this Agreement and for 12 months thereafter, Lenders agree to take reasonable precautions to maintain the confidentiality of any information that Borrowers deliver to Lenders and identify as confidential at the time of delivery, except that Lenders may disclose such information (a) to their respective officers, directors, employees, Affiliates and agents, including legal counsel, auditors and other professional advisors; (b) to any party to the Loan Documents from time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the request of any Governmental Authority exercising regulatory authority over such Lender; (e) which ceases to be confidential, other than by an act or omission of any Lender, or which becomes available to any Lender on a nonconfidential basis; (f) to the extent reasonably required in connection with any litigation relating to any Loan Documents or transactions contemplated thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the exercise of any rights or remedies under the Loan Documents; (h) to any Transferee, as long as such Person agrees to be bound by the provisions of this Section; (i) to the National Association of Insurance Commissioners or any similar organization, or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to any investor or potential investor in an Approved Fund that is a Lender or Transferee, but solely for use by such investor to evaluate an investment in such Approved Fund, or to any manager, servicer or other Person in connection with its administration of any such Approved Fund; or (k) with the consent of Borrower Representative. Notwithstanding the foregoing, Lenders may issue and disseminate to the public general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ names in advertising and other promotional materials.
13.12 GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
13.13 Consent to Forum . EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES OF AMERICA LOCATED IN COOK COUNTY, ILLINOIS, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Collateral Agent or any Lender to bring proceedings against any Obligor in any other court. Nothing in this Agreement shall be deemed to preclude enforcement by Collateral Agent or any Lender of any judgment or order obtained in any forum or jurisdiction.
 
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13.14 Waivers by Obligors . To the fullest extent permitted by Applicable Law, Obligors waives (a) the right to trial by jury (which Collateral Agent and each Lender hereby also waives) in any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Collateral Agent on which Obligors may in any way be liable, and hereby ratifies anything Collateral Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Collateral Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Collateral Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a material inducement to Collateral Agent and Lenders entering into this Agreement and that Collateral Agent and Lenders are relying upon the foregoing in their dealings with Obligor. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
13.15 Patriot Act Notice . Collateral Agent and Lenders hereby notify Obligor that pursuant to the requirements of the Patriot Act, Collateral Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Collateral Agent and Lenders to identify it in accordance with the Patriot Act. Collateral Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor’s management and owners, such as legal name, address, social security number and date of birth.
13.16 Subordination . Each Obligor covenants and agrees that the payment of all indebtedness, principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of any Obligor), fees, charges, expenses, reasonable attorneys’ fees and any other sum, obligation or liability owing by any other Obligor to such Obligor, including any intercompany trade payables or royalty or licensing fees (collectively, the “Intercompany Obligations”), is subordinated, to the extent and in the manner provided in this Section 13.16, to the prior payment in full of all Obligations (herein, the “Senior Obligations”) and that the subordination is for the benefit of Lenders, and Lenders may enforce such provisions directly (it being understood that nothing in this Section 13.16 shall prohibit any payment on any Intercompany Obligations so long as no Default or Event of Default has occurred and is continuing).
 
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(a) Each Obligor hereby (i) authorizes Lenders to demand specific performance of the terms of this Section 13.16 whether or not any other Obligor shall have complied with any of the provisions hereof applicable to it, at any time when such Obligor shall have failed to comply with any provisions of this Section 13.16 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.
(b) Upon any distribution of assets of any Obligor in any dissolution, winding-up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) and subject to the provisions of Section 13.16:
(i) Lenders shall first be entitled to receive payment in full in cash of the Senior Obligations before any Obligor is entitled to receive any payment on account of the Intercompany Obligations.
(ii) Any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, to which any other Obligor would be entitled except for the provisions of Section 13.16, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to Lenders, to the extent necessary to make payment in full of all Senior Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to Lenders.
(iii) In the event that notwithstanding the foregoing provisions of Section 13.16, any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, shall be received by any other Obligor on account of the Intercompany Obligations before all Senior Obligations are paid in full, such payment or distribution shall be received and held in trust for and shall be paid over to Lenders for application to the payment of the Senior Obligations until all of the Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to Lenders.
(c) No right of the Lenders or any other present or future holders of any Senior Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Obligor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Obligor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
13.17 Advertisement . Each Obligor hereby authorizes Lenders to publish the names of Borrowers and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Lenders elect to publish.
13.18 Intercreditor Agreement . Notwithstanding anything contained herein, this Agreement and the other Loan Documents and the rights, remedies, duties and obligations evidenced hereby and thereby are subject in all respects to the terms and conditions of the Intercreditor Agreement. Furthermore, without limitation of the sentence above, the rights of the Lenders and the duty and/or obligation of Collateral Agent to take any enforcement action hereunder and/or under or with respect to any other Loan Documents is subject in all respects to the terms and conditions of the Intercreditor Agreement. In the event there is a conflict between this Agreement and/or any other Loan Documents and the Intercreditor Agreement, the Intercreditor Agreement shall control and govern.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
 
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

BORROWERS :	
	
KELLWOOD COMPANY
KWD HOLDINGS, INC.
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, LLC
SIERRA DESIGNS ACQUISITION COMPANY, LLC
ZOBHA, LLC
VINCE, LLC	
		
By:	 	/s/ Keith A. Grypp	
			
Name:	 	Keith A. Grypp	
Title:	 	Senior Vice President, Secretary and
General Counsel	
[Signature Page to Fifth Amended and Restated Term Loan Agreement]

			
LENDERS :	
	
      SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Melissa Klafter	
			
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	

      SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Melissa Klafter	
			
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	

COLLATERAL AGENT :	
	
      SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Melissa Klafter	
			
Name:	 	Melissa Klafter	
Title:	 	Vice President and Assistant Treasurer	
[Signature Page to Fifth Amended and Restated Term Loan Agreement]

Exhibit 10.32
EXECUTION COPY

 
KELLWOOD COMPANY
and
each of its Domestic Subsidiaries party hereto,
as Borrowers

TERM LOAN AGREEMENT
Dated as of October 19, 2011
Term A Loan: $47,900,000.00
Term B Loan: $7,100,000.00

CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
and
CERBERUS BUSINESS FINANCE, LLC,
as Collateral Agent

TABLE OF CONTENTS

   	  	 	  	Page	 	
			
Section 1.	  	DEFINITIONS; RULES OF CONSTRUCTION	  	 	1	  	
			
1.1  	  	Definitions	  	 	1	  	
1.2  	  	Accounting Terms	  	 	27	  	
1.3  	  	Certain Matters of Construction	  	 	28	  	
			
Section 2.	  	CREDIT FACILITIES	  	 	28	  	
			
2.1  	  	Term Loans	  	 	28	  	
			
Section 3.	  	INTEREST, FEES AND CHARGES	  	 	31	  	
			
3.1  	  	Rates and Payment of Interest	  	 	31	  	
3.2  	  	Fees	  	 	31	  	
3.3  	  	Computation of Interest and Yield Protection	  	 	32	  	
3.4  	  	Reimbursement Obligations	  	 	32	  	
3.5  	  	Capital Adequacy	  	 	32	  	
3.6  	  	Mitigation	  	 	32	  	
3.7  	  	Maximum Interest	  	 	33	  	
3.8  	  	LIBOR Option	  	 	33	  	
3.9  	  	Funding Losses	  	 	34	  	
3.10	  	Changes in Law; Impracticability or Illegality	  	 	34	  	
3.11	  	No Requirements to Match Fund	  	 	35	  	
			
Section 4.	  	LOAN ADMINISTRATION	  	 	35	  	
			
4.1  	  	Borrower Representative	  	 	35	  	
4.2  	  	One Obligation	  	 	35	  	
4.3  	  	Effect of Termination	  	 	36	  	
			
Section 5.	  	PAYMENTS	  	 	36	  	
			
5.1  	  	General Payment Provisions	  	 	36	  	
5.2  	  	Payment of Other Obligations	  	 	36	  	
5.3  	  	Marshaling; Payments Set Aside	  	 	36	  	
5.4  	  	Post-Default Allocation of Payments	  	 	37	  	
5.5  	  	Loan Account; Account Stated	  	 	37	  	
5.6  	  	Taxes	  	 	38	  	
5.7  	  	[Intentionally Omitted]	  	 	40	  	
5.8  	  	Nature and Extent of Each Borrower’s Liability	  	 	40	  	
			
Section 6.	  	CONDITIONS PRECEDENT	  	 	43	  	
			
6.1  	  	Conditions Precedent to Initial Loans	  	 	43	  	
 
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Section 7.	  	[Intentionally Omitted]	  	 	45	  	
			
Section 8.	  	REPRESENTATIONS AND WARRANTIES	  	 	45	  	
			
8.1  	  	General Representations and Warranties	  	 	45	  	
8.2  	  	Complete Disclosure	  	 	52	  	
			
Section 9.	  	COVENANTS AND CONTINUING AGREEMENTS	  	 	52	  	
			
9.1  	  	Affirmative Covenants	  	 	52	  	
9.2  	  	Negative Covenants	  	 	58	  	
			
Section 10.	  	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	  	 	66	  	
			
10.1  	  	Events of Default	  	 	66	  	
10.2  	  	Remedies upon Default	  	 	68	  	
10.3  	  	License	  	 	68	  	
10.4  	  	Setoff	  	 	69	  	
10.5  	  	Remedies Cumulative; No Waiver	  	 	69	  	
			
Section 11.	  	COLLATERAL AGENT	  	 	70	  	
			
11.1  	  	Appointment, Authority and Duties of Collateral Agent	  	 	70	  	
11.2  	  	Agreements Regarding Collateral and Field Examination Reports	  	 	71	  	
11.3  	  	Reliance By Collateral Agent	  	 	72	  	
11.4  	  	Action Upon Default	  	 	72	  	
11.5  	  	Ratable Sharing	  	 	73	  	
11.6  	  	Indemnification of Agent Indemnitees	  	 	73	  	
11.7  	  	Limitation on Responsibilities of Collateral Agent	  	 	74	  	
11.8  	  	Successor Agent and Co-Agents	  	 	74	  	
11.9  	  	Due Diligence and Non-Reliance	  	 	75	  	
11.10	  	No Third Party Beneficiaries	  	 	75	  	
11.11	  	Collateral Agent in its Individual Capacity	  	 	75	  	
			
Section 12.	  	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	  	 	76	  	
			
12.1  	  	Benefit of Agreement	  	 	76	  	
12.2  	  	Participations	  	 	76	  	
12.3  	  	Assignments	  	 	77	  	
12.4  	  	Tax Treatment	  	 	79	  	
			
Section 13.	  	MISCELLANEOUS	  	 	79	  	
			
13.1  	  	Consents, Amendments and Waivers	  	 	79	  	
13.2  	  	Indemnity	  	 	80	  	
13.3  	  	Notices and Communications	  	 	80	  	
13.4  	  	Performance of Borrowers’ Obligations	  	 	81	  	
13.5  	  	Credit Inquiries	  	 	82	  	
13.6  	  	Severability	  	 	82	  	
 
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13.7  	  	Cumulative Effect; Conflict of Terms	  	 	82	  	
13.8  	  	Counterparts; Facsimile Signatures	  	 	82	  	
13.9  	  	Entire Agreement	  	 	82	  	
13.10	  	Obligations of Lenders	  	 	82	  	
13.11	  	Confidentiality	  	 	83	  	
13.12	  	GOVERNING LAW	  	 	83	  	
13.13	  	Consent to Forum	  	 	83	  	
13.14	  	Waivers by Obligors	  	 	83	  	
13.15	  	Patriot Act Notice	  	 	84	  	
13.16	  	Subordination	  	 	84	  	
13.17	  	Advertisement	  	 	85	  	
13.18	  	Intercreditor Agreement	  	 	85	  	
 
iii

LIST OF EXHIBITS AND SCHEDULES

Exhibit A	  	Form of Term A/B Note	
Exhibit B	  	Assignment and Acceptance	
Exhibit C	  	LIBOR Notice	
Exhibit D	  	Compliance Certificate	
Exhibit E	  	Joinder Agreement	
		
Schedule 1.1A	  	Lender Term A Loan Amounts	
Schedule 1.1B	  	Lender Term B Loan Amounts	
Schedule 8.1.1	  	Business Locations	
Schedule 8.1.4	  	Names and Capital Structure	
Schedule 8.1.5	  	Corporate Names; Locations	
Schedule 8.1.8	  	Surety Obligations	
Schedule 8.1.11	  	Patents, Trademarks, Copyrights and Licenses	
Schedule 8.1.14	  	Environmental Matters	
Schedule 8.1.15	  	Restrictive Agreements	
Schedule 8.1.16	  	Litigation	
Schedule 8.1.18	  	Pension Plans	
Schedule 8.1.20	  	Labor Contracts	
Schedule 8.1.27	  	Insurance	
Schedule 8.1.29	  	Material Contracts	
Schedule 9.2.1	  	Existing Indebtedness	
Schedule 9.2.2	  	Existing Liens	
Schedule 9.2.5	  	Investments	
Schedule 9.2.17	  	Existing Affiliate Transactions	
 
iv

TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this “ Agreement ”) is dated as of October 19, 2011 among KELLWOOD COMPANY, a Delaware corporation (“ Borrower Representative ” or “ Parent ”) and its Domestic Subsidiaries from time to time a party hereto (each a “ Borrower ” and collectively with Borrower Representative, “ Borrowers ”), other Obligors (as defined below) party hereto, the lenders from time to time party hereto (each a “ Lender ” and collectively, the “ Lenders ”) and Cerberus Business Finance, LLC, solely in its capacity as collateral agent for each Lender (the “ Collateral Agent ”).
RECITALS :
WHEREAS, the Borrowers have asked the Lenders to extend credit to the Borrowers consisting of (a) a Term A Loan (as hereinafter defined) in the aggregate principal amount of $47,900,000 and (b) a Term B Loan (as hereinafter defined) in the aggregate principal amount of $7,100,000. The proceeds of the Loans (as hereinafter defined) shall be used (i) with respect to the Term A Loan, to finance the payments of certain earnouts relating to past acquisitions and/or the funding of Permitted Acquisitions, and (ii) with respect to the Term B Loan, for working capital and liquidity purposes and/or to finance the payments of certain earnouts relating to past acquisitions and/or the funding of Permitted Acquisitions. The Lenders are severally, and not jointly, willing to extend such credit to the Borrowers subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties agree as follows:
 
Section 1.	DEFINITIONS; RULES OF CONSTRUCTION	
1.1 Definitions . As used herein, the following terms have the meanings set forth below:
2009 Debentures - the 2009 notes issued pursuant to the 2009 Indenture.
2009 Debenture Intercreditor Agreement - that certain Amended and Restated Intercreditor Agreement dated as of October 19, 2011, by and between Wells Fargo Bank, National Association (or such other Person reasonably acceptable to Collateral Agent), as collateral agent under the 2009 Indenture, the Collateral Agent, the Revolving Credit Agent, and the Sun Collateral Agent.
2009 Indenture - that certain indenture, dated as of July 23, 2009, by and between Parent and Wells Fargo Bank, National Association (or such other Person reasonably acceptable to Collateral Agent), as trustee and collateral agent, pursuant to which Parent issued $120,590,000 in aggregate principal amount of 12.875% Second-Priority Senior Secured PIK Notes due December 31, 2014.
2009 Indenture Guaranty - that certain Guaranty Agreement (and including any guaranty agreement executed pursuant to the terms thereof and any replacement guaranty) dated as of July 23, 2009, by and among the Guarantors and Wells Fargo Bank, National Association (or such other Person reasonably acceptable to Collateral Agent), as trustee, for the holders of the 2009 Debentures, as amended or supplemented from time to time.
 
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Account - as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.
Account Debtor - a Person who is obligated under an Account, Chattel Paper or General Intangible.
Acquisition - the acquisition of (a) a controlling Equity Interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such Equity Interest or upon exercise of an option or warrant for, or conversion of securities into, such Equity Interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.
Additional Amount - as defined in Section 5.6(a).
Affiliate - with respect to any Person, another Person (a) who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first Person; (b) who beneficially owns 10% or more of the voting securities or any class of Equity Interests of such first Person; (c) at least 10% of whose voting securities or any class of Equity Interests is beneficially owned, directly or indirectly, by such first Person; or (d) who is an executive or financial officer, director, partner or managing member of such first Person. “ Control ” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.
Agent Indemnitees - Collateral Agent and its officers, directors, employees, Affiliates, agents and attorneys.
Agent Professionals - attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Collateral Agent.
Agreement - as defined in the preamble hereto.
Allocable Amount - as defined in Section 5.8.3.
Anti-Terrorism Laws - any laws relating to terrorism or money laundering, including the Patriot Act.
Applicable Law - all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.
 
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Applicable Margin - any date of determination, with respect to the interest rate of any Loan or any portion thereof:
(a) From the Effective Date until March 31, 2012 (the “ Initial Applicable Margin Period ”), the relevant Applicable Margin shall be set at (i) 10.25% for a LIBOR Rate Loan, and (ii) 7.75% for a Reference Rate Loan.
(b) After the Initial Applicable Margin Period, the relevant Applicable Margin for a LIBOR Rate Loan or a Reference Rate Loan shall be set at the respective level indicated below based upon the Leverage Ratio of the Parent and its Subsidiaries set forth opposite thereto, which financial tests shall be calculated for the four consecutive fiscal quarter period ending on the last day of the most recently ended fiscal quarter of the Parent and its Subsidiaries for which quarterly financial statements and a certificate of the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative are received by the Collateral Agent and the Lenders in accordance with Section 9.1.2(b) , provided, however, that if at the time of such calculation Consolidated EBITDA of the Parent and its Subsidiaries for the corresponding four consecutive fiscal quarter period is equal to or greater than $50,000,000, then the relevant Applicable Margin for any Loan indicated below shall be reduced by 0.75%:

Level	  	Leverage Ratio	  	Applicable Margin	 	
	  		  	LIBOR Rate
Loan	 	 	Reference Rate
Loan	 	
I	  	Leverage Ratio greater than or equal to 2.125 to 1.0	  	 	10.25	% 	 	 	7.75	% 	
II	  	Leverage Ratio less than 2.125 to 1.0 but greater than 1.75 to 1.0	  	 	10.00	% 	 	 	7.50	% 	
III	  	Leverage Ratio less than or equal to 1.75 to 1.0	  	 	9.75	% 	 	 	7.25	% 	
(c) Subject to clause (d) below, the adjustment of the Applicable Margin (if any) will occur on the date the Collateral Agent receives the quarterly financial statements and a certificate of the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative in accordance with Section 9.1.2(b) .
(d) Notwithstanding the foregoing:
(i) if for any period, the Collateral Agent does not receive the financial statements and certificates described in clause (c) above, then for the period commencing on the date such financial statements and certificate were required to be delivered through the date on which such financial statements and certificate are actually received by the Collateral Agent and the Lenders, the Applicable Margin shall be set at Level I in the table above; and
 
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(ii) in the event that the audited annual financial statements of the Parent and its Subsidiaries required to be delivered pursuant to Section 9.1.2(a) for any Fiscal Year shall indicate that the actual Leverage Ratio and/or Consolidated EBITDA of the Parent and its Subsidiaries for any fiscal quarter or four consecutive fiscal quarter period, as applicable, in such Fiscal Year was higher or lower than as previously certified by the Parent in the Compliance Certificate for such fiscal quarter or period, then the Applicable Margin for such fiscal quarter shall be adjusted retroactively (to the effective date of the determination of the Applicable Margin that was based upon the delivery of such Compliance Certificate) to reflect the correct Applicable Margin, and the Borrowers shall promptly make payments to or receive a future credit or payment from the Collateral Agent and Lenders, as the case may be, to reflect such adjustment.
Applicable Prepayment Premium - as of any date of determination, an amount equal to (a) during the period of time from and after the Closing Date up to and including the date that is the first anniversary of the Closing Date, an amount equal to 2.50% times the principal amount of any prepayment of the Loans on such date, and (b) thereafter, zero.
Asset Disposition - a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.
Asset Loss Event - the loss, destruction or damage to or condemnation, requisition, seizure or taking of, any assets of any Obligor or any of its Subsidiaries (other than any Foreign Subsidiaries).
Assignment and Acceptance - an assignment agreement in the form of Exhibit B.
Availability - as defined in the Revolver Agreement as in effect on the date hereof.
Bankruptcy Code - Title 11 of the United States Code.
Blocked Person - as defined in Section 8.1.33.
Board of Governors - the Board of Governors of the Federal Reserve System.
Borrower Representative - as defined in the preamble to this Agreement.
Borrowers - Borrower and its Domestic Subsidiaries (other than Immaterial Subsidiaries and U.S. Foreign Holdcos) from time to time parties hereto.
Borrowing Base - as defined in the Revolver Agreement as in effect on the date hereof.
Business Day - (a) any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required to close, and (b) with respect to the borrowing, payment or continuation of, or determination of interest rate on, LIBOR Rate Loans, any day that is a Business Day described in clause (a) above and on which dealings in Dollars may be carried on in the interbank eurodollar markets in New York City and London.
 
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Capital Adequacy Regulation - any law, rule, regulation, guideline, request or directive of any central bank or other Governmental Authority, whether or not having the force of law, regarding capital adequacy of a bank or any Person controlling a bank.
Capital Expenditures - all liabilities incurred, expenditures made or payments due (whether or not made) for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.
Capital Lease - any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP (but without giving effect to FASB ASC 840).
Capital Lease Obligations - with respect to any Person, obligations of such Person and its Subsidiaries under Capital Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP (but without giving effect to FASB ASC 840).
Cash Collateral - cash, and any interest or other income earned thereon, that is delivered to Collateral Agent to Cash Collateralize any Obligations.
Cash Collateralize - the delivery of cash to Collateral Agent, as security for the payment of Obligations, in an amount equal to with respect to any inchoate or contingent Obligations, Collateral Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations.
Cash Equivalents - (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.
Cerberus - Cerberus Business Finance, LLC, and its successors and assigns.
Cerberus Indemnitees - Cerberus and its officers, directors, employees, Affiliates, agents and attorneys.
CERCLA - the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq .).
 
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Change of Control - the occurrence of any of the following events: (a) Sponsor ceases to own and control, beneficially and of record, directly or indirectly, more than 50.1% of the voting and economic Equity Interests in Parent on a fully diluted basis, or (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have acquired beneficial ownership on a fully diluted basis of the voting Equity Interests of Parent sufficient to (whether or not exercised) elect a majority of the members of the board of directors (or similar governing body) of Parent.
Chattel Paper - as defined in the UCC.
Claims - all liabilities, obligations, losses, damages, penalties, judgments, proceedings, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Collateral Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.
Closing Date - as defined in Section 6.1.
Code - the Internal Revenue Code of 1986, as amended.
Collateral - all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations pursuant to the Security Agreement or other Loan Documents.
Collateral Agent - Cerberus in it capacity as collateral agent for the Lenders.
Collateral Agent Advances - as defined in Section 11.1.5.
Compliance Certificate - a certificate, substantially in the form of Exhibit D hereto, and in substance reasonably satisfactory to Collateral Agent.
Consolidated EBITDA - for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate (for all periods), (f) to the extent
 
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deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate (for all periods), (h) nonrecurring restructuring charges incurred in Fiscal Years 2011 and 2012, in an aggregate amount for both years not to exceed $3,500,000, in each case, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBTIDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) costs and expenses incurred in connection with Acquisitions which are ultimately not consummated so long as such costs and expenses do not exceed $1,000,0000 during any trailing twelve month period included in the calculation of Consolidated EBITDA, (1) losses associated with the start up of the “Lamb & Flag”, “Chord” and “BLK DNM” brands not to exceed $2,750,000 in any trailing twelve month period included in the calculation of Consolidated EBITDA, and (m) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Collateral Agent.
Consolidated Net Income - for any period of computation thereof, the gross revenues from operations of Parent and its Subsidiaries (including payments received by Parent and its Subsidiaries of (a) interest income, and (b) Distributions made in the Ordinary Course of Businesses by Persons in which investment is permitted pursuant to this Agreement and not related to an extraordinary event), less all operating and non-operating expenses of Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP; but excluding (without duplication): (i) net gains or losses on the sale, conversion or other disposition of capital assets, (ii) net gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of Parent or any Subsidiary, (iii) net gains or losses on the collection of proceeds of life insurance policies, (iv) any write-up or write-down of any asset (provided, that write-downs of Accounts and/or Inventory shall not be so excluded), (v) any net gains resulting from repurchases of Debt, and (vi) any other net gain or loss of an extraordinary nature as determined in accordance with GAAP.
 
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Consolidated Net Interest Expense - for any period, for Parent and its Subsidiaries on a consolidated basis, the sum of (a) all interest and similar expenses that are treated as interest in accordance with GAAP, and (b) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP. For each period of 12 consecutive Fiscal Months ending next following the date of each Acquisition (whether consummated before or after the Closing Date), Consolidated Net Interest Expense as a component of Consolidated EBITDA shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Obligations) incurred, acquired or assumed in connection with such Acquisition (“ Incremental Debt ”) calculated (A) as if all such Incremental Debt had been incurred as of the first day of such 12 consecutive Fiscal Month period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such 12 consecutive Fiscal Months, as the case may be.
Contingent Obligation - any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.
Convertible Debentures - those certain $200,000,000 3.50% Convertible Senior Debentures maturing June 15, 2034, issued pursuant to that certain Indenture dated as of June 22, 2004 by and between the Parent and Union Bank of California, N.A. or any of its successors, as trustee (as amended or supplemented from time to time, the “ Convertible Debenture Agreement ”).
Copyright Security Agreement - each copyright security agreement pursuant to which an Obligor grants to Collateral Agent, a Lien on such Obligor’s interest in copyrights as security for the Obligations.
CWA - the Clean Water Act (33 U.S.C. §§ 1251 et seq .).
 
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Debt - as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, credit documents or similar instruments, (c) all Capital Leases, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred and being paid in the Ordinary Course of Business, (e) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination, (f) all Contingent Obligations; (g) all reimbursement obligations in connection with (i) letters of credit, bank guarantees or bankers’ acceptances issued for the account of such Person or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the Ordinary Course of Business, (h) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse and (i) in the case of Borrowers, the Obligations. The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer. Notwithstanding anything herein to the contrary, the term “Debt” shall not include any operating leases that, as a result of changes in GAAP, would classify such operating leases as Capitalized Lease Obligations, required to be reflected on a consolidated balance sheet of Borrowers in accordance with GAAP.
Default - an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.
Default Rate - as defined in Section 3.1(b).
Distribution - any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest; or any payment of management or advisory fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by any Borrower to any holder of any Equity Interest of Parent or any Affiliate of such holder.
Document - as defined in the UCC.
Dollars - lawful money of the United States.
Domestic Subsidiary - a Subsidiary (other than an Immaterial Subsidiary) which is created or organized under the laws of the United States of America, any of its states or the District of Columbia.
Enforcement Action - any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).
Environmental Laws - all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.
 
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Environmental Notice - a notice from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.
Environmental Release - a release as defined in CERCLA or under any other Environmental Law.
Equipment - as defined in the UCC, including all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory), and all parts, accessories and special tools therefor, and accessions thereto.
Equity Interest - the interest of any (a) shareholder in a corporation, (b) partner in a partnership (whether general, limited, limited liability or joint venture), (c) member in a limited liability company, or (d) other Person having any other form of equity security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974.
Event of Default - as defined in Section 10.
Exchange Act - the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.
Exchange Offer - that certain offer by Borrower Representative, completed as of July 23, 2009, pursuant to which Borrower Representative exchanged $117,832,000 in aggregate principal amount of its 7.875% debentures maturing July 15, 2009 and $13,790,000 in aggregate principal amount of its 7.625% debentures maturing October 15, 2017 for $120,590,000 in aggregate principal amount of its 2009 Debentures.
Excluded Issuance - (a) sales or issuances of Equity Interests of Ultimate Parent to Sponsor or any other Person holding the Equity Interests of Ultimate Parent as of the Closing Date, (b) sales or issuances of Equity Interests of Borrower Representative or Ultimate Parent pursuant to any employee stock option or other equity-based compensation plan approved by the governing body of Borrower Representative or Ultimate Parent, respectively, and (c) any capital contribution by, or equity issuance to, any Person, the proceeds of which are used to make Permitted Investments or Permitted Acquisitions.
Excluded Tax - as defined in Section 5.6(a).
Extraordinary Expenses - all costs, expenses or advances that Collateral Agent or a Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of a Borrower (which shall be reasonable under the circumstances in which they are incurred), including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against any Lender, any Borrower, any
 
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representative of creditors of a Borrower or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Collateral Agent’s Liens with respect to any Collateral), Loan Documents or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of any Lender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; or (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations. Such costs, expenses and advances include transfer fees, taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Borrower or independent contractors in liquidating any Collateral, and travel expenses.
Extraordinary Receipts - any cash received by any Obligor or any of its Subsidiaries not in the ordinary course of business (and not consisting of Asset Loss Event proceeds described in Section 2.1.6(b) hereof), including, without limitation, (i) pension plan reversions, (ii) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (iii) indemnity payments and (iv) any purchase price adjustment received in connection with any purchase agreement, net of any withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to an Obligor.
Fee Letter - the fee letter agreement dated as of the date hereof between Collateral Agent and Borrowers.
Fiscal Month - one of the three fiscal periods in a Fiscal Quarter each of which is approximately one month in duration. There are 12 Fiscal Months in each Fiscal Year.
Fiscal Quarter - one of the four 13-week, or, if applicable, 14-week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on a Saturday of the thirteenth (or fourteenth, if applicable) week in such quarter.
Fiscal Year - the fiscal year of the Parent for financial accounting purposes. The current Fiscal Year will end on January 28, 2012.
Fixed Charge Coverage Ratio - the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except those financed with Permitted Debt (other than Revolver Debt or the Loans)) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrowers to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.
Fixed Charges - the sum, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated Net Interest Expense paid or payable in cash (and, for the avoidance of doubt, excluding those paid-in-kind
 
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or capitalized), plus (b) scheduled principal payments made on Debt in cash and earnout payments paid in cash (other than earnout payments made in Fiscal Year 2011 in an aggregate amount not to exceed $58,500,000 by Parent and its Subsidiaries with respect to the “Vince” brand).
FLSA - the Fair Labor Standards Act of 1938.
Foreign Lender - any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.
Foreign Plan - any employee benefit plan or arrangement maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States, or any employee benefit plan or arrangement mandated by a government other than the United States for employees of any Obligor or Subsidiary.
Foreign Subsidiary - a Subsidiary that is not a Domestic Subsidiary or an Immaterial Subsidiary.
Full Payment - with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding) and (b) a release of any Claims of Obligors against Collateral Agent and Lenders arising on or before the payment date.
Funding Losses - as defined in Section 3.9.
GAAP - generally accepted accounting principles in the United States in effect from time to time.
General Intangibles - as defined in the UCC, including choses in action, causes of action, company or other business records, inventions, blueprints, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, service marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer lists, permits, tax refund claims, computer programs, operational manuals, internet addresses and domain names, insurance refunds and premium rebates, all rights to indemnification, and all other intangible Property of any kind.
Governmental Approvals - all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.
Governmental Authority - any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.
Guarantor Payment - as defined in Section 5.8.3.
 
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Guarantors - each Person who guarantees payments or performance of any Obligations pursuant to Section 5.8 hereof and after the date hereof pursuant to a Joinder Agreement. It is understood that the Obligations shall not be guaranteed by any existing or future Foreign Subsidiary, including any Foreign Subsidiary of any Guarantor.
Hedging Agreement - an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.
Immaterial Subsidiaries - American Recreation Products International, Inc., a Delaware corporation, The Kellwood Foundation, an Illinois charitable foundation, Kellwood Financial Services, Inc., a Delaware corporation, XCSI, Inc., a Delaware corporation, Kellwood Retail Group, Inc., a Delaware corporation, MJF Imports, Inc., a New York corporation, Tri W Corporation, a North Carolina corporation, Halmode Apparel, Inc., a Delaware corporation, New Campaign, Inc., a Delaware corporation and any other Domestic Subsidiary formed or acquired after the Closing Date (a) which is designated as such by the Borrower Representative in a written notice delivered to the Lenders from time to time and (b) which does not (i) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America and (ii) have revenues in any Fiscal Year in excess of $1,000,000 unless such Immaterial Subsidiary has become a Borrower pursuant to Section 9.2.20 or is an Obligor under the Revolver Agreement.
Indemnified Taxes - as defined in Section 5.6(a).
Indemnitees - Agent Indemnitees, Lender Indemnitees and Cerberus Indemnitees.
Indenture - that certain Indenture dated September 30, 1997 by and between The Chase Manhattan Bank, as trustee, or any successor trustee and the Parent, as amended, supplemented or restated from time to time, pursuant to which certain debt securities have been issued by the Parent.
Insolvency Proceeding - any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to (a) the entry of an order for reorganization or other similar relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.
Insurance Assignment - each collateral assignment of insurance pursuant to which an Obligor assigns to Collateral Agent, for the benefit of the Lenders, such Obligor’s rights under business interruption or other insurance policies as Collateral Agent and Required Lenders reasonably deems it appropriate to be assigned, as security for the Obligations.
Intellectual Property - all intellectual and similar Property of a Person, including inventions, designs, patents, patent applications, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, registrations and franchises; all books and records describing or used in connection with the foregoing; and all licenses or other rights to use any of the foregoing.
 
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Intellectual Property Claim - any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Domestic Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Intellectual Property or other Property violates another Person’s Intellectual Property.
Intercreditor Agreement - that certain Intercreditor Agreement, dated as of October 19, 2011, by and among the Collateral Agent, the Revolving Credit Agent, the Parent and any other parties thereto.
Interest Period - with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Reference Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided , however , that (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2 or 3 months after the date on which the Interest Period began, as applicable, and (e) the Borrowers may not elect an Interest Period which will end after the Termination Date.
Inventory - as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in an Obligor’s business (but excluding Equipment).
Investment - any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.
IPO - a bona fide underwritten initial public offering of Equity Interests of Parent (or any other direct or indirect parent of Parent) pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission resulting in total gross proceeds received by Parent, Ultimate Parent (so long as Ultimate Parent is the direct or indirect parent of Parent) or other direct or indirect parent or any holder of the Equity Interests of Parent, Ultimate Parent (so long as Ultimate Parent is the direct or indirect parent of Parent) or such parent of at least $75,000,000.
 
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Joinder Agreement - an agreement substantially in the form of Exhibit E hereto by which a Domestic Subsidiary of Parent becomes a Borrower hereunder.
Lender Indemnitees - Lenders and their officers, directors, employees, Affiliates (other than an Obligor or any Subsidiary of an Obligor), agents and attorneys.
Lenders - as defined in the preamble to this Agreement, including any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.
Leverage Ratio - with respect to any Person and its Subsidiaries for any period, the ratio of (a) Indebtedness of such Person and its Subsidiaries the repayment of which is secured by a Lien on any Collateral (including, without limitation, the Revolver Debt and Capital Lease Obligations, but excluding the Sun Debt and excluding the obligations under the 2009 Indenture) outstanding as of the end of such period to (b) Consolidated EBITDA of such Person and its Subsidiaries for such period.
LIBOR - with respect to each day during each Interest Period pertaining to a LIBOR Rate Loan, the rate of interest published in The Wall Street Journal, Eastern Edition, two Business Days prior to such Interest Period as the “London Interbank Offered Rate” applicable to such Interest Period. In the event that The Wall Street Journal, Eastern Edition is not published or such rate does not appear in The Wall Street Journal, Eastern Edition, LIBOR shall be the rate determined by the Collateral Agent to be the rate at which deposits in Dollars are offered to major banks in the London interbank market, two Business Days prior to the beginning of such Interest Period, in an amount approximately equal to the principal amount of the LIBOR Rate Loan to which such Interest Period is to apply and for a period of time comparable to such Interest Period, which determination shall be conclusive absent manifest error.
LIBOR Deadline - as defined in Section 3.8(a).
LIBOR Notice - a written notice substantially in the form of Exhibit C.
LIBOR Option - as defined in Section 3.8(a).
LIBOR Rate - for each Interest Period for each LIBOR Rate Loan, the greater of (a) 1.50% per annum, and (b) the rate per annum determined by the Collateral Agent (rounded upwards if necessary, to the next 1/100%) by dividing (i) LIBOR for such Interest Period by (ii) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.
LIBOR Rate Loan - each portion of a Loan that bears interest at a rate determined by reference to the LIBOR Rate.
License - any license or agreement under which a Borrower is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.
Licensor - any Person from whom a Borrower obtains the right to use any Intellectual Property.
 
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Lien - any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.
Lien Waiver - an agreement, in form and substance reasonably satisfactory to Collateral Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit Collateral Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for Collateral Agent, and agrees to deliver the Collateral to Collateral Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Collateral Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Collateral Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Collateral Agent the right, vis-à-vis such Licensor, to enforce Collateral Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.
Loan (s) - the Term A Loan and the Term B Loan.
Loan Account - the loan account established by each Lender on its books pursuant to Section 5.5.
Loan Documents - this Agreement and the Other Agreements.
Loan Year - each calendar year commencing on the Closing Date and on each anniversary of the Closing Date.
Management Services Agreement - that certain Management Services Agreement dated as of May 29, 2008 by and between Parent and Sun Capital Partners Management V, LLC, as in effect on the date hereof.
Margin Stock - as defined in Regulation U of the Board of Governors.
Material Adverse Effect - the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, or condition (financial or otherwise) of Borrowers taken as a whole (provided that actions or transactions permitted hereunder, including Permitted Acquisitions, that reduce Excess Availability (as defined in the Revolver Agreement) shall not, in and of themselves, constitute a Material Adverse Effect), on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Collateral Agent’s Liens on any Collateral; (b) impairs the ability of Borrowers taken as a whole to repay the Obligations or materially impairs the ability of any Borrower to perform any other obligation under the Loan Documents, or (c) otherwise impairs the ability of any Lender to enforce or collect any Obligations or of the Collateral Agent to realize upon any Collateral.
 
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Material Contract - any agreement or arrangement to which an Obligor is party (other than the Loan Documents, the Revolver Loan Documents or the Sun Loan Documents) (a) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect, or (b) that relates to Subordinated Debt, Debt under the 2009 Indenture or Debt in an aggregate amount of $46,000,000 or more.
Moody’s - Moody’s Investors Service, Inc., and its successors.
Multiemployer Plan - any employee benefit plan or arrangement described in Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor.
Net Cash Proceeds - for any Person with respect to:
(a) any Asset Disposition, the aggregate cash proceeds (including cash proceeds received by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by such Person pursuant to such disposition, net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees); (ii) Taxes paid or reasonably estimated by such Person to be payable as a result thereof (after taking into account any available Tax credits or deductions and any Tax sharing arrangements and any Tax distributions reasonably expected to be made with respect thereto); (iii) withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to any Obligor or any of its Subsidiaries; (iv) amounts required to be applied to the repayment of any Debt secured by a Permitted Lien having priority over the Liens of Collateral Agent under and in accordance with the Other Documents on the asset subject to such disposition (other than the Obligations); (v) the direct costs relating to or associated with the relocation of assets; and (vi) any amount required to be provided by such Person, as a reserve, in accordance with GAAP against any liabilities associated with such disposition including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with any such Asset Disposition; provided , however , that the amount of any such reserve, at the time that such reserve is no longer required in accordance with GAAP and to the extent that such amount is not actually applied to the liability for which it was reserved, shall be deemed to be part of the Net Cash Proceeds of such disposition and remitted to Collateral Agent for application to the Loans in accordance with the terms of Section 2.1.7;
(b) any Asset Loss Event or Extraordinary Receipts, the aggregate cash proceeds received by such Person in connection therewith (other than cash proceeds constituting business interruption insurance), net of (i) the direct costs incurred in collecting such amount, (ii) Taxes paid or reasonably estimated by such Person to be payable as a result thereof (after taking into account any available Tax credits or deductions and any Tax sharing arrangements and any Tax distributions reasonably expected to be made with respect thereto); provided , however , that the amount of such Taxes paid in excess of any such estimate shall be deemed to be part of the Net Cash Proceeds of such disposition and remitted to Collateral Agent for application to the Loans in accordance with the terms of Section 2.1.7 and (iii) withholding or other Tax required to be paid on any distribution by such Person (other than an Obligor) to any Obligor or any of its Subsidiaries;
 
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(c) any sale or issuance of Equity Interests of any Person (other than Excluded Issuances), the aggregate cash proceeds received (directly or indirectly) by such Person pursuant to such sale or issuance, net of the direct costs relating to such sale, or issuance (including legal, accounting and investment banking fees and underwriting discounts); and
(d) any sale, issuance or incurrence of Debt by any Person, the aggregate cash proceeds received (directly or indirectly) by such Person pursuant to such sale, issuance or incurrence, net of the direct costs relating to such sale, or issuance (including legal, accounting and investment banking fees).
New Lending Office - as defined in Section 5.6(d).
Non-U.S. Lender - as defined in Section 5.6(d).
Notes - each Term A Note, Term B Note or other promissory note executed by a Borrower to evidence any Obligations.
Obligations - all (a) principal of and premium, if any, on the Loans, (b) interest (which shall include any capitalized interest), expenses, fees and other sums payable by Obligors under Loan Documents, (c) obligations of Obligors under any indemnity for Claims, (d) Extraordinary Expenses, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.
Obligor - each Borrower, any Guarantor and any other Person that is liable for payment of the Obligations or that has granted a Lien in favor of Collateral Agent on its assets to secure the Obligations.
OFAC - The Office of Foreign Assets Control of the U.S. Department of the Treasury.
OFAC Sanctions Programs - the laws, regulations and Executive Orders administered by OFAC, including but not limited to, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as it has been or shall thereafter be renewed, extended, amended, or replaced, and the list of Specially Designated Nationals and Blocked Persons administered by OFAC, as such list may be amended from time to time.
Ordinary Course of Business - the ordinary course of business of any Borrower or Subsidiary and undertaken in good faith.
Organic Documents - with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.
 
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OSHA - the Occupational Safety and Hazard Act of 1970.
Other Agreement - each Note, Fee Letter, Security Agreement, Compliance Certificate, Copyright Security Agreement, Patent Security Agreement, Trademark Security Agreement, financial statement, report delivered hereunder, 2009 Debenture Intercreditor Agreement, Intercreditor Agreement, Sun Intercreditor Agreement, or other document, instrument or agreement (other than this Agreement, the Revolver Loan Documents and the Sun Loan Documents) now or hereafter executed by an Obligor or other Person in favor of the Collateral Agent or a Lender in connection with any transactions relating hereto.
Other Taxes - as defined in Section 5.6(b).
Parent - as defined in the preamble to this Agreement.
Patriot Act - the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Participant Register - as defined in Section 12.3(g).
Patent Security Agreement - each patent security agreement pursuant to which an Obligor grants to Agent a Lien on such Obligor’s interests in its patents, as security for the Obligations.
Payment Item - each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.
Perfection Certificate - a certificate, in form and substance reasonably satisfactory to Collateral Agent, providing information with respect to the property of each Obligor as of the Closing Date.
Permitted Acquisition - any Acquisition effected with the consent and approval of the board of directors or other applicable governing body of the Person being acquired, and with the duly obtained approval of such shareholders or other holders of equity or other ownership interest as such Person may be required to obtain, so long as (a) immediately prior to and immediately after the consummation of such Acquisition, no Default or Event of Default has occurred and is continuing, (b) substantially all of the sales and operating profits generated by such Person (or assets) so acquired or invested are derived from a line or lines of business that are part of, or complementary, to the business as then conducted by Borrowers and Subsidiaries, (c) such Acquisition is otherwise permitted under the Revolver Agreement, (d) Availability after giving effect to such Acquisition exceeds $35,000,000, (e) the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries after giving pro forma effect to such Acquisition, calculated as if the same had occurred at the beginning of the applicable period, is greater than the actual Fixed Charge Coverage Ratio for such period, (f) the consideration for any Acquisition shall not exceed $25,000,000 (unless otherwise consented to by the Required Lenders), and the total aggregate consideration for all such Acquisitions during the term of this Agreement shall not
 
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exceed $50,000,000 (unless otherwise consented to by the Required Lenders), and (g) Borrower Representative shall have furnished to the Collateral Agent at least 5 Business Days prior to the consummation of such Acquisition (i) an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such Acquisition) and, thereafter, promptly after the request of Collateral Agent, such other information and documents that any Collateral Agent may reasonably request, including, without limitation, executed counterparts of the respective agreements, instruments or other documents 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, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith, (ii) pro forma financial statements of the Parent and its Subsidiaries after the consummation of such Acquisition, (iii) a certificate of the chief financial officer or the vice president and controller of the Parent, demonstrating on a pro forma basis compliance with all covenants set forth in Section   9.2.24 hereof after the consummation of such Acquisition, and (iv) copies of such other agreements, instruments or other documents (including, without limitation, the Other Documents required by Section 9.1.10 (unless otherwise agreed by Collateral Agent)) as Collateral Agent shall reasonably request.
Permitted Asset Disposition - an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) one or more dispositions of Equipment or Real Estate so long as the net book value, as determined in accordance with GAAP, in the aggregate for all such dispositions does not exceed $5,000,000 over the term of the Agreement; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) termination of a lease of real or personal Property or License that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) disposition of Investments of the type described in clause (c) of the definition of “Restricted Investments” in the ordinary course of management of the investment portfolio of Borrowers and Subsidiaries; (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens, (g) the sale of the Phat Farm business and related intellectual property, so long as no Event of Default exists and the gross cash proceeds from such sale are not less than $4,000,000, or (h) otherwise permitted under the Revolver Agreement, as in effect on the date hereof, provided, however, that no Event of Default exists and all Asset Dispositions pursuant to this clause (h) shall not exceed $2,500,000 in the aggregate during any Fiscal Year or $5,000,000 in the aggregate over the term of the Agreement.
Permitted Contingent Obligations - Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) guarantee obligations of a Borrower or any Domestic Subsidiary in respect of Debt or operating leases and other non-Debt obligations otherwise permitted under this Agreement of a Borrower or any wholly-owned Domestic Subsidiary.
 
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Permitted Discretion - a determination made in good faith and in the exercise of commercially reasonable (from the perspective of a secured second-lien lender) business judgment.
Permitted Distributions - Distributions to the extent permitted under Sections 9.2.17(g), (h) and (i).
Permitted Investment - investments described in clauses (a) - (i) of the definition of Restricted Investment.
Permitted Lien - as defined in Section 9.2.2.
Permitted Purchase Money Debt - Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, provided that the aggregate outstanding amount of such Purchase Money Debt shall not exceed $5,000,000 at any time.
Person - any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.
Plan - an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and that is either (a) maintained by an Obligor for employees or (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which an Obligor is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions.
Pro Rata - with respect to any Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the amount of such Lender’s Loan amount as set forth on Schedule 1.1 by all outstanding Loans.
Properly Contested - with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or such Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any Collateral of such Obligor with a value in excess of $250,000; (e) no Lien is imposed on Collateral of such Obligor, unless bonded and stayed to the satisfaction of the Required Lenders; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.
Property - any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
 
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Purchase Money Debt - (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets which does not exceed on the date of acquisition the cost or fair market value, whichever is lower, of the Property being acquired on the date of acquisition; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) of items described in the preceding clauses (a) and (b).
Purchase Money Lien - a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.
RCRA - the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate - all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.
Reference Bank - JPMorgan Chase Bank, its successors or any other commercial bank designated by the Collateral Agent to the Borrower Representative from time to time.
Reference Rate - the greater of (a) the rate of interest publicly announced by the Reference Bank in New York, New York from time to time as its reference rate, base rate or prime rate and (b) 5.00%. The reference rate, base rate or prime rate is determined from time to time by the Reference Bank as a means of pricing some loans to its borrowers and neither is tied to any external rate of interest or index nor necessarily reflects the lowest rate of interest actually charged by the Reference Bank to any particular class or category of customers. Each change in the Reference Rate shall be effective from and including the date such change is publicly announced as being effective.
Reference Rate Loan - each portion of a Loan that bears interest at a rate determined by reference to the Reference Rate.
Refinancing Conditions - the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount (including, any capitalized interest with respect thereto that does not exceed the principal amount (to the extent such interest was permitted to be capitalized hereunder)) of the Debt being extended, renewed or refinanced; (b) if the original Debt was subordinated to the Obligations, it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (c) the representations, covenants and defaults applicable to it are no less favorable in any material respect to Obligors than those applicable to the Debt being extended, renewed or refinanced; (d) no Lien is granted to secure it other than Liens securing the original Debt; (e) if the original Debt was the obligation of a Foreign Subsidiary, no Obligor becomes obligated on such Debt; (f) upon giving effect to it, no Default or Event of Default exists; (g) (i) if the Stated Maturity of the Debt being extended, renewed or refinanced is earlier than the Stated Maturity of the Obligations, it has a Stated Maturity no earlier than the Stated Maturity of the Debt being extended, renewed or refinanced, or (ii) if the Stated Maturity of the Debt being extended, renewed or refinanced is later than the Stated Maturity of the Obligations, it has a Stated Maturity at least 91 days later than the Stated
 
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Maturity of the Obligations, and (h) it has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Debt being extended, renewed or refinanced.
Refinancing Debt - Debt that is the result of an extension, renewal or refinancing of Debt permitted under Section 9.2.1(b), (d) or (i).
Register - as defined in Section 12.3(d).
Registered Loan - as defined in Section 12.3(d).
Related Fund - with respect to any Person, an Affiliate of such Person, or a fund or account managed by such Person or an Affiliate of such Person.
Reportable Event - any event set forth in Section 4043(b) of ERISA.
Required Lenders - the Lenders having Loans in excess of 51% of all outstanding Loans.
Reserve Percentage - on any day, for any Lender, the maximum percentage prescribed by the Board of Governors (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.
Responsible Officer - with respect to all certificates and financial matters hereunder, President, Chief Executive Officer, and Chief Financial Officer of a Borrower (the “ Principal Responsible Officers ”) and, with respect to all notices and other matters hereunder, any Principal Responsible Officer, the Vice President, Finance and Controller, Vice President, Treasurer or General Counsel of the Borrower Representative or any other officer expressly designated by the Board of Directors of the Borrower Representative (or the appropriate committee thereof) or a Principal Responsible Officer as a Responsible Officer of the Borrower Representative. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower Representative shall be conclusively presumed to have been authorized by all necessary corporate and/or other action on the part of the Borrower Representative and each other Borrower on whose behalf it is delivered and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower Representative and each such Borrower.
Restricted Investment - any Investment by an Obligor, other than (a) Investments (other than those permitted by clause (b) through (g)  of this definition) that are existing on the Closing Date and are listed on Schedule 9.2.5; (b) Investments in Subsidiaries to the extent existing on the Closing Date; (c) cash and Cash Equivalents that are subject to Collateral Agent’s Lien and control (subject to the Intercreditor Agreement); provided that cash consisting of collected funds and Cash Equivalents held by the Obligors shall not exceed $10,000,000 in the aggregate (excluding amounts held in employee trust accounts) for more than three (3) consecutive Business Days so long as any Revolver Debt is outstanding, (d) loans, advances and
 
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credit extensions permitted under Section 9.2.7; (e) Investments of (i) any Subsidiary in a Borrower or (ii) any Obligor in another Obligor or (iii) any Subsidiary which is not an Obligor in another Subsidiary which is not an Obligor; (f) with respect to any Obligor, Permitted Acquisitions; (g) Investments permitted by Section 9.2.9; (h) other Investments and Acquisitions consummated after the Closing Date by any Subsidiary which is not an Obligor which Investments or Acquisitions do not contain any Contingent Obligations, or any direct or contingent liabilities, of any Obligor and which have not been financed in whole or in part by any Obligor and (i) any other Investment permitted under the Revolver Agreement, as in effect on the date hereof, so long as after giving effect to such Investment, Availability exceeds $12,500,000 and Borrowers’ accounts payable are not being extended in a manner inconsistent with past business practices, and provided that all such Investments made pursuant to this clause (i) shall not exceed $5,000,000 in the aggregate during the term of the Agreement.
Restrictive Agreement - an agreement (other than a Loan Document, Revolver Loan Document or Sun Loan Document) that conditions or restricts the right of any Borrower, Domestic Subsidiary or other Obligor to incur or repay the Obligations, to grant Liens on the Collateral, to declare or make Distributions to an Obligor, to modify, extend or renew the Obligations, or to repay any intercompany Debt owed to an Obligor.
Revolver Agreement - that certain Credit Agreement dated as of October 19, 2011, among the Parent and its Domestic Subsidiaries from time to time party thereto, the financial institutions party thereto and Wells Fargo Bank, N.A., as agent for the Lenders (as defined therein), as amended, restated, supplemented, refunded, refinanced or otherwise modified from time to time, subject in each case to the terms of this Agreement and the Intercreditor Agreement.
Revolver Debt - the ‘Obligations’ as defined in the Revolver Agreement (other than part (f) of such definition), as in effect on the date hereof or as amended, restated, supplemented, refunded, refinanced or otherwise modified from time to time in a manner consistent with the terms of the Intercreditor Agreement.
Revolver Guaranty - the guaranty of each Person who guarantees the Revolver Debt.
Revolver Loan Documents - ‘Loan Documents’ as defined in the Revolver Agreement, as in effect on the date hereof or as amended, restated, supplemented, refunded, refinanced or otherwise modified from time to time in a manner consistent with the terms of the Intercreditor Agreement.
Revolver Security Documents - ‘Security Documents’ as defined in the Revolver Agreement, as in effect on the date hereof or as amended, restated, supplemented, refunded, refinanced or otherwise modified from time to time in a manner consistent with the terms of the Intercreditor Agreement.
Revolving Credit Agent - Wells Fargo Bank, National Association, in its capacity as Agent under the Revolver Agreement.
 
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Royalties - all royalties, fees, expense reimbursement and other amounts payable by an Obligor under a License.
S&P - Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Security Agreement - the security agreement dated as of the date hereof made by each Obligor in favor of the Collateral Agent, for the benefit of the Collateral Agent and the Lenders, securing the Obligations.
Solvent - as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any loan documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.
Sponsor - Sun Capital Partners, Inc. or any of its Affiliates.
Stated Maturity - with respect to any installment of interest or principal on any series of Debt, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Debt as of the date of this Agreement, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
Subordinated Debt - Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations in a manner and form satisfactory to Required Lenders, and is unsecured and does not amortize prior to the Termination Date.
Subsidiary - any entity at least 50% of whose voting securities or Equity Interests is owned by an Obligor or any combination of Obligors (including indirect ownership by an Obligor through other entities in which such Obligor directly or indirectly owns 50% of the voting securities or Equity Interests).
Sun Collateral Agent - Sun Kellwood Finance, LLC, as collateral agent under the Sun Last Out Term A Loan Agreement and the Sun Last Out Term B/C/D Loan Agreement.
Sun Debt - the ‘Obligations’ as defined in each of the Sun Last Out Term A Loan Agreement and the Sun Last Out Term B/C/D Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Sun Intercreditor Agreement.
 
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Sun Intercreditor Agreement - that certain Intercreditor Agreement, dated as of October 19, 2011, by and among the Collateral Agent, the Revolving Credit Agent, the Sun Collateral Agent, the Parent and any other parties thereto.
Sun Last Out Term A Loan Agreement - that certain Amended and Restated Term Loan Agreement, dated as of October 19, 2011, by and among Parent, Borrowers, the other obligors party thereto, SCSF Kellwood Finance LLC, Sun Kellwood Finance, LLC and the Sun Collateral Agent.
Sun Last Out Term B/C/D Loan Agreement - that certain Third Amended and Restated Term Loan Agreement, dated as of October 19, 2011, by and among Parent, Borrowers, the other obligors party thereto, SCSF Kellwood Finance LLC, Sun Kellwood Finance, LLC and the Sun Collateral Agent.
Sun Lenders - the lenders party to the Sun Last Out Term A Loan Agreement and the lenders party to the Sun Last Out Term B/C/D Loan Agreement.
Sun Loan Documents - ‘Loan Documents’ as defined in each of the Sun Last Out Term A Loan Agreement and the Sun Last Out Term B/C/D Loan Agreement, as in effect on the date hereof or as amended or modified in a manner consistent with the terms of the Sun Intercreditor Agreement.
Taxes - any taxes, levies, imposts, duties, fees, assessments, deductions, withholdings or other charges of whatever nature, including income, receipts, excise, property, sales, use, transfer, license, payroll, withholding, social security, franchise, intangibles, stamp or recording taxes imposed by any Governmental Authority, and all interest, penalties and similar liabilities relating thereto.
Term A Loans - the loans made pursuant to Section 2.1.1 of this Agreement on the Closing Date. The amount of each Lender’s Pro Rata share of the Term A Loans as of the Closing Date is set forth on Schedule 1.1(A).
Term B Loans - the loans made pursuant to Section 2.1.2 of this Agreement on the Closing Date. The amount of each Lender’s Pro Rata share of the Term B Loans as of the Closing Date is set forth on Schedule 1.1(B).
Term A Notes - a promissory note executed by Borrowers on the Closing Date in favor of a Lender in the form of Exhibit A, evidencing the amount of such Lender’s Term A Loan amount as set forth on Schedule 1.1A.
Term B Notes - a promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit A, which shall evidence the amount of such Lender’s Term B Loan amount as set forth on Schedule 1.1B.
Termination Date - the earliest of (a) October 19, 2015, (b) the date on which the Revolver Debt under the Revolver Agreement has been paid in full in cash and all commitments
 
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to lend under the Revolver Agreement have been terminated; (c) 60 days prior to the scheduled maturity date of the 2009 Debentures (including any extensions thereof agreed to after the Closing Date), and (d) the date on which all the Term A Loans, Term B Loans and Obligations are accelerated pursuant to Section 10.2.
Trademark Security Agreement - each trademark security agreement pursuant to which an Obligor grants to Agent a Lien on such Obligor’s interests in trademarks, as security for the Obligations.
Transferee - any actual or potential assignee, participant or other Person acquiring an interest in any Obligations.
UCC - the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.
Ultimate Parent - Kellwood Holding Corp., a Delaware corporation.
Upstream Payment - a Distribution by a Subsidiary of a Borrower to such Borrower.
U.S. Foreign Holdco - any Domestic Subsidiary, the assets of which (other than de minimis assets) consist of stock or securities of a Foreign Subsidiary.
U.S. Lender - as defined in Section 5.6(d).
Weighted Average Life to Maturity - when applied to any Debt at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Debt, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Debt.
1.2 Accounting Terms . Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to the Lenders before the Closing Date and using the same inventory valuation method as used in such financial statements. If GAAP changes during the term of this Agreement, or if the Borrowers interpret or apply GAAP differently (and Borrowers’ certified public accountants concur in such interpretation or application) from how it was interpreted or applied in preparing the financial statements provided to the Lenders prior to the Closing Date, such that any financial ratios or covenants contained herein would then be calculated in a different manner or with different components, then Borrowers shall provide the Lenders with prior written notice of any such changes and upon the request of either the Borrowers or the Lenders, the Borrowers and the Lenders agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those financial ratios or covenants as criteria for evaluating the Obligors’ financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided, however, that, until the Borrowers, the Required Lenders (or the Lenders, to the extent provided in Section 13.1 ) so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change.
 
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1.3 Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Lenders’ notice addresses under Section 13.3.1; or (g) discretion of any Lender mean the sole and absolute discretion of such Person. All calculations of fundings of the Loans, and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.
 
Section 2.	CREDIT FACILITIES	
2.1 Term Loans Term A Loans. Each Lender agrees, severally to make a Term A Loan to the Borrowers on the date hereof, on the terms set forth herein and in the amounts set forth on Schedule 1.1A hereto.
2.1.2 Term B Loans . Each Lender agrees, severally to make a Term B Loan to the Borrowers on the date hereof, on the terms set forth herein and in the amounts set forth on Schedule 1.1B hereto.
2.1.3 Term Notes . The Term A Loans and Term B Loans made by each Lender and interest accruing thereon shall be evidenced by the records of such Lender. At the request of any Lender, Borrowers shall deliver a Term A Note or a Term B Note in the principal amount equal to such Lender’s Term A Loans or Term B Loans, as applicable, to such Lender.
2.1.4 Use of Proceeds . The proceeds of the Loans shall be used by Borrowers, in the case of the Term A Loan, to finance the payments of certain earnouts relating to past acquisitions and/or the funding of Permitted Acquisitions, and in the case of the Term B Loan, for working capital and liquidity purposes and/or to finance the payments of certain earnouts relating to past acquisitions and/or the funding of Permitted Acquisitions.
 
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2.1.5 Voluntary Prepayments .
Borrowers may at any time on at least five (5) days’ prior written notice by Borrower Representative to each Lender voluntarily prepay all or part of the Loans; provided that any such prepayments or reductions shall be in a minimum amount of $500,000 and integral multiples of $250,000 in excess of such amount.
2.1.6 Mandatory Prepayments . Subject to the terms of the Intercreditor Agreement,
(a) Upon the occurrence of a Change of Control, the Borrowers shall make Full Payment of all Obligations.
(b) When an Obligor or any Subsidiary thereof (other than a Foreign Subsidiary) makes any Asset Disposition (other than a disposition described under clause (a), (b), (c), (d), (e), (f) or (g) of the definition of “Permitted Asset Disposition” hereof) or experiences any Asset Loss Event, the Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds thereof, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such Net Cash Proceeds shall be held in trust for Collateral Agent; provided , however , that the Net Cash Proceeds of the foregoing received since the Closing Date shall not be required to be applied to the prepayment of the Loans to the extent such proceeds are to be reinvested in or otherwise used to replace, repair or restore the properties or assets used in such Obligor’s or such Subsidiary’s, as applicable, business and so long as: (i) no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (ii) Borrower Representative delivers a certificate to Collateral Agent within three (3) Business Days after such Asset Disposition or ten (10) Business Days after the occurrence of Asset Loss Event (as applicable), stating that such Net Cash Proceeds shall be used (or committed to be used) to reinvest in new assets useful in the business, or otherwise replace, repair or restore any such properties or assets to be used in such Obligor’s or such Subsidiaries’ business, as the case may be, within a period specified in such certificate not to exceed 270 days (or such longer period as Collateral Agent may agree, but not to exceed 360 days without the Required Lenders’ consent) after the receipt of such proceeds (which certificate shall set forth estimates of the proceeds to be so expended and shall set forth in reasonable detail any plans for such replacement, repair or restoration, which shall be acceptable to Collateral Agent in its Permitted Discretion) and (iii) such Net Cash Proceeds are deposited in a non-interest bearing account subject to the dominion and control of Collateral Agent (or, so long as the Revolver Agreement is in effect, the Revolving Credit Agent, acting as agent for Collateral Agent) which proceeds shall then be disbursed by Collateral Agent to such Obligor or such Subsidiary promptly upon Borrower Representative’s written request therefor setting forth in reasonable detail the use of such proceeds and certifying that such proceeds are being applied in the manner set forth in the certificate delivered to Collateral Agent in accordance with clause (ii); provided , further , that (A) if all or any portion of such Net Cash Proceeds not so applied to the prepayment of the Loans are not used (or committed to be used) in accordance with the foregoing proviso within 270 days (or such longer period as Collateral Agent may agree, but not to exceed 360 days without the Required Lenders’ consent) of receipt of such Net Cash Proceeds, such amount shall be applied to the Loans as otherwise set forth herein, on the last day of such specified period, (B) if such Obligor or such Subsidiary, as the case may be, is not permitted to reinvest or utilize such Net
 
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Cash Proceeds in accordance with this Section 2.1.6(b) as a result of the existence of a Default, Borrower Representative may request, and upon the written approval of Collateral Agent, such Net Cash Proceeds shall be deposited in a non-interest bearing account subject to the dominion and control of Collateral Agent (or, so long as the Revolver Agreement is in effect, the Revolving Credit Agent, acting as agent for Collateral Agent) until the earlier of (x) the date on which such Default is cured or waived in writing in accordance with the terms of this Agreement, in which case such amounts may be reinvested or utilized in accordance with the proviso above and (y) the date on which an Event of Default shall occur, in which case such Net Cash Proceeds shall be applied to the Loans in accordance with Section 5.4.1 on such date and (C) if such Obligor or such Subsidiary, as the case may be, is not permitted to reinvest or utilize such net cash proceeds as a result of a continuing Event of Default, such Net Cash Proceeds shall be applied in accordance with Section 5.4.1. The foregoing shall not be deemed to be implied consent to any Asset Disposition or other event otherwise prohibited by the terms and conditions hereof.
(c) Upon the sale or issuance of any of the Equity Interests (other than Excluded Issuances) of Ultimate Parent or any of its Subsidiaries, Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds of such sale or issuance, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such Net Cash Proceeds shall be held in trust for Collateral Agent.
(d) Upon the sale, issuance or incurrence of any Debt of any Obligor or any of its Subsidiaries (other than Debt permitted under Section 9.2.1 ), Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds of such sale, issuance or incurrence, such repayments to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds, and until the date of payment, such proceeds shall be held in trust for Collateral Agent. The foregoing shall not be deemed to be implied consent to any such sale, issuance or incurrence otherwise prohibited by the terms and conditions hereof.
(e) When any Obligor or any Subsidiary (other than a Foreign Subsidiary) thereof receives any Extraordinary Receipts, Borrowers shall repay the Loans in an amount equal to 100% of the Net Cash Proceeds thereof, such repayment to be made promptly but in no event more than five (5) Business Days following receipt of such Net Cash Proceeds. The foregoing shall not be deemed to be implied consent to any event or condition giving rise to any Extraordinary Receipts which would otherwise constitute a Default or Event of Default under this Agreement.
2.1.7 Application of Prepayments .
Notwithstanding anything in Section 2.1.6 to the contrary, Borrowers shall not be obligated to prepay the Loans pursuant to Section 2.1.6(b) through (e), to the extent that the Net Cash Proceeds received by any Obligor are applied to prepay the Revolver Debt together with a concurrent permanent reduction of the Revolver Commitment (as defined in the Revolver Agreement) and the Revolving Credit Agent has established a permanent reserve against the Borrowing Base (as defined in the Revolver Agreement) in an amount equal to the amount of such prepayment. Any prepayment made pursuant to Section 2.1.5 or Section 2.1.6 shall be accompanied by (i) accrued interest on the principal amount being prepaid to the date of
 
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prepayment, (ii) any Funding Losses payable pursuant to Section 3.9, (iii) the Applicable Prepayment Premium, if any, payable in connection with such prepayment of the Loans and (iv) if such prepayment would reduce the amount of the outstanding Loans to zero, such prepayment shall be accompanied by the payment of all fees accrued to such date pursuant to Section 3.2.
 
Section 3.	INTEREST, FEES AND CHARGES	
3.1 Rates and Payment of Interest Subject to the terms of this Agreement, at the option of the Borrower Representative, the Loans shall bear interest on the principal amount thereof from time to time outstanding, from the date of the Loans until repaid, at a rate per annum equal to (i) in the case of LIBOR Rate Loans, the LIBOR Rate for the Interest Period in effect for the Loans (or such portion thereof) plus the Applicable Margin, or (ii) in the case of Reference Rate Loans, the Reference Rate plus the Applicable Margin.
(b) During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if the Collateral Agent or the Required Lenders in their discretion so elect, Obligations shall bear interest at a rate equal to the rates set forth in Section 3.1(a) plus 2.0% (the “ Default Rate ”). Each Borrower acknowledges that the cost and expense to each Lender due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate the Lenders for such added cost and expense.
(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of the following month, (ii) on any date of prepayment, with respect to the principal amount of the Loans being prepaid; and (iii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.
3.2 Fees .
(a) In the event of the termination of this Agreement and repayment of the Obligations in full at any time prior to October 19, 2015, for any reason, including (i) termination upon the election of the Required Lenders after the occurrence and during the continuation of an Event of Default, (ii) foreclosure and sale of Collateral, (iii) sale of the Collateral in any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise of the Obligations by the confirmation of a plan of reorganization or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Collateral Agent and the Lenders or profits lost by the Collateral Agent and the Lenders as a result of such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Collateral Agent and the Lenders, the Borrowers shall pay to the Collateral Agent, for the account of the Lenders in accordance with their respective Pro Rata shares, the Applicable Prepayment Premium (if any), measured as of the date of such termination; provided, however, that notwithstanding anything to the contrary set forth in this Agreement, no Applicable Prepayment Premium shall be payable in connection with the Full Payment of the Obligations resulting from an IPO of any Borrower or the sale of substantially all of the assets or a division of any Borrower.
 
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(b) As and when due and payable under the terms of the Fee Letter, the Borrower shall pay the fees set forth in the Fee Letter.
3.3 Computation of Interest and Yield Protection . All computations of interest shall be computed for the actual days elapsed, based on a 360-day year. Each determination by the Lenders of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
3.4 Reimbursement Obligations Borrowers shall reimburse Collateral Agent and Lenders, without duplication, for all Extraordinary Expenses. Borrowers shall also reimburse the Collateral Agent and each Lender for all reasonable out-of-pocket and invoiced legal fees (which invoice may omit information that such counsel reasonably deems privileged) and all reasonable out-of-pocket accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Collateral Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 9.1.1, each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Collateral Agent’s or Lender’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Collateral Agent’s or a Lender’s professionals at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Collateral Agent, any Lender or any of their Affiliates (other than an Obligor or any Subsidiary of an Obligor) may have with such professionals with respect to this or any other transaction. All amounts reimbursable by Borrowers under this Section shall constitute Obligations secured by the Collateral and shall be payable on demand.
3.5 Capital Adequacy . If a Lender determines that any introduction of or any change in a Capital Adequacy Regulation, any change in the interpretation or administration of a Capital Adequacy Regulation by a Governmental Authority charged with interpretation or administration thereof, or any compliance by such Lender or any Person controlling such Lender with a Capital Adequacy Regulation, increases the amount of capital required or expected to be maintained by such Lender or Person (taking into consideration its capital adequacy policies and desired return on capital) as a consequence of such Lender’s Loans or other Obligations under the Loan Documents, then Borrowers shall, within five days following demand therefor, pay such Lender an amount sufficient to compensate for such increase. A Lender’s demand for payment (delivered to Borrower Representative) shall set forth the nature of the occurrence giving rise to such compensation and a calculation of the amount to be paid. In determining such amount, the Lender may use any reasonable averaging and attribution method.
3.6 Mitigation . Each Lender agrees that (a) upon becoming aware that it is subject to Section 3.5 or 5.6 , it will take reasonable measures to reduce Borrowers’ obligations under such Sections, including funding or maintaining its Loans through another office, as long as use of such measures would not adversely affect the Lender’s Loans, business or interests, and would not be inconsistent with any internal policy or applicable legal or regulatory restriction and (b) Borrowers shall have no obligation to reimburse any Lender under Sections 3.5 or 5.6 for costs or taxes incurred more than 90 days prior to notice to Borrower Representative with respect thereto.
 
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3.7 Maximum Interest . In no event shall interest, charges or other amounts that are contracted for, charged or received by the Lenders pursuant to any Loan Documents and that are deemed interest under Applicable Law (“ interest ”) exceed the highest rate permissible under Applicable Law (“ maximum rate ”). If, in any month, any interest rate, absent the foregoing limitation, would have exceeded the maximum rate, then the interest rate for that month shall be the maximum rate and, if in a future month, that interest rate would otherwise be less than the maximum rate, then the rate shall remain at the maximum rate until the amount of interest actually paid equals the amount of interest which would have accrued if it had not been limited by the maximum rate during prior periods. If, upon Full Payment of the Obligations, the total amount of interest actually paid under the Loan Documents is less than the total amount of interest that would, but for this Section, have accrued under the Loan Documents, then Borrowers shall, to the extent permitted by Applicable Law, pay to each Lender (a) the lesser of (i) the amount of interest that would have been charged if the maximum rate had been in effect at all times, or (ii) the amount of interest that would have accrued had the interest rate otherwise set forth in the Loan Documents been in effect, minus (b) the amount of interest actually paid under the Loan Documents. If a court of competent jurisdiction determines that any Lender has received interest in excess of the maximum amount allowed under Applicable Law, such excess shall be deemed received on account of, and shall automatically be applied to reduce, Obligations other than interest (regardless of any erroneous application thereof by any Lender), and upon Full Payment of the Obligations, any balance shall be refunded to Borrowers. In determining whether any excess interest has been charged or received by any Lender, all interest at any time charged or received from Borrowers in connection with the Loan Documents shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Obligations.
3.8 LIBOR Option .
(a) In lieu of having interest charged at the rate based upon the Reference Rate, the Borrowers shall have the option (the “ LIBOR Option ”) to have interest on all or a portion of the Loans be charged at a rate of interest based upon the LIBOR Rate. On the last day of each applicable Interest Period, unless the Borrowers properly have exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loans automatically shall convert to the rate of interest then applicable to Reference Rate Loans. The Borrowers may, at any time and from time to time, elect to exercise the LIBOR Option by notifying the Collateral Agent prior to 11:00 a.m. (New York City time) at least 3 Business Days prior to (i) the commencement of the proposed Interest Period or (ii) in the case of the conversion of a LIBOR Rate Loan into a Reference Rate Loan, the last day of the then current Interest Period (the “ LIBOR Deadline ”). Notice of the Borrowers’ election of the LIBOR Option for a permitted portion of the Loans and an Interest Period pursuant to this subsection (a) shall be made by delivery to the Collateral Agent of a LIBOR Notice received by the Collateral Agent before the LIBOR Deadline, or by telephonic notice received by the Collateral Agent before the LIBOR Deadline (to be confirmed by delivery to the Collateral Agent of a LIBOR Notice received by the Collateral Agent prior to 5:00 p.m. (New York City time) on the same day). Promptly upon its receipt of each such LIBOR Notice, the Collateral Agent shall provide a copy thereof to each of the Lenders. Each LIBOR Notice shall be irrevocable and binding on the Borrowers.
 
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(b) Notwithstanding anything to the contrary contained in this Agreement, the Borrowers (i) shall have not more than 3 LIBOR Rate Loans in effect at any given time, and (ii) only may exercise the LIBOR Option for LIBOR Rate Loans of at least $500,000 and integral multiples of $100,000 in excess thereof.
(c) The Borrowers may prepay LIBOR Rate Loans at any time; provided , however , that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any mandatory prepayment pursuant to Section 2.1.6 or any application of payments or proceeds of Collateral in accordance with Section 5.4 or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, the Borrowers shall indemnify, defend, and hold the Collateral Agent and the Lenders and their participants harmless against any and all Funding Losses in accordance with Section 3.9.
3.9 Funding Losses . In connection with each LIBOR Rate Loan, the Borrowers shall jointly and severally indemnify, defend, and hold the Collateral Agent and the Lenders harmless against any loss, cost, or expense incurred by the Collateral Agent or any Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of a Default or an Event of Default, or (b) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses, collectively, “ Funding Losses ”). Funding Losses shall, with respect to the Collateral Agent or any Lender, be deemed to equal the amount reasonably determined by the Collateral Agent or such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period therefor), minus (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which the Collateral Agent or such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of the Collateral Agent or a Lender delivered to the Borrower Representative setting forth any amount or amounts that such Agent or such Lender is entitled to receive pursuant to this Section 3.9 shall be conclusive absent manifest or demonstrable error.
3.10 Changes in Law; Impracticability or Illegality .
(a) The LIBOR Rate may be adjusted by the Collateral Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period (except changes in Indemnified Taxes and Excluded Taxes covered by Section 6.5 ) and changes in the reserve requirements imposed by the Board of Governors (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give the Borrower Representative and the Collateral Agent notice of such a determination and adjustment and the Collateral Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, the Borrower Representative may, by notice to
 
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such affected Lender (i) require such Lender to furnish to the Borrower Representative a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (ii) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any amounts due under Section 3.9 ).
(b) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation or application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to the Borrower Representative and the Collateral Agent, and the Collateral Agent promptly shall transmit the notice to each other Lender. In the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Reference Rate Loans of the same type hereunder, and the Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.
3.11 No Requirements to Match Fund. Anything to the contrary contained herein notwithstanding, neither the Collateral Agent nor any Lender, nor any of their participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Section 3 shall apply as if each Lender or its participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.
 
Section 4.	LOAN ADMINISTRATION	
4.1 Borrower Representative . Each Borrower hereby designates the Borrower Representative as its representative and agent for all purposes under the Loan Documents, including delivery or receipt of communications with the Collateral Agent any Lender, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with the Collateral Agent or any Lender. Borrower Representative hereby accepts such appointment. Collateral Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication delivered by Borrower Representative on behalf of any Borrower. Lenders may send any notice or communication with a Borrower hereunder to Borrower Representative on behalf of such Borrower. The Collateral Agent and the Lenders shall have the right, in its discretion, to deal exclusively with Borrower Representative for any or all purposes under the Loan Documents. Each Borrower agrees that any notice election, communication, representation, agreement or undertaking made on its behalf by Borrower Representative shall be binding upon and enforceable against it.
4.2 One Obligation . The Loans and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Collateral Agent’s Lien upon all Collateral; provided , however that Collateral
 
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Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.
4.3 Effect of Termination . On the Termination Date, all Obligations shall be immediately due and payable. All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Collateral Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, Collateral Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Collateral Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Collateral Agent receives (a) a written agreement, executed by Borrower Representative and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Collateral Agent and Lenders from any such damages; or (b) such Cash Collateral as Collateral Agent, in its discretion, deems necessary to protect against any such damages. The provisions of Sections 3.3, 3.4, 3.9, 5.3, 5.6, 11,13.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.
 
Section 5.	PAYMENTS	
5.1 General Payment Provisions . All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Taxes except as set forth in Section 5.6, and in immediately available funds, not later than 12:00 noon on the due date. Any payment after such time shall be deemed made on the next Business Day. Borrower Representative may, at the time of payment, specify to each Lender the Obligations to which such payment is to be applied, but each Lender shall in all events retain the right to apply such payment in such manner as the Lenders, subject to the provisions hereof, may determine to be appropriate. If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees. All payments received by the Lenders pursuant to this Agreement shall be applied in accordance with such Lender’s applicable Pro Rata portion of the aggregate outstanding Loans as of such date.
5.2 Payment of Other Obligations . Subject to the Intercreditor Agreement, Obligations other than the Loans, including Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.
5.3 Marshaling: Payments Set Aside . None of the Collateral Agent or the Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any Obligor makes a payment to the Lenders, or if Collateral Agent or any Lender receives payment from the proceeds of Collateral, exercise of setoff or otherwise, and such payment is subsequently invalidated or required to be repaid to a trustee, receiver or any other Person, then the Obligations originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been received and any enforcement or setoff had not occurred.
 
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5.4 Post-Default Allocation of Payments .
5.4.1 Allocation . Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows and subject to the Intercreditor Agreement:
(a) first , to all costs and expenses, including Extraordinary Expenses and any Collateral Agent Advances made by Collateral Agent with respect to the Collateral under or pursuant to the terms of this Agreement, in each case, owing to Collateral Agent and then to Lenders;
(b) second , to all Obligations constituting unpaid fees;
(c) third , to all Obligations constituting accrued and unpaid interest; and
(d) last , to all other Obligations.
Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a Pro Rata basis among the Obligations in the category. The allocations set forth in this Section are solely to determine the rights and priorities of the Collateral Agent and Lenders as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.
5.4.2 Erroneous Application . Collateral Agent and the Lenders shall not be liable for any application of amounts made by it/them in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).
5.5 Loan Account: Account Stated .
5.5.1 Loan Account . Each Lender shall maintain in accordance with its usual and customary practices an account or accounts (“ Loan Account ”) evidencing the Debt of Borrowers resulting from each Loan. Any failure of a Lender to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Each Lender may maintain a single Loan Account in the name of the Borrower Representative for such Lender’s Loans, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.
5.5.2 Entries Binding . Entries made in a Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Accounts is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies the applicable Lender in writing within 60 days after receipt or inspection that specific information is subject to dispute.
 
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5.6 Taxes . (a) Any and all payments made by Borrowers hereunder or under any Other Agreement shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, except for (i) taxes imposed on the net income or similar measure (or taxes imposed in lieu thereof) of Collateral Agent or any Lender (or any Transferee) or, in the case of a pass-through entity, any of its beneficial owners by the United States or the jurisdiction in which such Person is organized or has its principal lending office or in which its applicable lending office is located, or with which such person has any other present or former connection (other than a connection arising solely from entering into, receiving any payment under or enforcing its rights under this Agreement or any Other Agreement), or (ii) any branch profits imposed by the United States or any similar tax imposed by any other jurisdiction in which any Borrower is located, together with all interest, penalties and additions to Tax thereon (each such tax, together with all interest, penalties and additions to tax thereon, an “ Excluded Tax ”), (all nonexcluded taxes, levies, imposts, deductions, charges withholdings and liabilities, collectively or individually, imposed on any payment by Borrowers or on account of any Obligation hereunder, “ Indemnified Taxes ”). If Borrowers shall be required to deduct or withhold any Indemnified Taxes from or in respect of any sum payable hereunder to Collateral Agent or any Lender (or any Transferee), (i) the sum payable shall be increased by the amount (an “ Additional Amount ”) necessary so that after making all such required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.6 ) Collateral Agent or such Lender (or such Transferee) shall receive an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) Borrowers shall make such deductions and (iii) Borrowers shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, Borrowers jointly and severally agree to pay to the relevant Governmental Authority in accordance with applicable law any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any Other Agreement (“ Other Taxes ”). Borrower Representative shall deliver to Collateral Agent and each Lender official receipts (or other evidence of payment reasonably satisfactory to Collateral Agent) in respect of any Indemnified Taxes or Other Taxes payable hereunder promptly after payment of such Indemnified Taxes or Other Taxes.
(c) Borrowers jointly and severally indemnify and agree to hold Collateral Agent and each Lender harmless from and against Indemnified Taxes and Other Taxes (including, Indemnified Taxes and Other Taxes imposed on any amounts payable under this Section 5.6 ) paid by such Person, whether or not such Indemnified Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be paid within 10 days from the date on which any such Person makes written demand therefor specifying in reasonable detail the nature and amount of such Indemnified Taxes or Other Taxes.
(d) (i) Each Lender (or Transferee) that is organized under the laws of a jurisdiction outside the United States (a “ Non-U.S. Lender ”) agrees that it shall, no later than the Closing Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 12.3 after the Closing Date, promptly after the date upon which such Lender becomes a party hereto) deliver to Collateral Agent (who shall promptly provide a copy to the Borrower Representative and, in the case of a participant, to the Lender granting the participation only) a properly
 
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completed and duly executed copy of either U.S. Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including the appropriate attachments thereto) or any subsequent versions thereof or successors thereto, in each case claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax and payments of interest hereunder along with any other appropriate documentation establishing such exemption or reduction. In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the IRC, such Non-U.S. Lender hereby represents to Agent and Borrower that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the IRC, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the IRC) of the Ultimate Parent and is not a controlled foreign corporation related to the Ultimate Parent (within the meaning of Section 864(d)(4) of the IRC), and such Non-U.S. Lender agrees that it shall promptly notify Collateral Agent in the event any such representation is no longer accurate. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of a Transferee that is a participation holder, on or before the date such participation holder becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a “ New Lending Office ”). In addition, such Non-U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from Collateral Agent, the assigning Lender or the Lender granting a participation, as applicable. If the lapse of time or a change in circumstances renders a previous certification obsolete or inaccurate in any material respect, the Non-U.S. Lender shall deliver to Collateral Agent (who shall promptly provide a copy to the Borrower Representative and, in the case of a participant, to the Lender granting the participation only), new, properly completed and duly executed copies of the applicable Internal Revenue Service Form establishing such exemption or reduction and any related documentation as may be required to establish such Non-U.S. Lender’s entitlement to a continued exemption from or reduction in United States withholding tax if such Non-U.S. Lender or beneficial owner continues to be so entitled.
(ii) Each Lender (or Transferee) and Agent that is a “United States person” (within the meaning of Section 7701(a)(30) of the IRC) (each a “ U.S. Lender ”) agrees that it shall, no later than the Closing Date (or, in the case of a Lender which becomes a party hereto pursuant to Section 12.3 after the Closing Date, promptly after the date upon which such Lender becomes a party hereto) deliver to Collateral Agent (who shall promptly provide a copy to the Borrower Representative and, in the case of a participant, to the Lender granting the participation only) a complete and duly executed copy of Internal Revenue Service Form W-9 or successor form certifying that such Lender (or Transferee) is not subject to United States backup withholding tax on the date it becomes a party to this Agreement. In addition, such U.S. Lender shall deliver such forms within 20 days after receipt of a written request therefor from Collateral Agent, the assigning Lender or the Lender granting a participation, as applicable.
(iii) Notwithstanding any other provision of this Section 5.6, a Lender shall not be required to deliver any form pursuant to this Section 5.6(d) that such Lender is not legally able to deliver. Upon written request by Borrower Representative, Collateral Agent shall provide to Borrower Representative any U.S. Internal Revenue Service Form received by Collateral Agent pursuant to clauses (d)(i) and (d)(ii) above.
(e) The Borrowers shall not be required to indemnify Collateral Agent or any Lender, or pay any Additional Amounts to Collateral Agent or any Lender, in respect of any
 
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withholding or backup withholding tax pursuant to this Section 5.6 to the extent that (i) the obligation to withhold amounts with respect to withholding or backup withholding tax existed on the date Collateral Agent or such Lender became a party to this Agreement (or, in the case of a Transferee that is a participation holder, on the date such participation holder became a Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Lender designated such New Lending Office with respect to a Loan; provided, however, that this clause (i) shall not apply to the extent the indemnity payment or Additional Amounts any Transferee, or Lender (or Transferee) through a New Lending Office, would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or Additional Amounts that the Person making the assignment, participation or transfer to such Transferee, or Lender (or Transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation, or (ii) the obligation to pay such Additional Amounts would not have arisen but for a failure by such Lender or Collateral Agent to comply with the provisions of clause (d) above.
(f) If Collateral Agent or any Lender determines in its good faith that it has received a refund of any Indemnified Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid Additional Amounts pursuant to this Section 5.6, it shall pay to such Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or Additional Amounts paid, by a Borrower under this Section 5.6 with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses of Collateral Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant governmental authority with respect to such refund), provided that such Borrower, upon the request of the Collateral Agent or such Lender, agrees to repay the amount paid over by Collateral Agent or such Lender (plus any penalties, interest or other charges imposed by the relevant governmental authority) to Collateral Agent or such Lender in the event Collateral Agent or such Lender is required to repay such refund to such governmental authority. This paragraph shall not be construed to require Collateral Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to any Borrower or any other Person.
(g) Collateral Agent or any Lender (or Transferee) claiming any indemnity payment or additional payment amounts payable pursuant to this Section 5.6 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by Borrower Representative or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or Additional Amounts that may thereafter accrue, would not require Collateral Agent or such Lender (or Transferee) to disclose any information Collateral Agent or such Lender (or Transferee) deems confidential and would not, in the sole determination of Collateral Agent or such Lender (or Transferee), be otherwise disadvantageous to Collateral Agent or such Lender (or Transferee).
(h) The obligations of the parties under this Section 5.6 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
5.7 [ Intentionally Omitted ]. Nature and Extent of Each Borrower’s Liability .
 
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5.8.1 Joint and Several Liability . Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Collateral Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Collateral Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Collateral Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.
5.8.2 Waivers .
(a) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel the Collateral Agent or the Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Collateral Agent and the Lenders that the provisions of this Section are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Collateral Agent and the Lenders would decline to make Loans. Notwithstanding anything to the contrary in any Loan Document, and except as set forth in Section 5.8.3, each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.
(b) The Collateral Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.8. If, in the exercise of any rights or remedies, any Collateral Agent or Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action by Collateral Agent or such Lender and waives any claim based upon such action, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had but for such action.
 
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Any election of remedies that results in denial or impairment of the right of Collateral Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. If a Lender bids at any foreclosure or trustee’s sale or at any private sale, such Lender may bid all or a portion of the Obligations and the amount of such bid need not be paid by such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether a Lender or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.8, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which any Lender might otherwise be entitled but for such bidding at any such sale.
5.8.3 Extent of Liability: Contribution .
(a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.8 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.
(b) If any Borrower makes a payment under this Section 5.8 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “ Guarantor Payment ”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “ Allocable Amount ” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.8 without rendering such payment voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.
(c) Nothing contained in this Section 5.8 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.
5.8.4 Joint Enterprise . Each Borrower has requested that the Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that and
 
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Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’ request.
5.8.5 Subordination . Each Borrower hereby subordinates any claims it may have as a result of this Section 5.8, including any right of payment, subrogation, contribution and indemnity, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.
 
Section 6.	CONDITIONS PRECEDENT	
6.1 Conditions Precedent to Initial Loans . The Lenders shall not be required to fund the requested Loans or otherwise extend credit to Borrowers hereunder, until the date (“ Closing Date ”) that each of the following conditions (except to the extent that such conditions are permitted by each Lender to be satisfied on a post-closing basis pursuant to a post-closing agreement) has been satisfied:
(a) Each Lender that requests issuance of a Note shall have received a Note executed by the Borrowers and delivered to each such Lender. Each other Loan Document shall have been duly executed and delivered to the Lenders by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.
(b) The Lenders shall have received UCC and Lien searches.
(c) The Lenders shall have received fully-executed account control agreements for each Deposit Account (as defined in the Revolver Agreement) and Securities Account (as defined in the Revolver Agreement) (other than the Deposit Accounts at Bank of America, N.A. and JPMorgan Chase Bank, N.A. for which account control agreements shall be delivered pursuant to Section 9.1.16 ) subject to the “control” (for purposes of the UCC) of the Revolving Credit Agent and, upon the termination of the Revolver Agreement, the Collateral Agent, each in form and substance reasonably satisfactory to the Collateral Agent.
(d) The Lenders shall have received certificates, in form and substance reasonably satisfactory to it, from a knowledgeable Responsible Officer of Borrower Representative certifying that, after giving effect to the Loans and transactions hereunder, (i) each Obligor is Solvent; (ii) no Default or Event of Default exists or would result from this Agreement or other Loan Documents becoming effective in accordance with its or their respective terms; (iii) the representations and warranties set forth in Section 8 are true and correct in all respects; and (iv) such Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(e) The Lenders shall have received a certificate of a duly authorized officer of each Borrower, certifying (i) that attached copies of such Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown, (ii) that an attached copy of resolutions (to the extent necessary under Applicable Law or applicable Organic Documents) authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been
 
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amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility, and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. The Lenders may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.
(f) The Lenders shall have received copies of the charter documents of each Obligor, certified as appropriate by the Secretary of State or another official of such Obligor’s jurisdiction of organization. The Lenders shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.
(g) The Lenders shall have received an opinion of Kirkland & Ellis LLP, counsel to the Borrowers, as to such matters as the Collateral Agent may reasonably request.
(h) The Lenders shall have received a copy of the financial statements and the financial projections described in Section 8.1.7 hereof.
(i) [Intentionally omitted.]
(j) Borrowers shall have paid all fees, costs and expenses which are payable pursuant to the terms hereof to Lenders on the Closing Date.
(k) The Collateral Agent shall have received Lien Waivers, each in form and substance reasonably satisfactory to the Collateral Agent, as it may request, in respect of (a) the following locations: (i) 500 North Industrial Road, St. George, Utah 84770, and (ii) 13085, 13039 and 13053 East Temple Avenue, City of Industry, California, and (b) the imported goods that Carmichael International Service has been engaged by the Borrowers to facilitate the import of.
(1) The Lenders shall have received evidence that (i) the Term A Loans under this Agreement have been designated as “Additional Priority Permitted Debt” under the 2009 Debenture Intercreditor Agreement, and (ii) the Term B Loans under this Agreement have been designated as “Additional Priority Permitted Debt” under the 2009 Debenture Intercreditor Agreement.
(m) The Collateral Agent shall have received the Intercreditor Agreement, executed and delivered by each of the parties thereto.
(n) The Collateral Agent shall have received the Sun Intercreditor Agreement, executed and delivered by each of the parties thereto.
(o) The Collateral Agent shall have received an executed copy of the Revolver Agreement, in form and substance satisfactory to the Collateral Agent.
(p) The Collateral Agent shall have received an executed copy of the Sun Last Out Term A Loan Agreement, in form and substance satisfactory to the Collateral Agent.
(q) The Collateral Agent shall have received an executed copy of the Sun Last Out Term B/C/D Loan Agreement, in form and substance satisfactory to the Collateral Agent.
 
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(r) The Collateral Agent shall have received an executed copy of the 2009 Debenture Intercreditor Agreement, in form and substance satisfactory to the Collateral Agent.
(s) No event or development shall have occurred since January 29, 2011 which could reasonably be expected to have a Material Adverse Effect.
(t) All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person reasonably required in connection with the making of the Loans shall have been obtained and shall be in full force and effect.
(u) All proceedings in connection with the making of the initial Loans and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be reasonably satisfactory to the Collateral Agent and its counsel, and the Collateral Agent and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents as the Collateral Agent or such counsel may reasonably request.
(v) The Lenders shall have received copies of the Management Fee Agreement and the other Material Contracts as in effect on the Effective Date, certified as true and correct copies thereof by a Responsible Officer of the Borrower Representative, together with a certificate of a Responsible Officer of the Borrower Representative stating that such agreements remain in full force and effect and that none of the Obligors has breached or defaulted in any of its obligations under such agreements.
(w) No action, suit, investigation, litigation or proceeding shall have been pending or threatened in any court or before any arbitrator or governmental instrumentality that in Collateral Agent’s judgment (i) could reasonably be expected to have a material adverse effect on Borrowers’ business, operations, properties, or condition (financial or otherwise) or could materially and adversely impair Borrowers’ ability to perform satisfactorily under this Agreement; or (ii) could reasonably be expected to materially and adversely affect this Agreement or the transactions contemplated hereby.
(x) The Lenders shall have received such other agreements, instruments, approvals, opinions and other documents, each satisfactory to the Collateral Agent in form and substance, as the Collateral Agent may reasonably request.
 
Section 7.	[INTENTIONALLY OMITTED]	
 
Section 8.	REPRESENTATIONS AND WARRANTIES	
8.1 General Representations and Warranties . To induce Lenders to enter into this Agreement and to make available the Loans, each Obligor represents and warrants that:
8.1.1 Organization and Qualification . Each Obligor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
 
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8.1.2 Power and Authority . Each Obligor is duly authorized to execute, deliver and perform its Loan Documents, and has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.
8.1.3 Enforceability . Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
8.1.4 Capital Structure . Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following) shows, for each Obligor, its name and its jurisdiction of organization and its authorized and issued Equity Interests, and for each Domestic Subsidiary only, the holders of its Equity Interests and all agreements binding on such holders with respect to their Equity Interests. Each Obligor has good title to the Equity Interests of its Domestic Subsidiaries, free and clear of all Liens (other than Permitted Liens), and all such Equity Interests are duly issued, fully paid and non-assessable. Except as set forth on Schedule 8.1.4 (as such schedule may be amended or supplemented from time to time with respect to the following), there are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any Obligor or Domestic Subsidiary.
8.1.5 Corporate Names; Locations . During the five years preceding the Closing Date, except as shown on Schedule 8.1.5 , no Person that is an Obligor as of the Closing Date has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person. The chief executive offices and other locations of Collateral of Obligors as of the Closing Date are shown on Schedule 8.6.1 (as such schedule may be amended or supplemented from time to time).
8.1.6 Title to Properties; Priority of Liens . Each Obligor has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Lenders, in each case free of all Liens except Permitted Liens. Each Obligor has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.
8.1.7 Financial Statements . (a) The consolidated balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries and consolidating balance sheets and related statements of income for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries, copies of which have been delivered to the Collateral Agent and each Lender prior to the Closing Date, fairly present in all material respects the consolidated financial condition of the Parent and its
 
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Subsidiaries as at the respective dates thereof and the consolidated results of operations of the Parent and its Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP. Since January 29, 2011 there has been no change in the condition, financial or otherwise, of any Obligor or Domestic Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to the Agent or any Lender at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Obligor and Domestic Subsidiary is Solvent, both before and after giving effect to the transactions contemplated by this Agreement and the Loans.
(b) All projections furnished to the Collateral Agent prior to the Closing Date are believed by the Borrower Representative at the time furnished to be reasonable, have been prepared on a reasonable basis and in good faith by the Borrower Representative, and have been based on assumptions believed by the Borrower Representative to be reasonable at the time made and upon the best information then reasonably available to the Borrower Representative, and the Borrower Representative is not aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and such differences may be material.
8.1.8 Surety Obligations . Except as set forth on Schedule 8.1.8 (as such schedule may be amended or supplemented from time to time), no Obligor is obligated as indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.
8.1.9 Taxes . Each Obligor has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested and except where the failure to file or pay the same could not reasonably be expected to have a Material Adverse Effect. The provision for Taxes on the books of each Obligor is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.
8.1.10 Brokers . There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents, except for the payment of transaction fees to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement.
8.1.11 Intellectual Property . Each Obligor owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others, except where the failure to own or have rights to use such Intellectual Property could not reasonably be expected to have a Material Adverse Effect. There is no pending or, to any Obligor’s knowledge, threatened Intellectual Property Claim with respect to any Obligor or any of its Property (including any Intellectual Property, except for Intellectual Property Claims which could not reasonably be expected to have a Material Adverse Effect). Except as disclosed on Schedule 8.1.11 (as such schedule may be amended or supplemented from time to time), no Obligor pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Obligor is shown on Schedule 8.1.11 .
 
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8.1.12 Governmental Approvals . Each Obligor has, is in compliance with, and is in good standing with respect to, all Governmental Approvals, licenses and permits necessary to conduct its business and to own, lease and operate its Properties, except where noncompliance or failure to be in good standing could not reasonably be expected to have a Material Adverse Effect. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Obligors have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
8.1.13 Compliance with Laws . Each Obligor has duly complied, and its Properties and business operations are in compliance, with all Applicable Laws, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, there have been no citations, notices or orders of material noncompliance issued to Obligor under any Applicable Law.
8.1.14 Compliance with Environmental Laws . Except as disclosed on Schedule 8.1.14 , no Obligor’s past or present operations, Real Estate or other Properties are subject to any on-going federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect. To the knowledge of any Obligor, as of the Closing Date, no Obligor has received any Environmental Notice. As of the Closing Date, no Obligor has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.
8.1.15 Burdensome Contracts . No Obligor is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 8.1.15 (as such schedule may be amended or supplemented from time to time), none of which prohibit the execution or delivery of any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.
8.1.16 Litigation . Except as shown on Schedule 8.1.16 , there are no proceedings or investigations pending or, to any Obligor’s knowledge, threatened against any Obligor or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor. No Obligor is in default with respect to any order, injunction or judgment of any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
8.1.17 No Defaults . No event or circumstance has occurred or exists that constitutes a Default or Event of Default (subject to, with respect to the Revolver Loan Documents, the cure period in Section 10.1(t)). As of the Closing Date, no Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that with the
 
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passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Debt in excess of $23,000,000 (subject to, with respect to the Revolver Loan Documents, the cure period in Section 10.1(t)). As of the Closing Date, there is no basis upon which any party (other than an Obligor or Domestic Subsidiary) could terminate a Material Contract prior to its scheduled termination date.
8.1.18 ERISA . Except as disclosed on Schedule 8.1.18 (as such schedule may be amended or supplemented from time to time), no Obligor has any Multiemployer Plan. Each Obligor is in full compliance with the requirements of all Applicable Law, including ERISA, relating to each Multiemployer Plan. As of the Closing Date, no Obligor has any obligations under a Foreign Plan. No fact or situation exists that could reasonably be expected to result in a Material Adverse Effect in connection with any Multiemployer Plan. No Obligor has any withdrawal liability in connection with a Multiemployer Plan or Foreign Plan. All employer and employee contributions to Foreign Plans, to the extent required by law or the terms of such plans, have been made or accrued in accordance with normal accounting principles. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance and/or the book reserve established for each Foreign Plan, together with any accrued contributions, are sufficient to provide the accrued benefit obligations of all participants in such plans according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles.
8.1.19 Trade Relations . There exists no actual or threatened termination, limitation or modification of any business relationship between any Obligor and any customer or supplier, or any group of customers or suppliers, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Obligor to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.
8.1.20 Labor Relations . Except as described on Schedule 8.1.20 (as such schedule may be amended or supplemented from time to time), no Obligor is party to or bound by any collective bargaining agreement. As of the Closing Date, there are no material grievances, disputes or controversies with any union or other organization of any Obligor’s employees, or, to any Obligor’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.
8.1.21 Payable Practices . No Obligor has made any material change in its historical accounts payable practices from those in effect on the Closing Date.
8.1.22 Not a Regulated Entity . No Obligor is (a) an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.
8.1.23 Margin Stock . No Obligor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Loan proceeds will not be used
 
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by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
8.1.24 Plan Assets . As of the Closing Date, no Obligor is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code), and the execution of this Agreement is not a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
8.1.25 Immaterial Subsidiaries . No Immaterial Subsidiary (a) owns or generates any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) has revenues (other than from intercompany Accounts) in any Fiscal Year in excess of $1,000,000.
8.1.26 Nature of Business . No Obligor is engaged in any business other than the business it is engaged in on the Closing Date or any activities ancillary or related thereto, or logical extensions thereof.
8.1.27 Insurance . Each Obligor keeps its property adequately insured and maintains (a) insurance to such extent and against such risks as is customary with companies in the same or similar businesses, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public liability insurance in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law or as may be reasonably required by the Collateral Agent. Schedule 8.1.27 sets forth a list of all insurance maintained by each Obligor on the Closing Date.
8.1.28 Use of Proceeds . The proceeds of the Loans shall be used to (a) refinance the existing obligations (including with respect to the Term Loan B to refinance indebtedness incurred to finance all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of such assets or the acquisition of capital stock of any Person owning such assets) used in the business or the Borrowers), (b) pay fees and expenses in connection with the transactions contemplated hereby and (c) for general working capital purposes of the Borrowers (including the payments of certain earnouts and funding of Permitted Acquisitions).
8.1.29 Material Contracts . Set forth on Schedule 8.1.29 is a complete and accurate list as of the Closing Date of all Material Contracts of each Obligor, showing the parties and subject matter thereof and amendments and modifications thereto. Each such Material Contract (a) is in full force and effect and is binding upon and enforceable against each Loan Party that is a party thereto and, to the knowledge of such Obligor, all other parties thereto in accordance with its terms, (b) has not been otherwise amended or modified, and (c) is not in default due to the action of any Obligor or, to the best knowledge of any Obligor, any other party thereto.
 
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8.1.30 [ Intentionally Omitted] . No Bankruptcy Filing . No Obligor is contemplating either an Insolvency Proceeding or the liquidation of all or a major portion of such Obligor’s assets or property, and no Obligor has any knowledge of any Person contemplating an Insolvency Proceeding against it.
8.1.32 Security Interests . Each Security Agreement creates in favor of the Collateral Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral secured thereby. Upon the filing of the UCC-1 financing statements described in Section 6.1(b) and the recording of the Collateral Assignments for Security referred to in each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, such security interests in and Liens on the Collateral granted thereby shall be perfected, first priority security interests (to the extent perfection may be obtained by filing, and subject to Permitted Liens that are expressly allowed to have priority over the Collateral Agent’s Liens under Applicable Law and the Intercreditor Agreement), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements in accordance with applicable law, (ii) the recording of the Collateral Assignments for Security pursuant to each Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired U.S. patent and trademark applications and registrations and U.S. copyrights, (iii) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign intellectual property, and (iv) additional UCC filings to the extent new Obligors are acquired or existing Obligors change their states of organization.
8.1.33 Anti-Terrorism Laws .
(a) General . None of the Obligors nor, to the knowledge of each Obligor, any Affiliates of such Obligor, is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the Anti-Terrorism Laws.
(b) None of the Obligors nor, to the knowledge of each Obligor, any Affiliates of such Obligor, or their respective agents acting or benefiting in any capacity in connection with the Loans, or other transactions hereunder, is any of the following (each a “ Blocked Person ”):
(i) a Person that is prohibited pursuant to any of the OFAC Sanctions Programs, including a Person named on OFAC’s list of Specially Designated Nationals and Blocked Persons;
(ii) a Person that is owned or controlled by, or that owns or controls, or that is acting for or on behalf of, any Person described in (A), above;
(iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or
(iv) a Person that is affiliated or associated with a Person described in (A) through (C), above.
 
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(c) None of the Obligors, nor any of their agents acting in any capacity in connection with the Loans or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to any OFAC Sanctions Programs.
8.2 Complete Disclosure . No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to a Lender in writing that could reasonably be expected to have a Material Adverse Effect.
 
Section 9.	COVENANTS AND CONTINUING AGREEMENTS	
9.1 Affirmative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall, and shall cause each Domestic Subsidiary to:
9.1.1 Inspections; Appraisals .
(a) Permit Collateral Agent from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligors or Domestic Subsidiary, inspect, audit and make extracts from any Borrowers’ or Domestic Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Domestic Subsidiary’s business, financial condition, assets, prospects and results of operations. Lenders may participate in any such visit or inspection, at their own expense; provided , that upon the occurrence and during the continuation of an Event of Default, each Lender may participate in any visit or inspection conducted by Collateral Agent and all charges, costs and expenses of such Lender shall be paid by Borrowers; provided , further , that the Lenders will use commercially reasonable efforts to coordinate amongst such Lenders to minimize duplicative costs. Neither Collateral Agent nor any Lender shall have any duty to any Obligors to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligors. To the extent any other information is shared by Collateral Agent or a Lender with any Obligor, such Obligors acknowledges that it was prepared by the Lenders for their purposes and Obligors shall not be entitled to rely upon it.
(b) Reimburse Collateral Agent for all charges, costs and expenses of each Lender in connection with examinations of any Obligor’s books and records or any other financial or Collateral matters as Collateral Agent deems appropriate up to two times per Loan Year; provided , however , that if an examination is initiated during the continuance of a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Obligors without regard to such limits.
9.1.2 Financial and Other Information . Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to each Lender:
(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year, consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Required Lenders, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;
 
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(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month, unaudited consolidated balance sheets as of the end of such Fiscal Month and a related consolidated profit and loss statement and cash flow statement (which cash flow statement need not be prepared in accordance with GAAP but instead may be prepared in a manner substantially similar to the cash flow statement presented to the Collateral Agent with respect to the Fiscal Month ending on July 30, 2011) for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year end adjustments and the absence of footnotes;
(c) concurrently with delivery of financial statements under clauses (a) and (b)(i) above, or more frequently if requested by Collateral Agent while a Default or Event of Default exists, a Compliance Certificate executed by the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative;
(d) to the extent available and upon Lenders’ request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements;
 
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(e) not later than 30 days after the end of each Fiscal Year, projections of Borrowers’ consolidated balance sheets, results of operations and cash flow for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to the Collateral Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(f) promptly after the sending or filing thereof, copies of any regular, periodic and special reports or registration statements or prospectuses that any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; provided , that each statement or report required to be delivered pursuant to this clause (f) shall be deemed to have been delivered on the date on which the Borrower Representative posts such document on the Borrower Representative’s website on the Internet at the website address www.kellwood.com, or when such document is posted on the Securities and Exchange Commission’s website at www.sec.gov (the “ SEC Website ”) or on an Internet website established by the Lenders with Intralinks, Inc. or other similarly available electronic media (each of the foregoing an “ Informational Website ”); provided , further , that (i) the Borrower Representative shall deliver paper copies of all such documents to any Lender that requests the Borrower Representative to deliver such paper copies (without impairment of the effectiveness of any document previously delivered in electronic media form) until a request to cease delivering paper copies is given by such Lender and (ii) each Lender shall be notified by electronic mail of the applicable Informational Website and of the posting of each such document; it being understood and agreed that (x) Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this clause (f), and in any event shall have no responsibility to monitor compliance by the Borrower Representative with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents; and (y) Borrowers shall be responsible for (other than with respect to the SEC Website) and shall incur all risks associated with (including with respect to the SEC Website) the security and confidentiality of the Informational Websites and its information posted thereon;
(g) concurrently with delivery thereof to the Revolving Credit Agent (but only to the extent not duplicative of items required hereunder), delivery of the notices, certificates, reports and other information required by Sections 8.1, 8.2, and 8.3 of the Revolver Agreement; and
(h) such other reports and information (financial or otherwise) as any Lender may reasonably request from time to time in connection with any Collateral or any Obligor’s financial condition or business.
9.1.3 Notices . Notify the Lenders in writing, promptly (but in any event within 5 Business Days) after an Obligor obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if it is reasonably likely that an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the
 
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expiration of any material labor contract; (c) any default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any adverse judgment not covered by insurance in an amount exceeding $5,000,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution could reasonably be expected to have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice, which could reasonably be expected to have a Material Adverse Effect; (i) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; or (j) any opening of a new office or place of business where Collateral is located, within 30 days after such opening.
9.1.4 Landlord and Storage Agreements . Upon request, provide the Lenders with copies of all existing agreements, and promptly after execution thereof provide the Lenders with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral having a book value in excess of $1,000,000 in the aggregate at any time.
9.1.5 Compliance with Laws . Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Obligor or Domestic Subsidiary, it shall act promptly and diligently to investigate and report to the Lenders and, to the extent required by Applicable Law, all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.
9.1.6 Taxes . Pay and discharge all Taxes (other than de minimis Taxes) prior to the date on which they become delinquent or penalties attach, unless such Taxes are being Properly Contested.
9.1.7 Insurance . In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers reasonably satisfactory to the Required Lenders or other insurers rated A+ or better by Best Rating Guide, (a) with respect to the Properties and business of the Obligors of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated, and (b) business interruption insurance with deductibles and subject to an Insurance Assignment in favor of the Collateral Agent reasonably satisfactory to the Required Lenders. All certificates of insurance are to be delivered to the Collateral Agent, with the loss payable and additional insured endorsement in favor of the Collateral Agent and such other Persons as the Collateral Agent may designate from time to time, and shall provide for not less than 30 days’ prior written notice to the Collateral Agent of the exercise of any right of cancellation. If any Obligor or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such
 
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insurance, but at the Borrowers’ expense and without any responsibility on the Collateral Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, but subject to the Intercreditor Agreement, the Collateral Agent shall have the sole right, in the name of the Lenders, any Obligor and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.
9.1.8 Licenses . Keep each License affecting any material portion of the Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Obligors in full force and effect subject to non-renewal or termination by the applicable Obligor in the Ordinary Course of Business, or otherwise in its reasonable judgment; notify Lenders of any proposed modification to any such License increasing the Royalties payable thereunder, or entry into any new License, in each case at least 30 days after the effective date of such License or modification; pay all Royalties when due; and notify Lenders of any material default or breach asserted by any Person to have occurred under any License.
9.1.9 Future Subsidiaries . Promptly notify the Lenders upon any Person becoming a Domestic Subsidiary and cause it to execute and deliver to Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to the Required Lenders, as they shall deem appropriate, provided, that prior to any Person becoming a Borrower hereunder, Borrower Representative shall provide at least 5 days written notice to Collateral Agent.
9.1.10 Additional Guarantors . In the event that any Person becomes party to the Revolver Guaranty and such Person is not a Borrower hereunder, Borrower Representative shall immediately notify each Lender thereof and cause such Person to execute and deliver to the Lenders a Joinder Agreement and to take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance satisfactory to Collateral Agent, as it shall deem appropriate.
9.1.11 Preservation of Existence, Etc. Maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except as permitted by Section 9.2.9 or except to the extent failure to be so qualified or in good standing could not reasonably be likely to have a Material Adverse Effect.
9.1.12 Keeping of Records and Books of Account . Keep accurate records and books of account, with entries made to permit the preparation of financial statements in accordance with GAAP.
 
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9.1.13 Maintenance of Properties, Etc. Maintain and preserve all of its properties which are necessary for the proper conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation losses excepted.
9.1.14 Obtaining of Permits, Etc. Obtain, maintain and preserve and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except to the extent failure to do so could not reasonably be likely to have a Material Adverse Effect.
9.1.15 Further Assurances . Take such action and execute, acknowledge and deliver at its sole cost and expense, such agreements, instruments or other documents as the Collateral Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected first priority Liens any of the Collateral, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer and confirm unto the Collateral Agent and each Lender the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable law, each Obligor (i) authorizes the Collateral Agent to execute any such agreements, instruments or other documents in such Obligor’s name and to file such agreements, instruments or other documents in any appropriate filing office, (ii) authorizes the Collateral Agent to file any financing statement required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Obligor, and (iii) ratifies the filing of any financing statement, and any continuation statement or amendment with respect thereto, filed without the signature of such Obligor prior to the date hereof, in each case to the extent such filings are necessary or desirable in order to perfect or maintain the perfection of the Collateral Agent’s security interest in the Collateral.
9.1.16 Post-Closing Covenants
(a) On or before the date that is 30 days after the Closing Date (or such later date as the Collateral Agent may consent to in its discretion), deliver to the Collateral Agent copies of policies or certificates of insurance for the insurance policies carried by Obligors, all in compliance with the Loan Documents, together with such endorsements as to the named insureds or loss payees thereunder as the Collateral Agent may request and providing that such policy may be terminated or canceled (by the insurer or the insured thereunder) only upon 30 days’ prior written notice to the Collateral Agent and each such named insured or loss payee, together with evidence of the payment of all premiums due in respect thereof for such period as the Collateral Agent may request;
(b) On or before the date that is 30 days after the Closing Date (or such later date as the Collateral Agent may consent to in its discretion), use commercially reasonable efforts to obtain Lien Waivers, each in form and substance reasonably satisfactory to the Collateral Agent, as it may request, in respect of (a) the following locations: (i) 302 Hawthorne Drive, Glasgow, Missouri 65254, and (ii) 7101 NW 32nd Avenue, Miami, Florida and 1898 Marigold Street, Redlands, California, and (b) the imported goods that Barthco Int’l Inc. has been engaged by the Borrowers to facilitate the import of;
 
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(c) On or before the date that is 30 days after the Closing Date, use commercially reasonable efforts to provide the Collateral Agent with: (a) all documents necessary to effect and reflect the release of the Lien in favor of Wells Fargo Bank, National Association (granted by Levi Strauss & Co.), recorded at the United States Patent and Trademark Office on November 5, 1985 at Reel 0509, Frame 218; (b) all documents necessary to effect and reflect the release of the Lien in favor of Bankers Trust Company (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on December 18, 1986 at Reel 0547, Frame 322; and (c) all documents necessary to effect and reflect the release of the Lien in favor of BNY Financial Corp. (granted by Koret of California, Inc.), recorded at the United States Patent and Trademark Office on July 9, 1992 at Reel 0883, Frame 616; and
(d) On or before the date that is 10 days after the Closing Date (or such later date as the Collateral Agent may consent to in its discretion), deliver to the Collateral Agent fully- executed account control agreements for each Deposit Account (as defined in the Revolver Agreement) of the Borrowers at Bank of America, N.A. and JPMorgan Chase Bank, N.A, which shall be subject to the “control” of the Revolving Credit Agent and, upon termination of the Revolver Agreement, the Collateral Agent, each in form and substance reasonably satisfactory to the Collateral Agent.
9.2 Negative Covenants . For so long as any Loans or Obligations are outstanding, each Obligor shall not, and shall cause each Domestic Subsidiary not to:
9.2.1 Permitted Debt . Create, incur, guarantee or suffer to exist any Debt, except:
(a) the Obligations;
(b) Subordinated Debt;
(c) Permitted Purchase Money Debt;
(d) Debt (other than the Obligations, Subordinated Debt, Permitted Purchase Money Debt, the 2009 Debentures, the Revolver Debt and the Sun Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans and which is listed on Schedule 9.2.1 ;
(e) Permitted Contingent Obligations, provided no Obligor or any Domestic Subsidiary thereof shall incur any Contingent Obligations in respect of the obligations of any Foreign Subsidiary;
(f) Refinancing Debt as long as each Refinancing Condition is satisfied in respect of such Refinancing Debt at the time such Refinancing Debt is incurred;
(g) the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business;
(h) unsecured intercompany Debt for loans and advances made by any Borrower or wholly owned Subsidiary to (i) a Borrower, (ii) any other Obligor or (iii) if such wholly owned Subsidiary making such loan or advance is not an Obligor, any other wholly owned Subsidiary, provided that such intercompany Debt of any Obligor is subordinated pursuant to Section 13.16 ;
 
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(i) financing of insurance premiums;
(j) unsecured Debt in an amount not to exceed $5,000,000 at any time outstanding;
(k) other unsecured Debt of any Domestic Subsidiary which is not an Obligor, provided that, in connection with such Debt, no Obligor has incurred a Contingent Obligation or any direct or contingent liability with respect thereto unless such Contingent Obligation is unsecured and is expressly permitted hereunder;
(l) other Debt of any Obligor incurred or assumed in connection with a Permitted Acquisition that is created, incurred or guaranteed after the Closing Date so long as, in each case, (i) Availability after giving pro forma effect thereto exceeds $12,500,000, and (ii) Borrowers’ accounts payable are not being extended in a manner inconsistent with past business practices;
(m) (i) the 2009 Debentures, as long as such Debt is subject to the 2009 Debenture Intercreditor Agreement; provided that , the principal amount of the Debt owing under the 2009 Debentures shall not exceed at any time an amount equal to the principal amount outstanding under the 2009 Debentures as of the date of the consummation of the Exchange Offer, plus any interest thereon that is paid-in-kind in accordance with the terms thereof and added to the outstanding principal thereof, (ii) the Revolver Debt not to exceed $160,000,000, as long as such Debt is subject to the Intercreditor Agreement and (iii) the Sun Debt, as long as such Debt is subject to the Sun Intercreditor Agreement; and
(n) Bank Product Debt (as defined in the Revolver Agreement).
Notwithstanding anything in this Section 9.2.1 to the contrary, Borrowers shall not incur any Debt that is not permitted to be incurred under the 2009 Indenture or the Indenture.
9.2.2 Permitted Liens . Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “ Permitted Liens ”):
(a) Liens in favor of Collateral Agent securing the Obligations;
(b) Purchase Money Liens securing Permitted Purchase Money Debt;
(c) Liens for Taxes not yet due or being Properly Contested;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA but including carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;
 
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(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Debt), statutory obligations (including in connection with workers’ compensation, unemployment insurance and other social security legislation (other than Liens for Taxes or imposed under ERISA)) and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Collateral Agent’s Liens;
(f) Liens securing judgments for the payment of money in an aggregate amount not in excess of $5,000,000 (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 10 consecutive days during which execution is not effectively stayed;
(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;
(h) normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;
(i) existing Liens shown on Schedule 9.2.2 and any renewals or extensions thereof, provided that the Property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby does not increase the maximum outstanding principal amount of such obligations;
(j) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as such Liens were existing at the time of such Acquisition by a Borrower or Subsidiary and were not incurred, extended or renewed in contemplation of such Acquisition; provided that (i) the Lien shall attach solely to the property acquired, and (ii) at the time of acquisition of such fixed assets, the aggregate amount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed by a Borrower or Subsidiary shall not exceed an amount equal to the lesser of the total purchase price or fair market value at the time of acquisition of such fixed assets;
(k) other Liens that are created upon any of its Property (other than Collateral) after the Closing Date, so long as the fair market value of such Property subject to such Liens does not exceed $5,000,000 at any time outstanding
(l) Liens on deposits and unearned insurance premiums securing Debt permitted under Section 9.2.1(i);
(m) (i) Liens on Collateral securing the Debt owing under the 2009 Debentures, as long as such Liens are subject to the 2009 Debenture Intercreditor Agreement and such Debt is permitted under Section 9.2.1(m)(i) ; (ii) Liens on Collateral securing the Revolver Debt, as long as such Debt is permitted under Section 9.2.1(m)(ii) , and such Liens are subject to the Intercreditor Agreement; (iii) Liens on Collateral securing the Sun Debt, as long as such Debt is permitted under Section 9.2.1(m)(iii) , and such Liens are subject to the Sun Intercreditor Agreement; and
(n) Liens on Collateral securing Bank Product Debt (as defined in the Revolver Agreement), as long as such Debt is permitted under Section 9.2.1(n), and such Liens are subject to the Intercreditor Agreement.
 
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9.2.3 [Intentionally Omitted]
9.2.4 Distributions; Upstream Payments
(a) Declare or make any Distributions, except (i) Permitted Distributions and (ii) Upstream Payments; or
(b) Create or suffer to exist any encumbrance or restriction on the ability of a Domestic Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, the Revolver Loan Documents, the Sun Loan Documents, and under Applicable Law or restrictions in effect on the Closing Date as shown on Schedule 8.1.15 .
9.2.5 Restricted Investments . Make any Restricted Investment.
9.2.6 Disposition of Assets . Make any Asset Disposition, except a Permitted Asset Disposition or a transfer of Property by a Subsidiary or Obligor to a Borrower.
9.2.7 Loans; Extensions of Credit . Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled Account Debtors to the extent reasonably necessary in the relevant Obligor’s reasonable business judgment to prevent or limit loss; (e) intercompany loans permitted by Section 9.2.1(h); and (f) other loans or extensions of credit made in the ordinary course of business after the Closing Date as long as (i) Availability after giving effect to such loans or extensions of credit exceeds $12,500,000 and Borrowers’ accounts payable are not being extended in a manner inconsistent with past business practices, and (ii) they are permitted under the Revolver Agreement as in effect on the date hereof, in an aggregate amount not to exceed $5,000,000 at any time outstanding.
9.2.8 Restrictions on Payment of Certain Debt . Make (a) any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (i) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Responsible Officer of Borrower Representative shall certify to each Lender, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (ii) other Debt (other than the Obligations and Revolver Debt) prior to its due date under the agreements evidencing such Debt, except for any such prepayment with respect to the currently issued and outstanding notes under the Convertible Debentures, Indenture or 2009 Indenture to the extent such repayment involves (A) a repurchase of any currently issued and outstanding notes under the Indenture or 2009 Indenture in an
 
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amount not to exceed 80% of the par value thereof so long as either (x) the trailing 60 day average daily Availability, calculated after giving effect to such payment to repurchase the notes, exceeds $30,000,000 or (y) Parent and its Subsidiaries have maintained a Fixed Charge Coverage Ratio of at least 1.00:1.00 calculated at the end of the most recent Fiscal Month for the period of 12 consecutive Fiscal Months then ending and the trailing 60 day average daily Availability exceeds $25,000,000, in each case calculated after giving effect to such payment to repurchase the notes, or (B) a repayment of outstanding amounts under the Convertible Debentures in an aggregate amount not to exceed $300,000, or (b) any cash payments on or in respect of the Sun Debt if (i) any Event of Default has occurred and is continuing at the time of any such payment or would result after giving effect thereto, or (ii) Availability is less then $45,000,000, calculated after giving effect to such payment.
9.2.9 Fundamental Changes Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except:
(i) any Subsidiary may merge (x) with a Borrower, provided that such Borrower shall be the continuing or surviving Person, or (y) with any one or more Subsidiaries, provided that when any wholly-owned Subsidiary or Guarantor is merging with another Subsidiary, the wholly-owned Subsidiary or Guarantor shall be the continuing or surviving Person, or (z) with any other Person in connection with any Permitted Acquisition, provided that the continuing or surviving Person shall be a wholly-owned Subsidiary and, if such Subsidiary was a Guarantor or a Borrower, also a Guarantor or a Borrower;
(ii) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to a Borrower or to another Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary or a Guarantor, then the purchaser must also be a wholly-owned Subsidiary or Guarantor, respectively; or
(iii) in connection with a Permitted Asset Disposition.
(b) Except following thirty (30) days prior written notice to each Lender, change its name or conduct business under any fictitious name; change its tax or other organizational identification number; or change its form or state of organization.
9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with Section 9.1.9 or Section 9.2.9 in connection with Permitted Acquisitions; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.
9.2.11 Organic Documents . Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except for any amendment, modification or other change that does not adversely affect any Lender or any duty to pay Obligations.
9.2.12 Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Ultimate Parent and its Subsidiaries.
 
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9.2.13 Accounting Changes . Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2 ; or change its Fiscal Year.
9.2.14 Restrictive Agreements . Become a party to or permit any Subsidiary to become a party to any Restrictive Agreement, except a Restrictive Agreement as in effect on the Closing Date and shown on Schedule 8.1.15 and the Indenture, 2009 Indenture, 2009 Indenture Guaranty, Convertible Debentures, Revolver Debt and Sun Debt.
9.2.15 Hedging Agreements . Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.
9.2.16 Conduct of Business . Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.
9.2.17 Affiliate Transactions . Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 9.2.7 ; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Obligors; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 9.2.17 ; (f) transactions with Affiliates (other than those described in clause (g) below) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to each Lender and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate, other than any purchase or prepayment with respect to any issued and outstanding notes under the Convertible Debentures, Indenture or 2009 Indenture owned by an Affiliate; (g) the accrual or payment of management fees and customary and reasonable fees for management consulting services to Sun Capital Partners Management V, LLC pursuant to Section 2 of the Management Services Agreement; provided that (i) no Event of Default has occurred and is continuing at the time of any such payment thereof or would result after giving effect thereto, and (ii) Availability after giving effect to such payment is greater than $25,000,000 (it being understood that any management fees which may not be paid pursuant to the foregoing conditions set forth in this proviso may accrue and be paid at such time as such conditions would be satisfied after giving effect to such payment); (h) payment of indemnities and reimbursements of reasonable out-of-pocket fees and expenses incurred by Sun Capital Partners Management V, LLC in connection with the performance of the services under the Management Services Agreement; and (i) the payment of dividends or other distributions to Ultimate Parent (whether made to Ultimate Parent directly or to any Person directly or indirectly owned by Ultimate Parent and ultimately remitted to Ultimate Parent) in an amount sufficient to permit Ultimate Parent to pay (A) franchise taxes and other fees required to maintain Ultimate Parent’s corporate existence, and (B) to pay consolidated or combined federal, state or local taxes, including estimated taxes, which payments in the aggregate by each Obligor and Domestic Subsidiary are not in excess of the aggregate tax liabilities that would have been payable by each Obligor and Domestic Subsidiary calculated on a stand-alone basis.
9.2.18 Plans . Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date or assumed in connection with any Permitted Acquisition.
 
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9.2.19 Amendments to the Indenture, the 2009 Indenture, the 2009 Indenture Guaranty, Convertible Debenture, the Convertible Debenture Agreement, the Revolver Agreement or Subordinated Debt .
(a) Amend, supplement or otherwise modify (i) the Indenture, the 2009 Indenture or the 2009 Indenture Guaranty or (ii) any Convertible Debenture or Convertible Debenture Agreement, in a manner that directly or indirectly accelerates the time of payment, increases the principal amount of or interest rate applicable to indebtedness issued or provides for more restrictive terms that adversely affect the Lenders;
(b) Amend, supplement or otherwise modify any other document, instrument or agreement relating to any Subordinated Debt, if such modification (i) increases the principal balance of such Debt, or increases any required payment of principal or interest; (ii) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any representation, covenant or default that adversely affects the Lenders; or (vii) results in the Obligations not being fully benefited by the subordination provisions thereof; or
(c) Amend, supplement or otherwise modify the Revolver Agreement in violation of the Intercreditor Agreement.
(d) Amend, supplement or otherwise modify the Sun Last Out Term A Loan Agreement or the Sun Last Out Term B/C/D Loan Agreement in violation of the Sun Intercreditor Agreement.
9.2.20 Immaterial Subsidiaries . Permit or suffer any Immaterial Subsidiary to (a) own or generate any Accounts (other than intercompany Accounts) or Inventory located in the United States of America or (ii) have revenues in any Fiscal Year in excess of $1,000,000, unless Borrower Representative causes such Immaterial Subsidiary to execute a Joinder Agreement and to take such other action as the Collateral Agent shall require to evidence and perfect a Lien in favor of the Collateral Agent (for the benefit of the Lenders) on the Collateral in which such Person has an interest, including delivery of such legal opinions, in form and substance reasonably satisfactory to Collateral Agent, as it shall deem appropriate.
9.2.21 Federal Reserve Regulations . Permit any Loan or the proceeds of any Loan under this Agreement to be used by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.
9.2.22 Investment Company Act of 1940 . Engage in any business, enter into any transaction, use any securities or take any other action that would cause any Obligor to become an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940.
 
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9.2.23 Anti-Terrorism Laws . None of the Obligors nor any of their agents shall:
(a) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person,
(b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the OFAC Sanctions Programs or
(c) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the OFAC Sanctions Programs, the Patriot Act or any other Anti-Terrorism Law.
9.2.24 Financial Covenants .
(a) Leverage Ratio . Permit the Leverage Ratio of the Parent and its Subsidiaries as of the last day of any fiscal quarter ending nearest to the dates set forth below to be greater than the applicable ratio set forth below:

Fiscal Quarter End	  	Leverage Ratio	
		
January 31, 2012	  	3.27:1.00	
		
April 30, 2012	  	3.01:1.00	
		
July 31, 2012	  	3.62:1.00	
		
October 31, 2012	  	4.25:1.00	
		
January 31, 2013	  	3.35:1.00	
		
April 30, 2013	  	3.22:1.00	
		
July 31, 2013	  	3.65:1.00	
		
October 31, 2013	  	3.54:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter	  	2.85:1.00	
 
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(b) Fixed Charge Coverage Ratio . Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries for which the last quarter ends nearest to the date set forth below to be less than the amount set forth opposite such date:

Fiscal Quarter End	  	Fixed Charge Coverage Ratio	
		
January 31, 2012	  	1.00:1.00	
		
April 30, 2012	  	1.00:1.00	
		
July 31, 2012	  	1.00:1.00	
		
October 31, 2012	  	1.00:1.00	
		
January 31, 2013	  	1.00:1.00	
		
April 30, 2013	  	1.00:1.00	
		
July 31, 2013	  	1.10:1.00	
		
October 31, 2013	  	1.10:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter	  	1.10:1.00	
9.2.25 2009 Debenture Intercreditor Agreement . Incur Debt after the Closing Date pursuant to Section 4.09(b)(1) of the 2009 Indenture and designate the holders of such Debt as additional holders of “Priority Obligations” (as defined in the 2009 Debenture Intercreditor Agreement).
 
Section 10.	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	
10.1 Events of Default . Each of the following shall be an “ Event of Default ” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);
(b) Any representation, warranty or other written statement of any Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;
(c) Any Obligor breaches or fail to perform any covenant contained in Section 9.1.1, 9.1.2, 9.1.3 (other than Section 9.1.3(j)), 9.1.7, 9.1.11 or 9.2, or Section 6 of the Security Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 20 days after a Responsible Officer of such Obligor has knowledge thereof or a Responsible Officer of Borrower Representative receives notice thereof from any Lender, whichever is sooner; provided , however , that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;
 
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(e) Any Guarantor repudiates, revokes or attempts to revoke its guaranty hereunder; any Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Collateral Agent (for the benefit of the Lenders); or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by the Required Lenders);
(f) Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations) in excess of $5,000,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;
(g) Any judgment or order for the payment of money remains outstanding for more than 30 days against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,000,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;
(h) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,000,000;
(i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting a portion of its business, which action could reasonably be expected to have a Material Adverse Effect; any Obligor suffers the loss, revocation or termination of one or more licenses, permits, leases or agreements, which loss, revocation or termination could reasonably be expected to have a Material Adverse Effect, except in connection with a Permitted Asset Disposition, there is a cessation of any part of an Obligor’s business for a period of time (other than in connection with a Permitted Asset Disposition), which cessation could reasonably be expected to have Material Adverse Effect; any Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs (other than in connection with a Permitted Asset Disposition); or any Obligor ceases to be Solvent;
(j) Any Insolvency Proceeding is commenced by any Obligor on its behalf;
(k) Any Insolvency Proceeding is commenced against any Obligor and (i) such Obligor consents to the institution of the proceeding against it, (ii) the petition commencing the proceeding is not timely controverted by such Obligor, (iii) such petition is not dismissed within 60 days after its filing, or (iv) an order for relief is entered in the proceeding;
(l) A trustee (including an interim trustee) is appointed to take possession of any substantial Property of or to operate any of the business of any Obligor; or any Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally;
(m) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for any Multiemployer Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;
 
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(n) Any Obligor or any of its Responsible Officers is criminally indicted or convicted for (i) a felony committed in the conduct of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Collateral;
(o) A Change of Control occurs; or
(p) The Obligations at any time fail to constitute “Additional Priority Permitted Debt” under and as defined in the 2009 Debenture Intercreditor Agreement.
10.2 Remedies upon Default . If an Event of Default described in Section 10.1(j) and/or Section 10.1(k) occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations shall become automatically due and payable and all Loans shall terminate, without any action by any Lender or notice of any kind. In addition, or if any other Event of Default exists, the Required Lenders may do any one or more of the following from time to time, subject to the terms of the Intercreditor Agreement:
(a) declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law; and
(b) instruct the Collateral Agent to exercise any other rights or remedies afforded under the Loan Documents, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Obligors’ expense, and make it available to Collateral Agent at a place designated by Collateral Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Collateral Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days notice of any proposed sale or other disposition of Collateral by Collateral Agent shall be reasonable. Collateral Agent shall have the right to conduct such sales on any Obligor’s owned (or, with the permission of the landlords with respect to such premises, leased) premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law. Collateral Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Collateral Agent may purchase any Collateral at public, or if permitted by law, private sale and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations.
10.3 License . Collateral Agent for the benefit of each Lender is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Property of Obligors, including,
 
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without limitation, all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels and packaging materials, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral if and for so long as such non-exclusive license or other right to use, license or sub-license would not constitute or result in (a) the abandonment, invalidation or unenforceability of any right, title or interest of such Obligor therein or (b) a breach or termination pursuant to the terms of, or a default under, any such non-exclusive license or other right to use, license or sublicense, provided however , that at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, such grant shall include immediately and automatically any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (a) or (b) above. Each Obligor’s rights and interests under Intellectual Property shall inure to Collateral Agent (for the benefit of the Lenders).
10.4 Setoff . Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor) are each authorized by Obligors at any time during an Event of Default, without notice to Obligors or any other Person, to set off and to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities or other Debt at any time held or owing by any Lender or any such Affiliate (other than an Obligor or any Subsidiary of an Obligor) to or for the account of any Obligor against any Obligations, whether or not demand for payment of such Obligation has been made, any Obligations have been declared due and payable, are then due, or are contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is adequate; it being understood and agreed, as between Lenders and their Affiliates (other than an Obligor or any Subsidiary of an Obligor), that all such deposits, funds or other moneys to be applied against any Obligations, subject to the Intercreditor Agreement.
10.5 Remedies Cumulative; No Waiver Cumulative Rights . All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of Obligors contained in the Loan Documents are cumulative and not in derogation or substitution of each other. In particular, the rights and remedies of Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and shall not be exclusive of any other rights or remedies that Lenders may have, whether under any agreement, by law, at equity or otherwise.
10.5.2 Waivers . The failure or delay of any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a course of dealing. All rights and remedies shall continue in full force and effect until Full Payment of all Obligations. No modification of any terms of any Loan Documents (including any waiver thereof) shall be effective, unless such modification is specifically provided in a writing directed to Obligors and executed by the Lenders or the requisite Lenders, and such modification shall be applicable only to the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of any other Default or Event of Default that may exist at such time, unless expressly stated. If any Lender accepts performance by any Obligor under any Loan Documents in a manner other than that specified therein, or during any Default or Event of Default, or if any Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or exercise shall not operate to waive any Default or Event of Default nor
 
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to preclude exercise of any other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.
 
Section 11.	COLLATERAL AGENT	
11.1 Appointment, Authority and Duties of Collateral Agent Appointment and Authority . Each Lender appoints and designates Cerberus as Collateral Agent hereunder. Collateral Agent has and may further, and each Lender authorizes Collateral Agent to, enter into all Loan Documents (including, without limitation, the 2009 Debenture Intercreditor Agreement, the Intercreditor Agreement and the Sun Intercreditor Agreement, any amendments thereto, and any and all other subordination and/or intercreditor agreements required under the terms of this Agreement) to which Collateral Agent is intended to be a party and accept all Loan Documents, for Collateral Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Collateral Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Collateral Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without limiting the generality of the foregoing, Collateral Agent shall have the sole and exclusive authority to (a) act as collateral agent for each Lender for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (b) manage, supervise or otherwise deal with Collateral; and (c) exercise all rights and remedies given to Collateral Agent with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Collateral Agent shall be ministerial and administrative in nature, and Collateral Agent shall not have a fiduciary relationship with any Lender, participant or other Person, by reason of any Loan Documents or any transaction relating thereto.
11.1.2 Duties . Collateral Agent shall not have any duties except those expressly set forth herein and in the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the extent directed to do so by Required Lenders in accordance with and pursuant to the terms of this Agreement and subject to the terms of the Intercreditor Agreement. The conferral upon Collateral Agent of any right under any Loan Document shall not imply a duty on Collateral Agent’s part to exercise such right unless instructed to do so by Required Lenders in accordance with this Agreement and subject to the terms of the Intercreditor Agreement, and the Collateral Agent shall not, without the prior written consent of the Required Lenders, exercise any right conferred upon Collateral Agent under the Intercreditor Agreement or the Sun Intercreditor Agreement.
11.1.3 Collateral Agent Professionals . Collateral Agent may perform its duties through agents and employees. Collateral Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Collateral Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.
11.1.4 Instructions of Required Lenders . The rights and remedies conferred upon Collateral Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Collateral Agent may request instructions
 
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from Required Lenders with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from Lenders of their indemnification obligations under Section 11.5 against all Claims that could be incurred by Collateral Agent in connection with any act. Collateral Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Collateral Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action whatsoever against Collateral Agent as a result of Collateral Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of all Lenders shall be required in the circumstances described in Section 13.1.1 , and in no event shall Required Lenders, without the prior written consent of each Lender, direct Collateral Agent to accelerate and demand payment of Loans held by one Lender without accelerating and demanding payment of all other Loans. In no event shall Collateral Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Document or could subject any Agent Indemnitee to personal liability.
11.1.5 Collateral Agent Advances .
Upon the occurrence and during the continuance of an Event of Default, Collateral Agent may from time to time make such disbursements and advances (“ Collateral Agent Advances ”) which Collateral Agent, in its sole discretion, deems necessary or desirable to preserve, protect, prepare for sale or lease or dispose of the Collateral or any portion thereof, to enhance the likelihood or maximize the amount of repayment by Borrowers of the Loans and other Obligations or to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 3.4 and costs and expenses incurred by Collateral Agent in performing any covenant or agreement required to be performed by Borrowers which Borrowers have failed to perform. Collateral Agent Advances shall be repayable on demand and be secured by the Collateral. Collateral Agent Advances shall constitute Obligations hereunder which may be charged to the applicable Borrower’s account. Collateral Agent shall notify each Lender and Borrower Representative in writing of each such Collateral Agent Advance, which notice shall include a description of the purpose of such Collateral Agent Advance. Without limitation to its obligations pursuant to Section 11.6 , each Lender agrees that it shall make available to Collateral Agent, upon Collateral Agent’s demand, in Dollars in immediately available funds, the amount equal to such Lender’s Pro Rata share of each such Collateral Agent Advance. If such funds are not made available to Collateral Agent by such Lender, Collateral Agent shall be entitled to recover such funds on demand from such Lender, together with interest thereon for each day from the date such payment was due until the date such amount is paid to Collateral Agent at the Reference Rate.
11.2 Agreements Regarding Collateral and Field Examination Reports Lien Releases; Care of Collateral . Lenders authorize Collateral Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations, (b) that is the subject of an Asset Disposition which Borrower Representative certifies in writing to Collateral Agent is a Permitted Asset Disposition or a Lien which Borrower Representative certifies is a Permitted Lien entitled to priority over Collateral Agent’s Liens (and Collateral Agent may rely conclusively on any such certificate without further inquiry), (c) that is within the limitations set forth in Section 13.1.1(c)(iii) , (d) with the written consent of all Lenders or (e) in accordance with the terms of
 
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the Intercreditor Agreement; provided further, upon request of Borrower Representative, Collateral Agent will provide Borrower Representative with a release of the Collateral Agent’s security interest in any assets or Collateral in conjunction with a Permitted Asset Disposition. Collateral Agent shall have no obligation whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is cared for, protected, insured or encumbered, nor to assure that Collateral Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.
11.2.2 Possession of Collateral . Collateral Agent and Lenders appoint each other Lender as agent for the purpose of perfecting Liens (for the benefit of the Lenders) in any Collateral that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains possession of any such Collateral, it shall notify Collateral Agent thereof and, promptly upon Collateral Agent’s request, deliver such Collateral to Collateral Agent or otherwise deal with such Collateral in accordance with Collateral Agent’s instructions.
11.2.3 Reports . Collateral Agent shall promptly, upon receipt thereof, forward to each Lender copies of the results of any field audit or other examination or any appraisal prepared by or on behalf of Collateral Agent with respect to any Obligor or Collateral (“ Report ”). Each Lender agrees (a) that Cerberus makes no any representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Collateral Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Obligors books and records as well as upon representations of Obligors officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender agrees to indemnify and hold harmless Collateral Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as any Claims arising in connection with any third parties that obtain all or any part of a Report through such Lender.
11.3 Reliance By Collateral Agent . Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.
11.4 Action Upon Default . Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Agent and the other Lenders thereof in writing. Each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against an
 
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Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.
11.5 Ratable Sharing . If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.4.1, as applicable, such Lender shall forthwith purchase from the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.4.1, as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
11.6 Indemnification of Agent Indemnitees Indemnification . EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGOR (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ANY AND ALL LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ALL REASONABLE FEES AND EXPENSES OF COUNSEL TO SUCH AGENT INDEMNITEES), ADVANCES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE AGENT INDEMNITEES UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTIONS CONSUMMATED PURSUANT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, BY REASON OF COLLATERAL AGENT’S ENTERING INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) other than liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the gross negligence or willful misconduct of Agent Indemnitees. If Collateral Agent is sued by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or fraudulent transfer, then any monies paid by Collateral Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Collateral Agent by Lenders to the extent of each Lender’s Pro Rata share.
11.6.2 Proceedings . Without limiting the generality of the foregoing, if at any time (whether prior to or after the Termination Date) any proceeding is brought against any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for any act taken or omitted by Collateral Agent in connection with any Obligations, Collateral, Loan Documents or matters relating thereto, or otherwise to obtain any other relief of any kind on account of any transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required to pay under any judgment or other order entered in such proceeding or by reason of any
 
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settlement, including all interest, costs and expenses (including attorneys’ fees) incurred in defending same other than damages resulting from the gross negligence or willful misconduct of Agent Indemnitees. In Collateral Agent’s discretion, Collateral Agent may reserve for any such proceeding, and may satisfy any judgment, order or settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to Lenders subject to the Intercreditor Agreement.
11.7 Limitation on Responsibilities of Collateral Agent . Collateral Agent shall not be liable to Lenders for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Collateral Agent’s gross negligence or willful misconduct. Collateral Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor or Lender of any obligations under the Loan Documents. Collateral Agent does not make to Lenders any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.
11.8 Successor Agent and Co-Agents Resignation; Successor Collateral Agent . Collateral Agent may resign at any time by giving at least 30 days (or, upon payment in full of the Revolver Debt, 10 days) written notice thereof to Lenders and Borrower Representative. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Collateral Agent which shall be (provided no Default or Event of Default exists) reasonably acceptable to Borrower Representative. If no successor agent is appointed prior to the effective date of the resignation of Collateral Agent, then Collateral Agent may appoint a successor agent from among the Lenders. Immediately upon such appointment by Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Collateral Agent without further act, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 11.5 and 13.2. Notwithstanding any Collateral Agent’s resignation, the provisions of this Section 11 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Collateral Agent. Any successor by merger or acquisition of the stock or assets of Cerberus shall continue to be Collateral Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.
11.8.2 Separate Collateral Agent . It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Collateral Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law,
 
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Collateral Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If Collateral Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Collateral Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Collateral Agent. Lenders shall execute and deliver such documents as Collateral Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Collateral Agent until appointment of a new agent.
11.9 Due Diligence and Non-Reliance . Each Lender acknowledges and agrees that it has, independently and without reliance upon Collateral Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund the Loans hereunder. Each Lender has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further acknowledges and agrees that the other Lenders and Collateral Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Lender will, independently and without reliance upon the other Lenders or Collateral Agent, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making the Loans, and in taking or refraining from any action under any Loan Documents. Collateral Agent shall have no duty or responsibility to provide any Lender with any notices, reports or certificates furnished to Collateral Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Collateral Agent or any of Collateral Agent’s Affiliates.
11.10 No Third Party Beneficiaries . This Section 11 is an agreement solely among Lenders and Collateral Agent, and does not confer any rights or benefits upon Obligor or any other Person. As between Obligors and Collateral Agent, any action that Collateral Agent may take under any Loan Documents shall be conclusively presumed to have been authorized and directed by Lenders as herein provided.
11.11 Collateral Agent in its Individual Capacity . As a Lender, Cerberus shall have the same rights and remedies under the other Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders” or any similar term shall include Cerberus in its capacity as a Lender. Each of Cerberus and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee under indentures of, act as an agent under the Revolver Loan Documents, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Cerberus were any other bank, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the Lenders. In their individual capacity, Cerberus and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Lender agrees that Cerberus and its Affiliates shall be under no obligation to provide such information to Lenders.
 
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Section 12.	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	
12.1 Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of Obligors, Collateral Agent and Lenders and their respective successors and assigns, except that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Loan Documents, and (b) any assignment by a Lender must be made in compliance with Section 12.3. Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.
12.2 Participations . 12.2.1 Participations
Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the Other Agreements (including, all or any portion of the Loans made by it); provided, that (a) such Lender’s obligations under this Agreement (including without limitation, its Commitment hereunder) and the Other Agreements shall remain unchanged; (b) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and Borrowers, Collateral Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the Other Agreements; and (c) a participant shall not be entitled to require such Lender to take or omit to take any action hereunder except (i) action directly effecting an extension of the maturity dates or decrease in the principal amount of the Loans, (ii) action directly effecting an extension of the due dates or a decrease in the rate of interest payable on the Loans or the fees payable under this Agreement (other than by virtue of removal of the Default Rate), or (iii) actions directly effecting a release of all or a substantial portion of the Collateral or Borrowers (except as set forth in Section 11.2.1 of this Agreement or any Other Agreement). Borrowers agree that each participant shall be entitled to the benefits of Section 5.6 of this Agreement with respect to its participation in any portion of the Commitment and the Loans as if it was a Lender, except that a participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.6 unless Borrowers agree otherwise in writing; provided that (i) any participant shall not be entitled to any greater benefit thereunder than the Lender (or assignee) selling such participant its participation would have been entitled to in the absence of such participation, except to the extent the entitlement to such greater benefit arose as a result of a change in law, regulations, treaties, or any official interpretations thereof, after such participant acquired its participation and (ii) any participant complies with and is subject to Section 5.6 as if it were a Lender.
12.2.2 Register
In the event that any Lender sells participations in a Registered Loan, such Lender shall maintain a register acting for this purpose as a non-fiduciary agent of Borrower on which it enters the name of all participants in the Registered Loans held by it and the principal amount (and stated interest thereon) of the portion of the Registered Loan that is the subject of the participation (the “ Participant Register ”). A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register. Any such Participant Register shall be available for inspection by Borrowers, Collateral Agent and any Lender at any reasonable time and from time to time upon reasonable prior notice.
 
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12.3 Assignments This Agreement and the Other Agreements shall be binding upon and inure to the benefit of Borrowers, Collateral Agent, each Lender, all future permitted holders of the Obligations and their respective permitted successors and assigns; provided , however , that no Borrower may assign or transfer any of its rights hereunder or under the Loan Documents without the prior written consent of Collateral Agent and each Lender and any such assignment without Collateral Agent’s and Lenders’ prior written consent shall be null and void.
(b) Each Lender may with the written consent of Collateral Agent (not to be unreasonably withheld), assign to one or more other lenders or other entities all or a portion of its rights and obligations under this Agreement with respect to all or any portion of the Loans made by it; provided , however , that (i) such assignment is in an amount which is at least $5,000,000 or a multiple of $1,000,000 in excess thereof (or the remainder of such Lender’s portion of the Loans) (except such minimum amount shall not apply to an assignment by a Lender to (x) a Lender, an Affiliate of such Lender or a Related Fund of such Lender or (y) a group of new Lenders, each of whom is an Affiliate or Related Fund of each other to the extent the aggregate amount to be assigned to all such new Lenders is at least $2,500,000 or a multiple of $500,000 in excess thereof), (ii) the parties to each such assignment shall execute and deliver to Collateral Agent, for its acceptance, an Assignment and Acceptance, together with any promissory note subject to such assignment and such parties shall deliver to Collateral Agent, for the benefit of Collateral Agent, a processing and recordation fee of $5,000 (except the payment of such fee shall not be required (y) in connection with an assignment by a Lender to a Lender, an Affiliate of such Lender or to a Related Fund of such Lender or (z) if Collateral Agent, in its sole discretion, waives payment of such fee) and (iii) no written consent of Collateral Agent shall be required (1) in connection with any assignment by a Lender to a Lender, an Affiliate of such Lender or a Related Fund of such Lender or (2) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of such Lender). Upon such execution, delivery and acceptance, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least three (3) Business Days after the delivery thereof to Collateral Agent (or such shorter period as shall be agreed to by Collateral Agent and the parties to such assignment), (A) the assignee thereunder shall become a “Lender” hereunder and, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such Assignment and Acceptance and (B) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the assigning Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any Other Document or the execution, legality, validity, enforceability, genuineness, sufficiency or
 
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value of this Agreement or any Loan Document furnished pursuant hereto; (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers, Guarantors or any of their Subsidiaries or the performance or observance by Borrowers or Guarantors of any of their obligations under this Agreement or any Loan Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement and the Loan Documents, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the assigning Lender, Collateral Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the Loan Documents; (v) such assignee appoints and authorizes Collateral Agent to take such action as agents on its behalf and to exercise such powers under this Agreement and the Loan Documents as are delegated to Collateral Agent by the terms hereof and thereof, together with such powers as are reasonably incidental hereto and thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the Loan Documents are required to be performed by it as a Lender.
(d) Collateral Agent shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain, or cause to be maintained at the Payment Office, a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the “ Register ”) for the recordation of the names and addresses of the Lenders and the principal amount of the Loans (and stated interest thereon) (each, a “ Registered Loan ”) owing to each Lender from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrowers, Collateral Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrowers and any Lender at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon receipt by Collateral Agent of an Assignment and Acceptance, and subject to any consent required from Collateral Agent pursuant to Section 12.3(b) (which consent of Collateral Agent must be evidenced by the Collateral Agent’s execution of an acceptance to such Assignment and Acceptance), Collateral Agent shall accept such assignment, record the information contained therein in the Register and provide to Collateral Agent a copy of the fully executed Assignment and Acceptance.
(f) A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any, evidencing the same), Collateral Agent shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon, notwithstanding notice to the contrary.
 
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(g) Any Non-U.S. Lender who purchases or is assigned or participates in any portion of such Registered Loan shall comply with Section 5.6(d) .
12.4 Tax Treatment . If any interest in a Loan Document is transferred to a Transferee that is organized under the laws of any jurisdiction other than the United States or any state or district thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 5.6.
 
Section 13.	MISCELLANEOUS	
13.1 Consents. Amendments and Waivers Amendment . No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of the Collateral Agent, with the written consent of Required Lenders, and each Obligor party to such Loan Document; provided, however, that
(a) without the prior written consent of Collateral Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Collateral Agent (including, without limitation, any provision in Section 11 hereunder);
(b) without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the amount set forth on Schedule 1.1(A ) or Schedule 1.1(B) regarding such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;
(c) without the prior written consent of all Lenders, no modification shall be effective that would (i) extend the Termination Date; (ii) alter Section 5.4 or 13.1.1; (iii) except as currently contemplated by the Loan Documents (including, without limitation, in connection with a Permitted Asset Disposition) release Collateral with a book value greater than $10,000,000 during any calendar year; or (iv) except in connection with a Permitted Asset Disposition, release any Obligor from liability for any Obligations.
(d) With the written acknowledgment (without implying a requirement of consent) of Collateral Agent, Borrower Representative, and (if applicable) the signature of a Domestic Subsidiary becoming a Borrower, Joinder Agreements may be entered into and Schedules 8.1.4, 8.1.8, 8.1.11, 8.1.15, 8.1.18, and 8.1.20 may be modified.
13.1.2 Limitations . The agreement of Obligors shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders and/or Collateral Agent as among themselves. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing, and then only in the specific instance and for the specific purpose for which it is given.
13.1.3 Payment for Consents . No Obligors will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to
 
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any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.
13.2 Indemnity . EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.
13.3 Notices and Communications Notice Address . All notices, requests and other communications by or to a party hereto shall be in writing, at the following address:
Kellwood Company
600 Kellwood Parkway
Chesterfield, MO 63017
Attention: Keith A. Grypp
Telephone: (314) 576-3425
Telecopier: (314) 576-3460
with a copy to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
Attention: Jocelyn A. Hirsch, Esq.
Telephone: (312) 862-3201
Telecopier: (312) 862-2200
if to the Collateral Agent, to it at the following address:
Cerberus Business Finance, LLC
299 Park Avenue, 22 nd Floor
New York, New York 10171
Attention: Daniel E. Wolf
Telephone: (212) 891-2121
Telecopier: (212) 891-1541
 
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in each case, with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Eliot L. Relies, Esq.
Telephone: 212-756-2199
Telecopier: 212-593-5955
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 13.3 .
Each such notice, request or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address, or via Federal Express or other reputable overnight courier; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to any Lender pursuant to Section 2.1.4 shall be effective until actually received by the individual to whose attention at Lender such notice is required to be sent. Any written notice, request or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by the Borrower Representative shall be deemed received by all Obligors.
13.3.2 Electronic Communications; Voice Mail . Electronic mail and internet websites may be used only for routine communications, such as financial statements and other information required by Section 9.1.2 , administrative matters and distribution of Loan Documents for execution. Collateral Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.
13.3.3 Non-Conforming Communications . Collateral Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of an Obligor.
13.4 Performance of Borrowers’ Obligations . Collateral Agent or Lenders may, in its/their discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Collateral Agent or any Lender to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Collateral Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Collateral Agent or any Lender under this Section shall be reimbursed to Collateral Agent and/or such Lender by Borrowers, on demand, with interest from the date incurred to the
 
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date of payment thereof at the Default Rate applicable to the Loans. Any payment made or action taken by Collateral Agent or Lenders under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.
13.5 Credit Inquiries . Each Obligor hereby authorizes Collateral Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Obligor or Subsidiary in connection with the establishment of credit lines and/or trade credit or any verification of any Obligor’s Accounts.
13.6 Severability . Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.
13.7 Cumulative Effect: Conflict of Terms . The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise specifically provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.
13.8 Counterparts: Facsimile Signatures . Any Loan Document may be executed in counterparts, each of which taken together shall constitute one instrument. Loan Documents may be executed and delivered by facsimile, and they shall have the same force and effect as manually signed originals. Collateral Agent and each Lender may require confirmation by a manually-signed original, but failure to request or deliver same shall not limit the effectiveness of any facsimile signature.
13.9 Entire Agreement . Time is of the essence of the Loan Documents. The Loan Documents embody the entire understanding of the parties with respect to the subject matter thereof and supersede all prior understandings regarding the same subject matter.
13.10 Obligations of Lenders . The obligations of each Lender hereunder are several, and no Lender shall be responsible for the Obligations of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled, to the extent not otherwise restricted hereunder, to protect and enforce its rights arising out of the Loan Documents. It shall not be necessary for any Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Collateral Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute Collateral Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Obligor. Each Obligor acknowledges and agrees that in connection with all aspects of any transaction contemplated by the Loan Documents, Obligors, Collateral Agent and Lenders have an arms-length business relationship that creates no fiduciary duty on the part of Collateral Agent or any Lender, and each Obligor, Collateral Agent and Lender expressly disclaims any fiduciary relationship.
 
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13.11 Confidentiality . During the term of this Agreement and for 12 months thereafter, Lenders agree to take reasonable precautions to maintain the confidentiality of any information that Borrowers deliver to Lenders and identify as confidential at the time of delivery, except that Lenders may disclose such information (a) to their respective officers, directors, employees, Affiliates and agents, including legal counsel, auditors and other professional advisors; (b) to any party to the Loan Documents from time to time; (c) pursuant to the order of any court or administrative agency; (d) upon the request of any Governmental Authority exercising regulatory authority over such Lender; (e) which ceases to be confidential, other than by an act or omission of any Lender, or which becomes available to any Lender on a nonconfidential basis; (f) to the extent reasonably required in connection with any litigation relating to any Loan Documents or transactions contemplated thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the exercise of any rights or remedies under the Loan Documents; (h) to any Transferee, as long as such Person agrees to be bound by the provisions of this Section; (i) to the National Association of Insurance Commissioners or any similar organization, or to any nationally recognized rating agency that requires access to information about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to any investor or potential investor in a Related Fund that is a Lender or Transferee, but solely for use by such investor to evaluate an investment in such Related Fund, or to any manager, servicer or other Person in connection with its administration of any such Related Fund; or (k) with the consent of Borrower Representative. Notwithstanding the foregoing, Lenders may issue and disseminate to the public general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ names in advertising and other promotional materials.
13.12 GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
13.13 Consent to Forum . EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Collateral Agent or any Lender to bring proceedings against any Obligor in any other court. Nothing in this Agreement shall be deemed to preclude enforcement by Collateral Agent or any Lender of any judgment or order obtained in any forum or jurisdiction.
13.14 Waivers by Obligors . To the fullest extent permitted by Applicable Law, Obligors waive (a) the right to trial by jury (which Collateral Agent and each Lender hereby also waives) in any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest,
 
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notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Collateral Agent on which Obligors may in any way be liable, and hereby ratifies anything Collateral Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Collateral Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Collateral Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a material inducement to Collateral Agent and Lenders entering into this Agreement and that Collateral Agent and Lenders are relying upon the foregoing in their dealings with Obligor. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. 
13.15 Patriot Act Notice . Collateral Agent and Lenders hereby notify Obligor that pursuant to the requirements of the Patriot Act, Collateral Agent and Lenders may be required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Collateral Agent and Lenders to identify it in accordance with the Patriot Act. Collateral Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor’s management and owners, such as legal name, address, social security number and date of birth.
13.16 Subordination . Each Obligor covenants and agrees that the payment of all indebtedness, principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of any Obligor), fees, charges, expenses, reasonable attorneys’ fees and any other sum, obligation or liability owing by any other Obligor to such Obligor, including any intercompany trade payables or royalty or licensing fees (collectively, the “ Intercompany Obligations ”), is subordinated, to the extent and in the manner provided in this Section 13.16, to the prior payment in full of all Obligations (herein, the “ Senior Obligations ”) and that the subordination is for the benefit of Lenders, and Lenders may enforce such provisions directly (it being understood that nothing in this Section 13.16 shall prohibit any payment on any Intercompany Obligations so long as no Default or Event of Default has occurred and is continuing).
(a) Each Obligor hereby (i) authorizes Lenders to demand specific performance of the terms of this Section 13.16 whether or not any other Obligor shall have complied with any of the provisions hereof applicable to it, at any time when such Obligor shall have failed to comply with any provisions of this Section 13.16 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.
(b) Upon any distribution of assets of any Obligor in any dissolution, winding-up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) and subject to the provisions of Section 13.16:
(i) Lenders shall first be entitled to receive payment in full in cash of the Senior Obligations before any Obligor is entitled to receive any payment on account of the Intercompany Obligations.
 
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(ii) Any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, to which any other Obligor would be entitled except for the provisions of Section 13.16, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to Lenders, to the extent necessary to make payment in full of all Senior Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to Lenders.
(iii) In the event that notwithstanding the foregoing provisions of Section 13.16, any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, shall be received by any other Obligor on account of the Intercompany Obligations before all Senior Obligations are paid in full, such payment or distribution shall be received and held in trust for and shall be paid over to Lenders for application to the payment of the Senior Obligations until all of the Senior Obligations shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to Lenders.
(c) No right of the Lenders or any other present or future holders of any Senior Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Obligor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Obligor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.
13.17 Advertisement . Each Obligor hereby authorizes Lenders to publish the names of Borrowers and the amount of the credit facility provided hereunder in any “tombstone” or comparable advertisement which Lenders elect to publish.
13.18 Intercreditor Agreement . Notwithstanding anything contained herein, the rights, remedies, duties and obligations of the Collateral Agent and the Lenders with respect to the Collateral are subject in all respects to the terms and conditions of the Intercreditor Agreement. Furthermore, without limitation of the sentence above, the rights of the Lenders and the duty and/or obligation of Collateral Agent to take any enforcement action with respect to the Collateral is subject in all respects to the terms and conditions of the Intercreditor Agreement. In the event there is a conflict between this Agreement and/or any other Loan Documents and the Intercreditor Agreement, the Intercreditor Agreement shall control and govern.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
 
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I N WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

BORROWERS:	
	
KELLWOOD COMPANY	
KELLWOOD FINANCIAL RESOURCES, INC.	
(formerly known as Newkell, Inc.)	
KWD HOLDINGS, INC.	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
ZOBHA, LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, INC.	
SIERRA DESIGNS ACQUISITION CORPORATION	
ROYAL ROBBINS, INC.	
		
By:	 		
Name:	 	Adrian Kowalewski	
Title:	 	Treasurer	
 
Financing Agreement

					
LENDERS :	
	
ABLECO FINANCE LLC	
		
By:	 		
	 	Name:	 	Daniel Wolf	
	 	Title:	 	President	
	
A5 FUNDING L.P.	
		
By:	 	A5 Fund Management LLC,	
	 	its General Partner	
		
By:	 		
	 	Name:	 	Daniel Wolf	
	 	Title:	 	Vice President	
	
CERBERUS LEVERED LOAN OPPORTUNITIES FUND I, L.P.	
		
By:	 	Cerberus Levered Opportunities GP, LLC,	
	 	its General Partner	
		
By:	 		
	 	Name:	 	Daniel Wolf	
	 	Title:	 	Managing Director	
 
Financing Agreement

					
LENDERS :	
	
COREPOINTE CAPITAL FINANCE LLC	
		
By:	 		
	 	Name:	 	Timothy D. Fording	
	 	Title:	 	Managing Director	
 
Financing Agreement

			
COLLATERAL AGENT :	
	
CERBERUS BUSINESS FINANCE, LLC,
as Collateral Agent	
		
By:	 		
Name:	 	Daniel Wolf	
Title:	 	President	
 
Financing Agreement

Exhibit 10.33
EXECUTION COPY
CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of April 20, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), CERBERUS BUSINESS FINANCE LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Term Loan Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested that Agent and Lenders (i) consent to an amendment to the Sun Last Out B/C/D Loan Agreement to increase the obligations thereunder by $30,000,000 (the “ Additional Sun Debt ”) and (ii) release that certain standby letter of credit number BMCH358973OS issued by Bank of Montreal on February 3, 2012 to Agent on behalf of SK Financial Services Corp. (the “ Sun Letter of Credit ”);
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Consent . The Agent and the Lenders party hereto hereby consent to the incurrence by Borrowers of the Additional Sun Debt, pursuant to the terms of the Fourth AR Sun Loan Agreement (as hereinafter defined). Agent’s and Lenders’ consent to the incurrence of the Additional Sun Debt shall not be deemed to be a consent to any other deviation from the express terms of the Credit Agreement.
3. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 7 below, the Credit Agreement is hereby amended as follows:
(a) Clauses (a) and (b) of the definition of “Applicable Margin” are hereby amended and restated in their entirety as follows:
“(a) From the Effective Date until April 20, 2012 (the “ Initial Applicable Margin Period ”), the relevant Applicable Margin shall be set at (i) 10.25% for a LIBOR Rate Loan, and (ii) 7.75% for a Reference Rate Loan.

(b) After the Initial Applicable Margin Period, the relevant Applicable Margin for a LIBOR Rate Loan or a Reference Rate Loan shall be set at the respective level indicated below based upon the Leverage Ratio of the Parent and its Subsidiaries set forth opposite thereto, which financial tests shall be calculated for the four consecutive fiscal quarter period ending on the last day of the most recently ended fiscal quarter of the Parent and its Subsidiaries for which quarterly financial statements and a certificate of the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative are received by the Collateral Agent and the Lenders in accordance with Section 9.1.2(b) , provided, however, that if at the time of such calculation Consolidated EBITDA of the Parent and its Subsidiaries for the corresponding four consecutive fiscal quarter period is equal to or greater than $50,000,000, then the relevant Applicable Margin for any Loan indicated below shall be reduced by 0.75%

 	  	 	  	Applicable Margin	 	
Level	  	Leverage Ratio	  	LIBOR Rate
Loan	 	 	Reference Rate
Loan	 	
I	  	Leverage Ratio greater than or equal to 2.125 to 1.0	  	 	11.25	% 	 	 	8.75	% 	
II	  	Leverage Ratio less than 2.125 to 1.0 but greater than 1.75 to 1.0	  	 	11.00	% 	 	 	8.50	% 	
III	  	Leverage Ratio less than or equal to 1.75 to 1.0	  	 	10.75	% 	 	 	8.25	% 	
(b) The definition of “Consolidated EBITDA” appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“ Consolidated EBITDA —for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement;
 
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provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (l) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate, (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses incurred in Fiscal Year 2012 solely in connection with the audit of the Vince business in an amount not to exceed $350,000; provided that for the purpose of this definition, “Consolidated EBITDA” of the Parent and its subsidiaries shall be deemed to be: $5,832,000 for the fiscal quarter ended July 31, 2011, $15,604,000 for the fiscal quarter ended October 31, 2011 and $6,604,000 for the fiscal quarter ended January 31, 2012. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Agent.”
 
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(c) The definition of “Obligations” in the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“ Obligations —all (a) principal of and premium, if any, on the Loans, (b) interest (which shall include any PIK Amount or other capitalized interest), expenses, fees and
other sums payable by Obligors under Loan Documents, (c) obligations of Obligors under any indemnity for Claims, (d) Extraordinary Expenses, and (e) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.”
(d) The definition of “Term A Loans” in the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“ Term A Loans —the loans made pursuant to Section 2.1.1 of this Agreement on the Closing Date, together with any PIK Amount in respect of such loans. The amount of each Lender’s Pro Rata share of the Term A Loans as of the Closing Date is set forth on Schedule 1.1(A) .”
(e) The definition of “Term B Loans” in the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“ Term B Loans —the loans made pursuant to Section 2.1.2 of this Agreement on the Closing Date, together with any PIK Amount in respect of such loans. The amount of each Lender’s Pro Rata share of the Term B Loans as of the Closing Date is set forth on Schedule 1.1(B).”
(f) The definition of “PIK Amount” is hereby added to Section 1.1 of the Credit Agreement, in appropriate alphabetical order, to read as follows:
“ PIK Amount —as of any date of determination, the amount of all interest accrued with respect to the Term Loan A and/or the Term Loan B that has been paid-in-kind by being added to the balance of such Loan in accordance with Section 3.1(c).”
(g) Section 3.1(c) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of the following month, (ii) on any date of prepayment, with respect to the principal amount of the Loans being prepaid; and (iii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, (i) so long as no Default or Event of Default has occurred and is continuing, a portion of such interest equal to 1.00% per annum shall, in the absence of an election by the Parent to pay such interest in cash, be paid-in-kind by being added to the principal balance of the Term Loan A and/or the Term Loan B, as applicable, and (ii) interest accrued at the Default Rate shall be due and payable on demand. Any PIK Amount shall be added to the then outstanding principal balance of the Term Loan A and/or the Term Loan B, as applicable, on the first day of the month in arrears, and thereafter, shall bear interest as provided hereunder as if it had originally been part of the outstanding principal of the Term Loan A and/or Term Loan B, as applicable.”
 
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(h) Section 9.1.2(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that (A) with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 180 days of the close of such Fiscal Year, and (B) with respect to all other financial statements for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 97 days after the close of such Fiscal Year), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Required Lenders, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;”
(i) Section 9.1.2(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(b) as soon as available, (i) and in any event within 45 days after the end of each Fiscal Quarter the following: (A) (x) unaudited consolidated balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (y) commencing with the Fiscal Quarter ending April 30, 2012, unaudited balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis, setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) consolidating balance sheets as of the end of such Fiscal Quarter and the related statements of income for such portion of the Fiscal Year then elapsed for Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries (provided, that for the purposes of this clause (B) only, in the case of each Fiscal Quarter that corresponds with the end of a Fiscal Year, such delivery shall be made within 90 days after the end of such Fiscal Quarter), (ii) and in any event within 30 days after the end of each Fiscal Month (A) unaudited consolidated balance sheets as of the end of such Fiscal Month and a related consolidated profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for Parent and its Subsidiaries (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year, and (B) commencing with the Fiscal Month
 
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ending May 31, 2012, unaudited balance sheets as of the end of such Fiscal Month and a related profit and loss statement and cash flow statement for such Fiscal Month and for the portion of the Fiscal Year then elapsed, for the Vince business on a standalone basis (excluding discontinued operations), setting forth in comparative form corresponding figures for the preceding Fiscal Year (it being understood that with respect to clauses (i)(A)(y) above and this clause (ii)(B), delivery of the profit and loss statement and statements of working capital, accounts payable and accounts receivable for the Vince business on a standalone basis shall satisfy the requirements set forth in such clauses (i)(A)(y) and (ii)(B) for the Fiscal Months and Fiscal Quarters ending prior to July 31, 2012) and (iii) and in any event within 45 days after the end of each Fiscal Quarter (but within 90 days after the last Fiscal Quarter in a Fiscal Year) a report setting forth a copy of Parent’s Management Discussion and Analysis for such Fiscal Quarter, and, in each case of clauses (i), (ii) and (iii), certified by either the Chief Financial Officer, Vice President, Finance or Controller of the Borrower Representative as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter or Fiscal Month, as applicable, and period, subject to normal year end adjustments and the absence of footnotes;”
(j) Section 9.1.2(d) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(d) to the extent available and upon Lenders’ request, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements, including any such management letters and material reports with respect to the Vince business on a standalone basis;”
(k) Section 9.1.2(e) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(e) not later than 30 days after the end of each Fiscal Year, projections of (i) Borrowers’ consolidated balance sheets, results of operations and cash flow, (ii) the Vince business’ balance sheets, results of operations and cash flow on a standalone basis, in each case, for the next Fiscal Year, quarter by quarter, in form and substance reasonably satisfactory to the Collateral Agent, which projections shall be prepared on a reasonable basis and in good faith, and based on assumptions believed by the Borrowers to be reasonable at the time made based on the circumstances known at such time; it being recognized by the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;’
(l) Section 9.1.2 of the Credit Agreement is hereby amended by (i) deleting the “; and” at the end of clause (g), (ii) renumbering clause (h) as clause (i); and (iii) inserting the following new clause (h):
“(h) not later than 15 days after the Collateral Agent’s request, such information regarding actions undertaken and/or completed to ensure that the Vince business is working towards reporting its financial performance on a standalone basis such that it could be marketed and sold on a standalone basis; and”
 
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(m) Section 9.2.24 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(a) Leverage Ratio . Permit the Leverage Ratio of the Parent and its Subsidiaries as of the last day of any fiscal quarter ending nearest to the dates set forth below to be greater than the applicable ratio set forth below:

Fiscal Quarter End	  	Leverage Ratio	
		
July 31, 2012	  	7.77:1.00	
		
October 31, 2012	  	5.71:1.00	
		
January 31, 2013	  	3.51:1.00	
		
April 30, 2013	  	3.47:1.00	
		
July 31, 2013	  	3.58:1.00	
		
October 31, 2013	  	3.08:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter	  	2.44:1.00	
 
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(b) Fixed Charge Coverage Ratio . Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries for which the last quarter ends nearest to the date set forth below to be less than the amount set forth opposite such date:

Fiscal Quarter End	  	Fixed Charge Coverage Ratio	
		
July 31, 2012	  	0.14:1.00	
		
October 31, 2012	  	0.41:1.00	
		
January 31, 2013	  	0.67:1.00	
		
April 30, 2013	  	0.89:1.00	
		
July 31, 2013	  	1.24:1.00	
		
October 31, 2013	  	1.28:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter	  	1.22:1.00	
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
6. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) [Intentionally omitted];
(c) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents, consenting to the incurrence by Borrowers of the Additional Sun Debt;
 
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(d) Agent shall have received a fully executed copy of the Fourth Amended and Restated Term Loan Agreement among Borrowers, the other Obligors party thereto, SCSF Kellwood Finance, LLC and Sun Kellwood Finance, LLC (the “ Fourth AR Sun Loan Agreement ”);
(e) Borrower shall have received proceeds of the Additional Sun Debt in the amount of $30,000,000, and such proceeds shall have been used to reduce the outstanding amount of the Revolver Debt;
(f) Agent shall have received payment of an amendment fee in the amount of $512,500 in immediately available funds; and
(g) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
7. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally; and
(d) The incurrence of the Additional Sun Debt will not cause the principal amount of the Priority Obligations (as defined in the 2009 Debenture Intercreditor Agreement) incurred under Section 4.09(b)(1) of the Indenture to exceed the greater of (i) $225,000,000 less the aggregate amount of all Net Proceeds (as defined in the Indenture) of Asset Sales (as defined in the Indenture) applied by any Borrower since the date of the Indenture to repay any Indebtedness under the Priority Lien Documents (as defined in the 2009 Debenture Intercreditor) and to permanently reduce the commitments thereunder and (ii) the amount of the Borrowing Base (as defined in the 2009 Debenture Intercreditor).
8. Other Agreements .
(a) Reaffirmation . Each of SCSF Kellwood Finance, LLC (“ SCSF Finance ”), and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that
 
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certain Guaranty, dated as of October 19, 2011 (the “ Guaranty ”), made by the Sun Guarantors in favor of the Agent remain in full force and effect, and acknowledges and agrees that any reference therein to the Sun B/C/D Loan Agreement in the Guaranty shall mean the Sun B/C/D Loan Agreement as amended and restated by the Fourth AR Sun Loan Agreement.
(b) Release of Sun Letter of Credit and SK/Cerberus Guaranty . Upon the satisfaction of the conditions precedent to this Amendment set forth in Section 6 hereof the Agent agrees that (i) it shall return the Sun Letter of Credit to the Bank of Montreal for cancellation, and (ii) the Limited Guaranty, dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent in the maximum amount of $10,000,000 shall automatically terminate and be null and void and of no further force and effect.
9. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
10. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own,
 
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hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

BORROWERS:	
	
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC	
		
By:	 		
			
Name:	 	Adrian Kowalewski	
Title:	 	Senior Vice President	

AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION
CORPORATION ROYAL ROBBINS, INC.	
		
By:	 		
			
Name:	 	Adrian Kowalewski	
Title:	 	Senior Vice President	
First Amendment

			
AGENT AND LENDER:	
	
CERBERUS BUSINESS FINANCE, LLC,	
as Agent and a Lender	
		
By:	 		
			
Name:	 	Daniel Wolf	
Title:	 	President	

			
LENDERS:	
	
A5 FUNDING L.P.	
		
By:	 	A5 Fund Management LLC,
its General Partner	
		
By:	 		
	 	Name: Daniel Wolf	
	 	Title:   Vice President	

ABLECO FINANCE LLC	
		
By:	 		
	 	Name: Daniel Wolf	
	 	Title:   President	

CERBERUS LEVERED LOAN
OPPORTUNITIES FUND I, L.P.	
		
By:	 	Cerberus Levered Opportunities GP, LLC,
its General Partner	
		
By:	 		
	 	Name: Daniel Wolf	
	 	Title:   Managing Director	

COREPOINTE LOAN SPV LLC	
		
By:	 	CorePointe Group, LLC, its Managing Member	
		
By:	 		
	 	Name: Seth Fink	
	 	Title:   Vice President	

Agreed and acknowledged with respect to Section 8(a):

SUN KELLWOOD FINANCE, LLC	
		
By:	 		
Name: Maxwell Curtis Lentz	
Title:  Vice President	

SCSF KELLWOOD FINANCIAL, LLC	
		
By:	 		
Name: Maxwell Curtis Lentz	
Title:  Vice President	
Agreed and acknowledged with respect to Section 8(b):

SK FINANCIAL SERVICES CORP.	
		
By:	 		
Name: Michael J. McConvery	
Title:  Vice President	
 
First Amendment

Exhibit 10.34
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “ Amendment ”) is entered into as of July 25, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), CERBERUS BUSINESS FINANCE LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Term Loan Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested that Agent and Lenders amend the Credit Agreement to extend the period of time to deliver financial statements in respect of the Vince business for the Fiscal Year ending January 31, 2012 until 225 days after the close of such Fiscal Year;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 9.1.2(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(a) as soon as available, and in any event within 90 days after the close of each Fiscal Year (provided that, with respect to the financial statements in respect of the Vince business referred to in clause (ii) below, for the Fiscal Year ending January 31, 2012, such financial statements shall be furnished within 225 days of the close of such Fiscal Year), (i) consolidated balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of Parent and its Subsidiaries, which consolidated statements shall be prepared in accordance with GAAP, and (ii) balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year of the Vince business on a standalone basis, which financial statements shall

be prepared in accordance with GAAP, in each case, audited and certified (without qualification as to scope, “going concern” or similar items) by a firm of independent certified public accountants of recognized standing selected by Borrower Representative and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information filed with the Securities and Exchange Commission, and the consolidating balance sheets as of the end of such Fiscal Year and related statements of income for such Fiscal Year of Parent and its Subsidiaries, separately presenting Obligors, Immaterial Subsidiaries and Foreign Subsidiaries;”
(b) Section 9.2.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“9.2.10 Subsidiaries . Form or acquire any Subsidiary after the Closing Date, except in accordance with (i)  Section 9.1.9 or (ii) in connection with Permitted Acquisitions, Section 9.2.9; or permit any existing Domestic Subsidiary to issue any additional Equity Interests except director’s qualifying shares and except for Permitted Investments and issuances by a wholly-owned Subsidiary in connection with any Permitted Acquisition.”
3. Continuing Effect . Except as expressly set forth in Section 2 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
4. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
5. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents;
 
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(c) Agent shall have received a fully executed copy of an amendment to the Sun Last Out Term Loan Agreement; and
(d) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
6. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
7. Reaffirmation . Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”), and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011 (the “ Guaranty ”), made by the Sun Guarantors in favor of the Agent remain in full force and effect. and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
8. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York.
 
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(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
9. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

BORROWERS:	
	
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.) 
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, INC.
SIERRA DESIGNS ACQUISITION CORPORATION
ROYAL ROBBINS, INC.	
		
By:	 	/s/ Adrian Kowalewski	
Name: Adrian Kowalewski	
Title:   Senior Vice President	

			
AGENT AND LENDER:	
	
CERBERUS BUSINESS FINANCE, LLC,
as Agent and a Lender	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf	
Title:   President	
 
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LENDERS:	
	
A5 FUNDING L.P. 	
		
By:	 	A5 Fund Management LLC,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf	
	 	Title:   Vice President	
	
ABLECO FINANCE LLC	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf	
	 	Title:   President	
	
CERBERUS LEVERED LOAN
OPPORTUNITIES FUND I, L.P.	
		
By:	 	Cerberus Levered Opportunities GP, LLC,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf	
	 	Title:   Managing Director	
	
COREPOINTE LOAN SPV LLC	
		
By:	 	CorePointe Group, LLC, its Managing
Member	
		
By:	 	/s/ Timothy D. Fording	
	 	Name: Timothy D. Fording	
	 	Title:   Vice President	
 
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Agreed and acknowledged with respect to Section 7:

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	
	
SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 	/s/ Michael J. McConvery	
Name: Michael J. McConvery	
Title:   Vice President	

Exhibit 10.35
CONSENT AND AMENDMENT NO. 3 TO TERM LOAN AGREEMENT
THIS CONSENT AND AMENDMENT NO. 3 TO TERM LOAN AGREEMENT (this “ Amendment ”) is entered into as of December 31, 2012, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), CERBERUS BUSINESS FINANCE LLC, as agent for the Lenders (in such capacity, “ Agent ”). KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, the “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Term Loan Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have notified Agent and the Lenders that Parent and Canadian Recreation Products Inc. (“ Canadian RR Sub ”) desire to enter into a Purchase Agreement in the form of Exhibit A hereto (the “ Royal Robbins Purchase Agreement ”) pursuant to which Parent will sell all of the issued and outstanding equity interests of Royal Robbins, LLC (“ Royal Robbins ” and all such issued and outstanding equity interests of Royal Robbins the “ Royal Robbins Transferred Equity Interests ”) to RR Acquisition Corporation (“ US RR Purchaser ”) and Canadian RR Sub will sell the assets described on Exhibit B hereto (the “ RR Transferred Assets ”) to RR Canada, Inc. (“ Canadian RR Purchaser ”);
WHEREAS, the Loan Parties have also notified Agent and the Lenders that Phat Fashions LLC (“ Phat Fashions ”) has entered into a Purchase Agreement in the form of Exhibit C hereto (the “ Phat Fashions Purchase Agreement ”) pursuant to which Phat Fashions will sell the assets described on Exhibit D hereto (the “ PF Transferred Assets ”) to Baby Phat Holding Company, LLC (“ PF Purchaser ”);
WHEREAS, the Loan Parties have requested that Agent and the Lenders consent to (i) the sale by Parent of all of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement, (iii) the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case upon receipt of the Initial RR Consideration (as defined below), (iv) the release of Agent’s Lien on the PF Transferred Assets upon receipt of the Initial PF Consideration (as defined below), and (v) the prepayment of the Obligations under the Credit Agreement in an aggregate amount not less than $10,000,000, with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement;
WHEREAS, the Agent and Lenders are willing to provide such consent on the terms provided herein;

WHEREAS, the Loan Parties, Agent and Lenders have also agreed to amend the Credit Agreement in certain respects on the terms provided herein;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Consent . In reliance on the representations and warranties of the Loan Parties set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, Agent and the Lenders consent to (i) the sale by Parent of the Royal Robbins Transferred Equity Interests to US RR Purchaser pursuant to the Royal Robbins Purchase Agreement, the release of Royal Robbins as a Borrower and/or Obligor under the Credit Agreement and the other Loan Documents and the release of Agent’s Lien on the assets of Royal Robbins, in each case so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Royal Robbins Purchase Agreement) for the Royal Robbins Transferred Equity Interests (such amount, the “ Initial RR Consideration ”) is at least $17,500,000 and (C) $10,000,000 of Initial RR Consideration is remitted directly to the Agent and the remaining portion of the Initial RR Consideration is remitted directly to the Revolving Credit Agent for application to the outstanding Revolver Debt, (ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement and the release of Agent’s Lien on the PF Transferred Assets, in each case, so long as (A) such sale is consummated on or before January 31, 2013 (B) the amount of the Net Cash Proceeds arising from the cash purchase price (excluding any escrow amount) paid on the Closing (as defined in the Phat Fashions Purchase Agreement) for the PF Transferred Assets (such amount, the “ Initial PF Consideration ”) is at least $5,000,000 and (C) the Initial PF Consideration is remitted directly to Revolving Credit Agent for application to the outstanding Revolver Debt, and (iii) the prepayment of the Obligations in an aggregate amount not less than $10,000,000 with a portion of the Net Cash Proceeds arising from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement. The foregoing consent shall not be deemed to be a consent to any other deviation from the express terms of the Credit Agreement and the Loan Documents.
3. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Borrower set forth in Section 7 below and subject to the conditions to effectiveness set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended to add the following definitions in appropriate alphabetical order, as follows:
Initial RR Consideration – as defined in the Third Amendment.
Initial PF Consideration – as defined in the Third Amendment.
PF Transferred Assets – as defined in the Third Amendment.
 
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Phat Fashions Purchase Agreement – as defined in the Third Amendment.
Royal Robbins Investment – collectively, the “Seller Notes” (as defined in the Royal Robbins Purchase Agreement) and the “Earnout Cash” (as defined in the Royal Robbins Purchase Agreement).
Royal Robbins Purchase Agreement – as defined in the Third Amendment.
Royal Robbins Transferred Equity Interests – as defined in the Third Amendment.
Third Amendment – that certain Consent and Amendment No. 3 to Credit Agreement dated as of December 31, 2012 among Agent, Lenders and Loan Parties.
(b) The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“ Consolidated EBITDA - for any period, for Parent and its Subsidiaries on a consolidated basis and without duplication, an amount equal to the sum (provided, that any gains referred to in clauses (e) or (m) below shall be deducted from such sum) of (without duplication) (a) Consolidated Net Income, (b) Consolidated Net Interest Expense deducted in determining such Consolidated Net Income, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) to the extent added or deducted in the calculation of Consolidated Net Income, all gains or losses in connection with restructuring the Calvin Klein license owned by Parent and its Subsidiaries in an aggregate amount not to exceed $3,000,000 in the aggregate for all periods, (f) to the extent deducted in the calculation of Consolidated Net Income, all costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ Koret and Sag Harbor names (including, but not limited to, severance, lease buy-outs, termination costs and losses on inventory), as well as other severance costs, contract termination costs, and costs associated with the shutdown of Borrowers’ Trenton, Tennessee distribution facility, in an aggregate amount not to exceed $1,500,000 during the term of this Agreement; provided , that the aggregate amount added back under this clause (f) for the Fiscal Year ending January 28, 2012 shall not exceed $1,000,000, (g) to the extent deducted in the calculation of Consolidated Net Income, any costs and expenses relating to environmental claims in respect of Borrowers’ New Haven property in an amount not to exceed $2,000,000 in the aggregate for all periods, (h) nonrecurring restructuring charges incurred during Fiscal Years 2012 and 2013, in an aggregate amount for both years not to exceed $1,750,000, to the extent not already covered by any of the clauses (a)-(g) above, (i) losses or expenses reflected in Consolidated Net Income as a result of (A) amounts paid to Sponsor in respect of
 
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management fees to the extent (1) permitted under Section 9.2.17 (but not to exceed $3,000,000 in any Fiscal Year) and (2) not included in Consolidated EBITDA for a prior period as accrued but unpaid management fees and expenses pursuant to clause (C) below, (B) amounts paid to Sponsor in respect of expense reimbursements to the extent permitted under Section 9.2.17, and (C) accrued but unpaid management fees and expenses payable to Sponsor permitted under Section 9.2.17, (j) costs and expenses incurred in connection with Permitted Acquisitions, (k) all gains or losses resulting from any adjustments of future purchase price or earnout obligations recorded on the balance sheet (to the extent required by GAAP) in connection with the Rebecca Taylor and Zobha acquisitions or any Permitted Acquisition, in an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement, (l) severance expense incurred outside of a GAAP designated restructuring event not to exceed $25,000 in Fiscal Year 2012, (m) to the extent deducted in the calculation of Consolidated Net Income, expense associated with maintaining the stock option program not to exceed $100,000 during any trailing twelve month period, (n) payment associated with the escheatment audit not to exceed $2,100,000 in aggregate, (o) to the extent deducted in the calculation of Consolidated Net Income, fixed asset write-offs and termination costs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $5,000,000 during the term of this Agreement, (p) to the extent deducted in the calculation of Consolidated Net Income, all non-cash costs associated with inventory write-downs in connection with the closure of certain business segments (including certain retail stores) relating to the Borrowers’ BLK DNM and Lamb and Flag names, in an aggregate amount not to exceed $3,300,000 during the term of this Agreement, and (q) the aggregate amount of all audit, tax, consulting and legal costs and expenses paid by the Loan Parties during such period associated with Project Victory, plus retention payments during such period for Rea Laccone and Christopher LaPolice less estimated pro forma costs for replacement executives for Rea Laccone and Christopher LaPolice during such period. For each period of 12 consecutive Fiscal Months ending next following the date of any Acquisition (whether consummated before or after the Closing Date), Consolidated EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission and reasonably satisfactory to Agent.”
(c) The definition of “Permitted Investment” in Section 1.1 of the Credit Agreement is hereby amended to replace the reference to “(i)” with a reference to “(j)”.
(d) The definition of “Restricted Investment” in Section 1.1 of the Credit Agreement is hereby amended to (i) replace the “and” after the clause (h) with “,”, (ii) reletter clause “(i)” as “(j)”, and (iii) add the following clause (i):
“(i) the Royal Robbins Investment, and”.
 
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(e) A new sentence is added at the end of Section 2.1.6(b) of the Credit Agreement as follows:
“Notwithstanding anything contained in this Section 2.1.6(b) to the contrary, (i) the Net Cash Proceeds from the sale of the Royal Robbins Transferred Equity Interests pursuant to the Royal Robbins Purchase Agreement shall be used as follows: (A) $10,000,000 shall be used by Obligors to prepay the Obligations, (B) $5,000,000 shall be applied to the prepayment of the Revolver Debt in accordance with Section 2.1.7 , and (C) the remaining portion of such Net Cash Proceeds shall pay down the Revolver Debt (without a permanent reduction in the Revolver Commitment (as defined in the Revolver Agreement) or the establishment of a permanent reserve against the Borrowing Base (as defined in the Revolver Agreement), it being understood that such Net Cash Proceeds shall not be required to be reinvested in or otherwise used to repair, replace or restore any properties or assets as provided above in this Section 2.1.6(b) so long as “Excess Proceeds” (as defined in the 2009 Indenture) do not at any time exceed $10,000,000), and (ii) the Net Cash Proceeds from the sale of the PF Transferred Assets pursuant to the Phat Fashions Purchase Agreement shall pay down the Revolver Debt (without a permanent reduction in the Revolver Commitment (as defined in the Revolver Agreement) or the establishment of a permanent reserve against the Borrowing Base (as defined in the Revolver Agreement), it being understood that such Net Cash Proceeds shall not be required to be reinvested in or otherwise used to repair, replace or restore any properties or assets as provided above in this Section 2.1.6(b) ).”
4. Continuing Effect . Except as expressly set forth in Section 2 or 3 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
5. Reduction of SK/Wells Guaranty/Wells Guaranty LC . Pursuant to that certain Waiver, dated as of March 23, 2012 (the “ Waiver ”), between the Agent, the Lenders, the Loan Parties, and SK Financial Services Corp. (“ SK ”), in the event that the SK/Wells Guaranty (as defined therein) is terminated (unless such termination is a result of payment in full of under the SK/Wells Guaranty and/or a full draw under the Wells Guaranty LC (as defined therein)) but the SK/Cerberus Guaranty (as defined therein) remains effective, SK shall promptly (but in any event within three (3) Business Days) deliver to the Agent a letter of credit (in form and substance substantially similar to, and issued by the same financial institution that provided, the Wells Guaranty LC) in the amount of the Wells Guaranty LC minus any payments previously made under such Wells Guaranty LC to support SK’s obligations under the SK/Wells Guaranty. Notwithstanding the provisions of the Waiver, the Agent and the Lenders agree that so long as (a) no Event of Default shall have occurred and be continuing, and (b) the Revolving Credit Agent and the Lenders (as defined in the Revolver Agreement) have returned and terminated the Wells Guaranty LC:
 
 	(a)	they will accept a letter of credit in the amount of $10,000,000, on terms and conditions mutually acceptable to SK and the Agent; and	
 
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 	(b)	they consent to the reduction of the Guaranty Cap (as defined in the Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent (the “ SK/Cerberus Guaranty ”)) from $20,000,000 (minus any payments previously made under the Wells Guaranty LC to support SK’s obligations under the SK/Wells Guaranty) to $10,000,000.	
6. Reaffirmation and Confirmation: Covenant .
(a) Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects.
(b) Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”) and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011, made by the Sun Guarantors in favor of the Agent remain in full force and effect and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
7. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment;
(b) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement;
(c) Agent shall have received a fully executed copy of an amendment to the Sun Loan Documents, consenting to the dispositions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement;
(d) Agent shall have received a fully executed consent to the Intercreditor Agreement consenting to this Amendment; and
 
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(e) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
8. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally; and
(d) The transactions contemplated by the Royal Robbins Purchase Agreement and the Phat Fashions Purchase Agreement and the application of the Net Cash Proceeds from such transactions as described herein are in compliance with the 2009 Indenture. Parent has received an opinion as to fairness to Parent of the transactions contemplated by the Royal Robbins Purchase Agreement from a financial point of view issued by an accounting, appraisal or investment banking firm of material standing.
9. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
 
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10. Other Agreements .
(a) Effective simultaneously with receipt of the Initial RR Consideration pursuant to Section 2 hereof, (i) the release in the form of Exhibit E hereto releasing Royal Robbins as a Borrower under the Credit Agreement and the other Loan Documents shall be automatically effective, (ii) Agent authorizes the filing of a UCC termination statement with respect to the UCC financing statement listed on Exhibit F hereto, and (iii) Agent agrees to take such further actions as may be reasonably requested by Borrowers to evidence the termination of the Liens of Agent in the assets of Royal Robbins and the release of Royal Robbins as a Borrower.
(b) Effective simultaneously with receipt of the Initial PF Consideration and the Initial RR Consideration pursuant to Section 2 hereof, (i) Agent authorizes the filing of the partial release in the form of Exhibit G hereto with respect to the UCC financing statement listed on Exhibit H hereto and (ii) Agent agrees to take such further actions as may be reasonably requested by Obligors to evidence the termination of the Liens of Agent in the PF Transferred Assets.
(c) Loan Parties agree that the Net Cash Proceeds of any consideration received by Parent in excess of the Initial RR Consideration under the Royal Robbins Purchase Agreement shall be subject to the terms of Section 2.1.6(b) of the Credit Agreement (as amended by the Third Amendment) and the Net Cash Proceeds of any consideration received by Phat Fashions in excess of the Initial PF Consideration under the Phat Fashions Purchase Agreement shall be subject to the terms of Section 2.1.6(b) of the Credit Agreement (as amended by the Third Amendment).
11. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
 
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(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

BORROWERS:	
	
KELLWOOD COMPANY	
KELLWOOD FINANCIAL RESOURCES, INC.	
(formerly known as Newkell, Inc.)	
KWD HOLDINGS, INC.	
PHAT FASHIONS LLC	
PHAT LICENSING LLC	
ZOBHA, LLC	
MEOW INC.	
BETH’S BOUTIQUE, LLC	
AMERICAN RECREATION PRODUCTS, LLC	
SIERRA DESIGNS ACQUISITION COMPANY, LLC	
ROYAL ROBBINS, LLC	
VINCE, LLC	
		
By:	 	/s/ Keith A. Grypp	
Name:	 	Keith A. Grypp	
Title:	 	Senior Vice President	
Signature Page to Consent and Amendment No. 3 to Credit Agreement

			
AGENT AND LENDER:
 
CERBERUS BUSINESS FINANCE, LLC,
As Agent and a Lender	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	President	
Consent and Amendment No. 3 to Credit Agreement

			
LENDERS:	
	
A5 FUNDING L.P.	
By:	 	A5 Fund Management LLC,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	Vice President	
	
ABLECO FINANCE LLC	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	President	
	
CERBERUS OFFSHORE LEVERED I L.P.	
By:	 	COL I GP Inc.,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	Vice President	
	
CERBERUS OFFSHORE LEVERED II L.P.	
By:	 	COL II GP Inc.,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	Vice President	
	
CERBERUS ONSHORE LEVERED II LLC	
		
By:	 	/s/ Daniel Wolf	
Name:	 	Daniel Wolf	
Title:	 	Vice President	
Consent and Amendment No. 3 to Credit Agreement

Agreed and acknowledged with respect to Section 5(b):

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael J. McConvery	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
	
SK FINANCIAL SERVICES CORP.	
		
By:	 	/s/ Michael J. McConvery	
Name:	 	Michael J. McConvery	
Title:	 	Vice President	
Signature Page to Consent and Amendment No. 3 to Credit Agreement

Exhibit 10.36
EXECUTION COPY
MODIFICATION TO CONSENT AND AMENDMENT NO. 4
TO TERM LOAN AGREEMENT
THIS MODIFICATION TO CONSENT AND AMENDMENT NO. 4 TO TERM LOAN AGREEMENT (this “ Modification to Consent ”) is entered into as of March      , 2013, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), CERBERUS BUSINESS FINANCE LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Term Loan Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Term Loan Agreement ”);
WHEREAS, the Loan Parties, Agent and Lenders are also parties to that certain Consent and Amendment No. 3 to Term Loan Agreement dated as of December 31, 2012 (the “ Phat Fashions Consent ”);
WHEREAS, pursuant to the Phat Fashions Consent, Agent and Lenders consented to the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement, subject to certain terms and conditions;
WHERAS, the Loan Parties have requested that certain of such terms and conditions to such consent be modified and Agent and Lenders are willing to provide their consent to such modification on the terms provided herein;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Phat Fashions Consent.
2. Amendments to Phat Fashions Consent . In reliance upon the representations and warranties of the Borrower set forth in Section 6 below and subject to the conditions to effectiveness set forth in Section 5 below, the Phat Fashions Consent is hereby amended as follows:
(a) Section 2(ii) is amended and restated in its entirety as follows:
(ii) the sale by Phat Fashions of the PF Transferred Assets to PF Purchaser pursuant to the Phat Fashions Purchase Agreement and the release of Agent’s Lien on the PF Transferred Assets, in each case, so long as (A) such sale is consummated on or before May 31, 2013, (or such later date as Agent shall agree to), (B) the amount of the gross proceeds arising from the cash purchase price paid on the Closing (as defined in the Phat Fashions Purchase Agreement) for the PF Transferred Assets (such amount, the “ Initial PF Consideration ”) is at least $4,800,000, and (C) the Net Cash Proceeds of the Initial PF Consideration is remitted directly to Agent for application to the outstanding Revolving Loans,

(b) The Phat Fashions Purchase Agreement attached as Exhibit C to the Phat Fashions Consent is replaced with Exhibit C hereto. All references to the Phat Fashions Purchase Agreement shall mean the agreement attached hereto as Exhibit C .
3. Continuing Effect . Except as expressly set forth in Section 2 of this Modification to Consent, nothing in this Modification to Consent shall constitute a modification or alteration of the terms, conditions or covenants of the Term Loan Agreement or any other Loan Document (including the Phat Fashions Consent), or a waiver of any other terms or provisions thereof, and the Term Loan Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
4. Reaffirmation and Confirmation; Covenant .
(a) Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Term Loan Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Term Loan Agreement or any other Loan Document. Each Loan Party hereby agrees that this Modification to Consent in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects.
(b) Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”) and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011, made by the Sun Guarantors in favor of the Agent remain in full force and effect and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
5. Conditions to Effectiveness . This Modification to Consent shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Modification to Consent;
(b) Agent shall have received a fully executed copy of an amendment to the Revolver Loan Documents, with respect to the matters addressed in this Modification to Consent;
 
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(c) Agent shall have received a fully executed copy of an amendment to the Sun Loan Documents, with respect to the matters addressed in this Modification to Consent;
(d) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Modification to Consent.
6. Representations and Warranties . In order to induce Agent and Lenders to enter into this Modification to Consent, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Modification to Consent:
(a) All representations and warranties contained in the Term Loan Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Modification to Consent, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Modification to Consent and the Term Loan Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
7. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Modification to Consent and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Term Loan Agreement. All obligations provided herein shall survive any termination of this Modification to Consent and the Term Loan Agreement as modified hereby.
(b) Governing Law . This Modification to Consent shall be a contract made under and governed by the internal laws of the State of New York.
(c) Counterparts . This Modification to Consent may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Modification to Consent by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Modification to Consent.
 
-3-

8. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Term Loan Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Modification to Consent.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
-4-

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

BORROWERS:
 
KELLWOOD COMPANY
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, LLC
SIERRA DESIGNS ACQUISITION COMPANY, LLC
VINCE, LLC	
		
By:	 	/s/ Keith Grypp	
Name: Keith Grypp
Title:   Senior Vice President	

			
AGENT AND LENDER:
 
CERBERUS BUSINESS FINANCE, LLC,
as Agent and a Lender	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf	
Title:   President	
Modification to Consent and Amendment No. 4 to Term Loan Agreement

			
LENDERS:
 
A5 FUNDING L.P.	
		
By:	 	A5 Fund Management LLC,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
 
ABLECO FINANCE LLC	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   President	
 
CERBERUS OFFSHORE LEVERED I L.P.	
		
By:	 	COL I GP Inc.,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
 
CERBERUS OFFSHORE LEVERED II LP	
		
By:	 	COL II GP Inc.,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
 
CERBERUS ONSHORE LEVERED II LLC	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
Modification to Consent and Amendment No. 4 to Term Loan Agreement

			
CERBERUS AUS LEVERED II LP	
		
By:	 	CAL I GP LLC,
its General Partner	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
 
CERBERUS ASRS FUNDING LLC	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf
Title:   Vice President	
Modification to Consent and Amendment No. 4 to Term Loan Agreement

Agreed and acknowledged with respect to Section 4(b):

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Melissa Klafter	
Name: Melissa Klafter
Title:   Vice President	

SCSF KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Melissa Klafter	
Name: Melissa Klafter
Title:   Senior Vice President	

SK FINANCIAL SERVICES CORP.	
		
By:	 	/s/ Melissa Klafter	
Name: Melissa Klafter
Title:   Vice President	
Modification to Consent and Amendment No. 4 to Term Loan Agreement

Exhibit 10.37
AMENDMENT NO. 5 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 5 TO CREDIT AGREEMENT (this “Amendment ”) is entered into as of May 3, 2013, by and among the Lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), CERBERUS BUSINESS FINANCE LLC, as agent for the Lenders (in such capacity, “ Agent ”), KELLWOOD COMPANY, a Delaware corporation (“ Parent ”), the Domestic Subsidiaries of Parent party hereto as Borrowers (together with Parent, “ Borrowers ”) and the other Obligors party hereto (together with the Borrowers, the “ Loan Parties ”).
WHEREAS, the Loan Parties, Agent, and Lenders are parties to that certain Term Loan Agreement dated as of October 19, 2011 (as amended, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Loan Parties have requested that Agent and Lenders amend the Credit Agreement to, among other things, amend the definition of “Fixed Charge Coverage Ratio”;
WHEREAS, in connection therewith, the Loan Parties, Agent and Lenders have agreed to amend the Credit Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:
1. Defined Terms . Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . In reliance upon the representations and warranties of the Loan Parties set forth in Section 6 below, the Credit Agreement is hereby amended as follows:
(a) The definition of “Fixed Charge Coverage Ratio” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“ Fixed Charge Coverage Ratio —the ratio, determined on a consolidated basis for Parent and its Subsidiaries for the most recent 12 consecutive Fiscal Months, of (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures (except (i) those financed with Permitted Debt (other than Revolver Debt or the Loans) and (ii) with respect to the fiscal quarters ending on July 31, 2013, October 31, 2013 and January 31, 2014, up to $7,500,000 of capital expenditures for a new IT system, new headquarters, and new shop and store openings related to Project Victory, shall be disregarded for purposes of this clause (i), provided , however , that only a maximum of $4,000,000 may be used for new store and shop openings) plus (ii) cash taxes paid, plus (iii) Distributions made by Parent in cash (other than, to the extent included in clause (iii), without duplication, (x) any purchase, redemption or other acquisition or retirement for value of any Equity Interest held by an employee in connection with the termination of employment, death or disability of that employee of any Obligor and (y) management fees, costs and expenses paid to Sponsor by Borrowers to the extent deducted in calculation of Consolidated Net Income), to (b) Fixed Charges.”

(b) Section 9.2.24(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(b) Fixed Charge Coverage Ratio . Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries for which the last quarter ends nearest to the date set forth below to be less than the amount set forth opposite such date:

Fiscal Quarter End	  	Fixed Charge Coverage Ratio	
July 31, 2012	  	0.14:1.00	
		
October 31, 2012	  	0.41:1.00	
		
January 31, 2013	  	0.67:1.00	
		
April 30, 2013	  	0.89:1.00	
		
July 31, 2013	  	1.10:1.00	
		
October 31, 2013	  	1.175:1.00	
		
January 31, 2014 and as of the last day of each fiscal quarter thereafter”	  	1.25:1.00”	
3. Continuing Effect . Except as expressly set forth in Section 2 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby.
4. Reaffirmation and Confirmation; Covenant . Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable (except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally) and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects. Failure to comply with the foregoing agreement shall constitute an immediate Event of Default.
 
-2-

5. Conditions to Effectiveness . This Amendment shall become effective upon the satisfaction of each of the following conditions precedent, each in form and substance acceptable to Agent:
(a) Agent shall have received a fully executed copy of this Amendment; and
(b) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment.
6. Representations and Warranties . In order to induce Agent and Lenders to enter into this Amendment, each Loan Party hereby represents and warrants to Agent and Lenders that, after giving effect to this Amendment:
(a) All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Amendment, in each case as if then made, other than representations and warranties that expressly relate solely to an earlier date (in which case such representations and warranties were true and correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) This Amendment and the Credit Agreement, as modified hereby, constitute legal, valid and binding obligations of each Loan Party and are enforceable against each Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
7. Amendment Fee . The Borrowers (a) hereby agree to pay to the Collateral Agent, for its sole and separate account and not the account of any Lender, a nonrefundable amendment fee equal to $25,000, in immediately available funds, on the date hereof, and (b) acknowledge and agree that such fee shall be fully earned as of date hereof, constitutes an “Obligation” and is in addition to any interest and other fees payable by the Borrowers under the Credit Agreement or any other Loan Document.
8. Reaffirmation . Each of (i) SCSF Kellwood Finance, LLC (“ SCSF Finance ”), and Sun Kellwood Finance, LLC (“ Sun Finance ”, and together with SCSF Finance, the “ Sun Guarantors ”) hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Guaranty, dated as of October 19, 2011 (the “ Guaranty ”), made by the Sun Guarantors in favor of the Agent remain in full force and effect. and (ii) SK Financial Services Corp. hereby ratifies, affirms, acknowledges and agrees that its obligations under that certain Limited Guaranty dated as of March 23, 2012, made by SK Financial Services Corp. in favor of the Agent remains in full force and effect.
 
-3-

9. Miscellaneous .
(a) Expenses . The Loan Parties jointly and severally agree to pay on demand all expenses of Agent (including, without limitation, the fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, all in accordance with Section 3.4 of the Credit Agreement. All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.
(b) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.
10. Release .
(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “ Releasees ” and individually as a “ Releasee ”), of and from all demands, actions, causes of action, suits, controversies, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “ Claim ” and collectively, “ Claims ”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.
(b) Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
(c) Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
[signature pages follow]
 
-4-

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

BORROWERS:
 
KELLWOOD COMPANY
KWD HOLDINGS, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC
ZOBHA, LLC
MEOW INC.
BETH’S BOUTIQUE, LLC
AMERICAN RECREATION PRODUCTS, LLC
SIERRA DESIGNS ACQUISITION COMPANY, LLC
VINCE, LLC	
		
By:	 	/s/ Keith Grypp	
Name: Keith Grypp	
Title:   Senior Vice President	

			
AGENT AND LENDER:
 
CERBERUS BUSINESS FINANCE, LLC,
as Agent	
		
By:	 	/s/ Daniel Wolf	
Name: Daniel Wolf	
Title:   President	

			
LENDERS:
 
A5 FUNDING L.P.	
		
By:	 	A5 Fund Management LLC,	
	 	its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	
	
ABLECO FINANCE LLC	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   President	
	
CERBERUS OFFSHORE LEVERED I L.P.	
		
By:	 	COL I GP Inc.,	
	 	its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	
	
CERBERUS OFFSHORE LEVERED II LP	
		
By:	 	COL II GP INC.,	
	 	its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	
	
CERBERUS ONSHORE LEVERED II LLC	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	

			
CERBERUS AUS LEVERED LP	
		
By:	 	CAL I GP LLC,	
	 	its General Partner	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	
	
CERBERUS ASRS FUNDING LLC	
		
By:	 	/s/ Daniel Wolf	
	 	Name: Daniel Wolf
Title:   Vice President	

Agreed and acknowledged with respect to Section 7:

SUN KELLWOOD FINANCE, LLC	
		
By:	 	/s/ Michael McConvery	
Name: Michael McConvery	
Title:   Vice President and Asst. Secretary	

SCSF KELLWOOD FINANCIAL, LLC	
		
By:	 	/s/ Michael McConvery	
Name: Michael McConvery	
Title:   Vice President and Asst. Secretary	

SK FINANCIAL SERVICES CORP.	
		
By:	 	/s/ Michael McConvery	
Name: Michael McConvery	
Title:   Vice President and Asst. Secretary	

Exhibit 10.40

KELLWOOD COMPANY
AND
THE GUARANTORS NAMED HEREIN
$120,590,000
12 7/8% SECOND-PRIORITY SENIOR SECURED PIK NOTES DUE 2014

INDENTURE
Dated as of July 23, 2009

Wells Fargo Bank, National Association
as Trustee
and
Collateral Agent

CROSS-REFERENCE TABLE*

Trust Indenture Act Section	  	Indenture Section	
310(a)(1)	  	7.10	
      (a)(2)	  	7.10	
      (a)(3)	  	N.A.	
      (a)(4)	  	N.A.	
      (a)(5)	  	7.10	
      (b)	  	7.10	
      (c)	  	N.A.	
311(a)	  	7.11	
      (b)	  	7.11	
      (c)	  	N.A.	
312(a)	  	2.05	
      (b)	  	13.03	
      (c)	  	13.03	
313(a)	  	7.06	
      (b)(1)	  	N.A.	
      (b)(2)	  	7.06	
      (c)	  	7.06; 13.02	
      (d)	  	7.06	
314(a)	  	4.03; 12.02; 13.05	
      (b)	  	N.A.	
      (c)(1)	  	13.04	
      (c)(2)	  	13.04	
      (c)(3)	  	N.A.	
      (d)	  	N.A.	
      (e)	  	13.05	
      (f)	  	N.A.	
315(a)	  	7.01	
      (b)	  	7.05, 13.02	
      (c)	  	7.01	
      (d)	  	7.01	
      (e)	  	6.11	
316(a) (last sentence)	  	2.09	
      (a)(1)(A)	  	6.05	
      (a)(1)(B)	  	6.04	
      (a)(2)	  	N.A.	
      (b)	  	6.07	
      (c)	  	2.12	
317(a)(1)	  	6.08	
      (a)(2)	  	6.09	
      (b)	  	2.04	
318(a)	  	13.01	
      (b)	  	N.A.	
      (c)	  	13.01	

N.A. means not applicable.
*	This Cross Reference Table is not part of the Indenture.	

TABLE OF CONTENTS

 	 	 	  	Page	 	
		
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE	  	 	1	  	
Section 1.01	 	Definitions.	  	 	1	  	
Section 1.02	 	Other Definitions.	  	 	27	  	
Section 1.03	 	Incorporation by Reference of Trust Indenture Act.	  	 	28	  	
Section 1.04	 	Rules of Construction.	  	 	28	  	
		
ARTICLE 2. THE NOTES	  	 	29	  	
Section 2.01	 	Form and Dating.	  	 	29	  	
Section 2.02	 	Execution and Authentication; Interest on Notes.	  	 	31	  	
Section 2.03	 	Registrar and Paying Agent.	  	 	33	  	
Section 2.04	 	Paying Agent to Hold Money in Trust.	  	 	33	  	
Section 2.05	 	Holder Lists.	  	 	33	  	
Section 2.06	 	Transfer and Exchange.	  	 	34	  	
Section 2.07	 	Replacement Notes.	  	 	47	  	
Section 2.08	 	Outstanding Notes.	  	 	47	  	
Section 2.09	 	Treasury Notes.	  	 	48	  	
Section 2.10	 	Temporary Notes.	  	 	48	  	
Section 2.11	 	Cancellation.	  	 	48	  	
Section 2.12	 	Defaulted Interest.	  	 	48	  	
Section 2.13	 	C USIP Numbers.	  	 	49	  	
		
ARTICLE 3. REDEMPTION AND PREPAYMENT	  	 	49	  	
Section 3.01	 	Notices to Trustee.	  	 	49	  	
Section 3.02	 	Selection of Notes to Be Redeemed or Purchased.	  	 	49	  	
Section 3.03	 	Notice of Redemption.	  	 	50	  	
Section 3.04	 	Effect of Notice of Redemption.	  	 	51	  	
Section 3.05	 	Deposit of Redemption or Purchase Price.	  	 	51	  	
Section 3.06	 	Notes Redeemed or Purchased in Part.	  	 	51	  	
Section 3.07	 	Optional Redemption.	  	 	51	  	
Section 3.08	 	Mandatory Redemption.	  	 	52	  	
Section 3.09	 	Offer to Purchase by Application of Excess Proceeds.	  	 	52	  	
		
ARTICLE 4. COVENANTS	  	 	54	  	
Section 4.01	 	Payment of Notes.	  	 	54	  	
Section 4.02	 	Maintenance of Office or Agency.	  	 	54	  	
Section 4.03	 	Financial Statements.	  	 	54	  	
Section 4.04	 	Compliance Certificate.	  	 	55	  	
Section 4.05	 	Taxes.	  	 	56	  	
Section 4.06	 	Stay, Extension and Usury Laws.	  	 	56	  	
Section 4.07	 	Restricted Payments.	  	 	56	  	
Section 4.08	 	Dividend and Other Payment Restrictions Affecting Subsidiaries.	  	 	61	  	
Section 4.09	 	Incurrence of Indebtedness and Issuance of Preferred Stock.	  	 	63	  	
Section 4.10	 	Asset Sales.	  	 	68	  	
 
i

							
Section 4.11	 	Transactions with Affiliates.	  	 	69	  	
Section 4.12	 	Liens.	  	 	71	  	
Section 4.13	 	Business Activities.	  	 	72	  	
Section 4.14	 	Corporate Existence.	  	 	72	  	
Section 4.15	 	Offer to Repurchase Upon Change of Control.	  	 	72	  	
Section 4.16	 	Designation of Restricted and Unrestricted Subsidiaries.	  	 	74	  	
Section 4.17	 	Payments for Consent.	  	 	74	  	
Section 4.18	 	Additional Subsidiary Guarantees.	  	 	74	  	
		
ARTICLE 5. SUCCESSORS	  	 	75	  	
Section 5.01	 	Merger, Consolidation, or Sale of Assets.	  	 	75	  	
Section 5.02	 	Successor Corporation Substituted.	  	 	76	  	
		
ARTICLE 6. DEFAULTS AND REMEDIES	  	 	77	  	
Section 6.01	 	Events of Default.	  	 	77	  	
Section 6.02	 	Acceleration.	  	 	78	  	
Section 6.03	 	Other Remedies.	  	 	79	  	
Section 6.04	 	Waiver of Past Defaults.	  	 	79	  	
Section 6.05	 	Control by Majority.	  	 	79	  	
Section 6.06	 	Limitation on Suits.	  	 	80	  	
Section 6.07	 	Rights of Holders of Notes to Receive Payment.	  	 	80	  	
Section 6.08	 	Collection Suit by Trustee.	  	 	80	  	
Section 6.09	 	Trustee May File Proofs of Claim.	  	 	80	  	
Section 6.10	 	Priorities.	  	 	81	  	
Section 6.11	 	Undertaking for Costs.	  	 	81	  	
		
ARTICLE 7. TRUSTEE	  	 	82	  	
Section 7.01	 	Duties of Trustee.	  	 	82	  	
Section 7.02	 	Rights of Trustee.	  	 	83	  	
Section 7.03	 	Individual Rights of Trustee.	  	 	84	  	
Section 7.04	 	Trustee’s Disclaimer.	  	 	84	  	
Section 7.05	 	Notice of Defaults.	  	 	84	  	
Section 7.06	 	Reports by Trustee to Holders of the Notes.	  	 	85	  	
Section 7.07	 	Compensation and Indemnity.	  	 	85	  	
Section 7.08	 	Replacement of Trustee.	  	 	86	  	
Section 7.09	 	Successor Trustee by Merger, etc.	  	 	87	  	
Section 7.10	 	Eligibility; Disqualification.	  	 	87	  	
Section 7.11	 	Preferential Collection of Claims Against Company.	  	 	88	  	
		
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE	  	 	88	  	
Section 8.01	 	Option to Effect Legal Defeasance or Covenant Defeasance.	  	 	88	  	
Section 8.02	 	Legal Defeasance and Discharge.	  	 	88	  	
Section 8.03	 	Covenant Defeasance.	  	 	89	  	
Section 8.04	 	Conditions to Legal or Covenant Defeasance.	  	 	89	  	
Section 8.05	 	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.	  	 	90	  	
Section 8.06	 	Repayment to Company.	  	 	91	  	
Section 8.07	 	Reinstatement.	  	 	91	  	
 
ii

							
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER	  	 	92	  	
Section 9.01	 	Without Consent of Holders of Notes.	  	 	92	  	
Section 9.02	 	With Consent of Holders of Notes.	  	 	92	  	
Section 9.03	 	Compliance with Trust Indenture Act.	  	 	94	  	
Section 9.04	 	Revocation and Effect of Consents.	  	 	94	  	
Section 9.05	 	Notation on or Exchange of Notes.	  	 	94	  	
Section 9.06	 	Trustee to Sign Amendments, etc.	  	 	94	  	
		
ARTICLE 10. COLLATERAL AND SECURITY	  	 	95	  	
Section 10.01	 	Collateral and Security Documents.	  	 	95	  	
Section 10.02	 	Release of Collateral.	  	 	96	  	
Section 10.03	 	Recording; Opinions as to Recording.	  	 	97	  	
Section 10.04	 	Further Assurances and Security.	  	 	98	  	
Section 10.05	 	Authorization of Receipt of Funds by the Trustee under the Security Documents.	  	 	98	  	
Section 10.06	 	Concerning the Collateral Agent; Authorizations	  	 	98	  	
Section 10.07	 	Resignation and Removal of Collateral Agent; Appointment of Successor.	  	 	100	  	
		
ARTICLE 11. SUBSIDIARY GUARANTEES	  	 	103	  	
Section 11.01	 	Guarantee.	  	 	103	  	
Section 11.02	 	Limitation on Guarantor Liability.	  	 	104	  	
Section 11.03	 	Execution and Delivery of Subsidiary Guarantee.	  	 	104	  	
Section 11.04	 	Guarantors May Consolidate, etc., on Certain Terms.	  	 	104	  	
Section 11.05	 	Releases of Subsidiary Guarantees.	  	 	105	  	
		
ARTICLE 12. SATISFACTION AND DISCHARGE	  	 	106	  	
Section 12.01	 	Satisfaction and Discharge.	  	 	106	  	
Section 12.02	 	Application of Trust Money.	  	 	107	  	
		
ARTICLE 13. MISCELLANEOUS	  	 	107	  	
Section 13.01	 	Trust Indenture Act Controls.	  	 	107	  	
Section 13.02	 	Notices.	  	 	108	  	
Section 13.03	 	Communication by Holders of Notes with Other Holders of Notes.	  	 	109	  	
Section 13.04	 	Certificate and Opinion as to Conditions Precedent.	  	 	109	  	
Section 13.05	 	Statements Required in Certificate or Opinion.	  	 	109	  	
Section 13.06	 	Rules by Trustee and Agents.	  	 	110	  	
Section 13.07	 	Payments Due on Non-Business Days.	  	 	110	  	
Section 13.08	 	No Personal Liability of Directors, Officers, Employees, Stockholders or Securityholders.	  	 	110	  	
Section 13.09	 	Governing Law; Jury Trial Waiver	  	 	110	  	
Section 13.10	 	No Adverse Interpretation of Other Agreements.	  	 	111	  	
Section 13.11	 	Successors.	  	 	111	  	
Section 13.12	 	Severability.	  	 	111	  	
Section 13.13	 	Counterpart Originals.	  	 	111	  	
Section 13.14	 	Table of Contents, Headings, etc.	  	 	111	  	
Section 13.15	 	Force Majeure.	  	 	111	  	
 
iii

EXHIBITS

Exhibit A1	  	FORM OF NOTE	
Exhibit A2	  	FORM OF REGULATION S TEMPORARY GLOBAL NOTE	
Exhibit B	  	FORM OF CERTIFICATE OF TRANSFER	
Exhibit C	  	FORM OF CERTIFICATE OF EXCHANGE	
Exhibit D	  	FORM OF SUBSIDIARY GUARANTEE	
Exhibit E	  	FORM OF SUPPLEMENTAL INDENTURE	
Exhibit F	  	FORM OF INCUMBENCY CERTIFICATE	
 
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INDENTURE dated as of July 23, 2009 by and among Kellwood Company, a Delaware corporation (the “ Company ”), the Guarantors from time to time party hereto and Wells Fargo Bank National Association, a national banking association, as trustee (in such capacity, the “ Trustee ”) and as collateral agent (in such capacity, the “ Collateral Agent ”).
The Company and the Guarantors agree with the Trustee and Collateral Agent as follows for the benefit of each other and for the equal and ratable benefit of the Holders of all of the Notes (the Initial Notes, together with any Additional Notes, each as defined herein, the “ Notes ”):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions .
“ Accredited Investor ” means any Person described in Rule 501(a).
“ Acquired Debt ” means, with respect to any specified Person:
 
 	(1)	Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and	
 
 	(2)	Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.	
“ Additional Notes ” means any Notes (other than the Initial Notes), if any, issued under this Indenture in accordance with Section 2.01 and Section 2.02 hereof, as amended, restated, supplemented, replaced or otherwise modified from time to time.
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings. No person (other than the Company or any Subsidiary of the Company in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction) will be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of an Investment in connection with a Qualified Receivables Transaction.
“ Agent ” means any Registrar, co-registrar, Paying Agent or additional paying agent.
 
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“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.
“ Alternative Fixed Charge Coverage Ratio Test ” shall be satisfied if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which any Restricted Equity Payment is made would have been at least 2.25 to 1.0, determined on a pro forma basis.
“ Asset Acquisition ” means: (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of all or substantially all of the assets of any other Person or any division or line of business of any other Person.
“ Asset Sale ” means:
 
 	(a)	the sale, lease, conveyance or other disposition of any assets or rights (other than in the ordinary course of business); provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section 5.01 and not by Section 4.10 of this Indenture; and	
 
 	(b)	the issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.	
Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:
 
 	(1)	the sale of inventory in the ordinary course of business;	
 
 	(2)	any single transaction or series of related transactions that involves assets or Equity Interests having a Fair Market Value of less than $7.5 million;	
 
 	(3)	a transfer of assets or Equity Interests between or among the Company and its Restricted Subsidiaries;	
 
 	(4)	an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company;	
 
 	(5)	the sale or lease of products, services or accounts receivable or the licensing of intellectual property, in each case in the ordinary course of business, and any sale or other disposition of damaged, worn-out, unmerchantable or otherwise unsalable or obsolete assets in the ordinary course of business;	
 
2

 	(6)	the termination of a lease of real or personal property or license that is not necessary in the ordinary course of business;	
 
 	(7)	the sale or other disposition of cash or Cash Equivalents;	
 
 	(8)	sales of accounts receivable and related assets of the type specified in the definition of “Qualified Receivables Transaction” to a Receivables Subsidiary for the fair market value thereof, including cash in an amount at least equal to 75% of the book value thereof as determined in accordance with GAAP, it being understood that, for the purposes of this clause (8), notes received in exchange for the transfer of accounts receivable and related assets will be deemed cash if the Receivables Subsidiary or other payor is required to repay said notes as soon as practicable from available cash collections less amounts required to be established as reserves pursuant to contractual agreements with entities that are not Affiliates of the Company entered into as part of a Qualified Receivables Transaction;	
 
 	(9)	transfers of accounts receivable and related assets of the type specified in the definition of “Qualified Receivables Transaction” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Transaction;	
 
 	(10)	sales or factoring of accounts receivable by the Company or any Restricted Subsidiary in the ordinary course of business pursuant to arrangements on customary terms and conditions; and	
 
 	(11)	a Restricted Payment that does not violate Section 4.07 of this Indenture or a Permitted Investment.	
“ Asset Sale Offer ” has the meaning assigned to it under Section 3.09 of this Indenture.
“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” or “group” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” or “group” will be deemed to have beneficial ownership of all securities that such “person” or “group” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.
“ Board of Directors ” means:
 
 	(1)	with respect to a corporation, the board of directors of the corporation or any committee of the corporation duly authorized to act on behalf of such board;	
 
 	(2)	with respect to a partnership, the Board of Directors of the general partner of the partnership;	
 
3

 	(3)	with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and	
 
 	(4)	with respect to any other Person, the board or committee of such Person serving a similar function.	
“ Borrowing Base ” means, as of the last fiscal month end immediately prior to the date of determination, an amount equal to:
 
 	(1)	90% of the face amount of all accounts receivable owned by the Company and its Restricted Subsidiaries as calculated in accordance with GAAP, consistent with the accounting methods and policies used in preparing the Company’s most recently reported financial statements; plus	
 
 	(2)	65% of the book value of all assets classified as inventory owned by the Company and its Restricted Subsidiaries as calculated in accordance with GAAP, consistent with the accounting methods and policies used in preparing the Company’s most recently reported financial statements;	
provided, however, that (a) if Indebtedness is being incurred to finance an acquisition pursuant to which any accounts receivable or inventory will be acquired (whether through the direct acquisition of assets or the acquisition of Capital Stock of a Person), Borrowing Base shall include the applicable percentage of any accounts receivable and inventory to be acquired in connection with such acquisition and (b) any accounts receivable owned by a Receivables Subsidiary, or which the Company or any of its Subsidiaries has agreed to transfer to a Receivables Subsidiary, shall be excluded for purposes of determining such amount.
“ Broker-Dealer ” means any broker or dealer registered under the Exchange Act.
“ Business Day ” means each day that is not a Saturday, Sunday or other day on which the Trustee or banking institutions in New York, New York are authorized or required by law to close.
“ Capital Lease Obligation ” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP as in effect on the date of this Indenture, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
“ Capital Stock ” means:
 
 	(1)	in the case of a corporation, corporate stock;	
 
 	(2)	in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;	
 
4

 	(3)	in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and	
 
 	(4)	any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the preceding any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.	
“ Cash Equivalents ” means:
 
 	(1)	United States dollars or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time;	
 
 	(2)	securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than 12 months from the date of acquisition;	
 
 	(3)	certificates of deposit and eurodollar time deposits with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 12 months and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500.0 million;	
 
 	(4)	repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;	
 
 	(5)	commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within 12 months after the date of acquisition; and	
 
 	(6)	money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.	
“ Change of Control ” means the occurrence of any of the following:
 
 	(1)	the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to any “person” or “group” (as that term is used in Section 13(d) of the Exchange Act);	
 
 	(2)	the appointment of a trustee (including an interim trustee) to take possession of any substantial property of, or to operate any of the businesses of, the Company, or the making of any offer of settlement, extension, or composition to its unsecured creditors generally by the Company;	
 
5

 	(3)	the adoption of a plan relating to the liquidation or dissolution of the Company; or	
 
 	(4)	the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as defined above) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares.	
“ Change of Control Offer ” has the meaning assigned to it under Section 4.15 of this Indenture.
“ Clearstream ” means Clearstream Banking, S.A.
“ Collateral ” means “collateral” as such term is defined in that certain Second Lien Security Agreement, dated on or about the date hereof by and among the Company, the Guarantors and the Collateral Agent.
“ Company ” means Kellwood Company, and any and all successors thereto.
“ Consolidated Cash Flow ” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:
 
 	(1)	an amount equal to any extraordinary loss (including any loss on extinguishment or conversion of Indebtedness) plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale (without giving effect to the $7.5 million threshold provided in the definition thereof), to the extent such losses were deducted in computing such Consolidated Net Income; plus	
 
 	(2)	provision for income taxes determined in accordance with GAAP of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus	
 
 	(3)	Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus	
 
 	(4)	depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash items (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash items in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash items were deducted in computing such Consolidated Net Income; plus	
 
6

 	(5)	any reasonable expenses or charges related to any Equity Offering, Permitted Investment, acquisition, recapitalization or Indebtedness permitted to be incurred under this Indenture or related to the Refinancing Transactions and, in each case, deducted in such period in computing Consolidated Net Income; plus	
 
 	(6)	the amount of any restructuring charges (including without limitation retention, severance, facility closure costs and benefit charges) relating to any acquisitions completed after the date of this Indenture, in each case that were deducted in such period in computing Consolidated Net Income; minus	
 
 	(7)	non-cash items increasing such Consolidated Net Income for such period, other than (i) the accrual of revenue in the ordinary course of business and (ii) reversals of prior accruals or reserves for cash items previously excluded from Consolidated Cash Flow pursuant to clause (4) of this definition;	
in each case, on a consolidated basis and determined in accordance with GAAP.
“ Consolidated Net Income ” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:
 
 	(1)	the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be excluded, except to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;	
 
 	(2)	the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;	
 
 	(3)	the cumulative effect of a change in accounting principles will be excluded;	
 
 	(4)	any non-cash goodwill or other intangible asset impairment charges incurred subsequent to the date of this Indenture resulting from the application of SFAS No. 142 will be excluded;	
 
 	(5)	notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries;	
 
 	(6)	any non-recurring costs and expenses incurred in connection with the Refinancing Transactions shall be excluded;	
 
7

 	(7)	any non-cash compensation charges, including any such charges arising from stock options, restricted stock grants or other equity-incentive programs shall be excluded; and	
 
 	(8)	inventory purchasing accounting adjustments made as a result of any acquisition transactions shall be excluded.	
“ Corporate Trust Office of the Trustee ” will be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Company except that, for purposes of Sections 2.03 and 4.02, such term means the office or agency of the Trustee in Minneapolis, Minnesota, which at the date of original execution of this Indenture is located at 608 Second Avenue South, N9303-121, Minneapolis, Minnesota 55479, Attention: Corporate Trust Operations.
“ Credit Agreement ” means that certain Loan and Security Agreement, dated as of April 12, 2006, by and among the Company, the Lenders party thereto and as defined therein, Bank of America, N.A., as Agent and Banc of America Securities LLC and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Book Managers providing for up to $175.0 million of revolving credit borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time (including increasing the amount loaned thereunder provided that such additional Indebtedness is incurred in accordance with the restrictions of this Indenture) in accordance with the terms of the Intercreditor Agreement.
“ Credit Facilities ” means, one or more debt facilities (including, without limitation, the Credit Agreement and Last Out Term Loan Agreement), commercial paper facilities or vendor financing arrangements, in each case providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), vendor financing or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.
“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all clearing agencies under the Exchange Act that are successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
 
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“ Designated Noncash Consideration ” means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers’ Certificate setting forth such valuation and the basis therefor; provided that noncash consideration received in connection with an Asset Sale may be designated as Designated Noncash Consideration only to the extent that the aggregate fair market value of such noncash consideration plus the fair market value of all noncash consideration that, since the date of this Indenture, has been designated as Designated Noncash Consideration (such fair market value being measured at the time of such designation) and has not been converted into cash or Cash Equivalents pursuant to a sale or otherwise, does not exceed the greater of $10.0 million and 2.0% of Total Assets.
“ Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 of this Indenture. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.
“ Domestic Subsidiary ” means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company.
“ Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ Equity Offering ” means a public or private offering of Qualified Capital Stock of the Company.
“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
 
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“ Exchange Offer ” has the meaning set forth in the definition of Refinancing Transactions.
“ Existing Indebtedness ” means (i) Indebtedness existing on the date of this Indenture and (ii) amounts owed under that certain Non-Exclusive Disposal/Make-Whole Agreement, dated August 18, 2008, by and between the Company and Calvin Klein, Inc.
“ Fair Market Value ” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company (unless otherwise provided in this Indenture).
“ Final Settlement Date ” means the date of, or a date designated by the Company promptly following, the expiration time of the Exchange Offer.
“ First-Priority Liens ” means, collectively, the Lien obligations under the Credit Agreement and the Last Out Term Loan Agreement.
“ Fixed Charge Coverage Ratio ” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that (i) the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock or (ii) any Qualified Holdco Indebtedness is incurred, repaid, repurchased, redeemed, defeased or otherwise discharged, in any case subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
 
 	(1)	acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period;	
 
 	(2)	the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;	
 
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 	(3)	the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;	
 
 	(4)	any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;	
 
 	(5)	any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and	
 
 	(6)	if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).	
“ Fixed Charges ” means, with respect to any specified Person for any period, the sum, without duplication, of:
 
 	(1)	the consolidated interest expense of (i) such Person and its Restricted Subsidiaries for such period and (ii) the issuer or borrower of any Qualified Holdco Indebtedness to the extent attributable to such Qualified Holdco Indebtedness, in each case whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates (but excluding the amortization or write-off of deferred financing fees in connection with the Refinancing Transactions); plus	
 
 	(2)	the consolidated interest expense of (i) such Person and its Restricted Subsidiaries that was capitalized during such period and (ii) the issuer or borrower of any Qualified Holdco Indebtedness that was capitalized during such period to the extent attributable to such Qualified Holdco Indebtedness; plus	
 
 	(3)	any interest expense accruing on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus	
 
 	(4)	the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted	
 
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 	Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.	
“ Foreign Subsidiary ” means any Restricted Subsidiary that is not a Domestic Subsidiary.
“ GAAP ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture.
“ Global Note Legend ” means the legend set forth in Section 2.06(f)(2), which is required to be placed on all Global Notes issued under this Indenture.
“ Global Notes ” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibits A1 and A2 hereto issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(d)(3) hereof.
“ Government Securities ” means direct obligations of, or obligations guaranteed by, the United States of America, and the full and timely payment for which the United States pledges its full faith and credit.
“ Guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).
“ Guarantor ” means each Person executing this Indenture as a Guarantor and any Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture and any successors and assigns of such Person or Subsidiary.
“ Hedging Obligations ” means, with respect to any specified Person, the obligations of such Person under:
 
 	(1)	interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;	
 
 	(2)	other agreements or arrangements designed to manage or hedge interest rates or interest rate risk; and	
 
 	(3)	other agreements or arrangements designed to manage, protect or hedge such Person against fluctuations in currency exchange rates or commodity prices.	
 
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“ Holder ” means a Person in whose name a Note is registered.
“ Indebtedness ” means, with respect to any specified Person, any indebtedness of such Person (excluding current or noncurrent accrued expenses and trade payables), whether or not contingent:
 
 	(1)	in respect of borrowed money;	
 
 	(2)	evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);	
 
 	(3)	in respect of banker’s acceptances;	
 
 	(4)	representing Capital Lease Obligations;	
 
 	(5)	representing the balance deferred and unpaid of the purchase price of any property (excluding trade payables) or services due more than six months after such property is acquired or such services are completed; or	
 
 	(6)	representing the net amount owing under any Hedging Obligations,	
if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.
“ Indenture ” means this Indenture, as amended or supplemented from time to time, including the terms of the Notes.
“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.
“ Initial Notes ” means the Company’s 12 7/8% Second-Priority Senior Secured PIK Notes due 2014 issued under this Indenture in connection with the Exchange Offer, as amended, restated, supplemented, replaced or otherwise modified from time to time.
“ Initial Public Offering ” means the first underwritten public offering of Qualified Capital Stock by the Company or by any direct or indirect parent of the Company, in either case pursuant to a registration statement (other than a registration statement on Form S-4 or S-8) filed with the Commission in accordance with the Securities Act for aggregate net cash proceeds of at least $25.0 million.
“ Institutional Accredited Investor ” means any Person described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
 
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“ Intercreditor Agreement ” means that certain Intercreditor Agreement, dated on or about the date hereof, by and between the Trustee and Bank of America, as Credit Agreement Agent, as amended, restated or otherwise modified from time to time.
“ Investments ” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described under Section 4.07 of this Indenture. The acquisition by the Company or any Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Subsidiary in such third Person that were acquired in contemplation of the acquisition by the Company or any of its Subsidiaries in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described under Section 4.07 of this Indenture. Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.
“ Issue Date ” means the date that Notes are first issued hereunder.
“ Last Out Facility Cap Amount ” means (a) the aggregate principal amount of Indebtedness permitted under, or in respect of, the Last Out Term Loan Agreement pursuant to Section 10.2.1(f)(ii) of the Credit Agreement (as in effect on the Issue Date), minus (b) all prepayments and repayments of principal of any such Indebtedness.
“ Last Out Term Loan Agreement ” means that certain Term Loan Agreement, dated on or about the date hereof, by and among the Company and each of its domestic Subsidiaries party thereto, other obligors party thereto, SCSF Kellwood Finance, LLC and Sun Kellwood Finance LLC to fund certain cash requirements that may arise in connection with the Exchange Offer, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time in accordance with the terms of the Intercreditor Agreement.
“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a
 
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security interest in and, except in connection with any Qualified Receivables Transaction, any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
“ Management Services Agreement ” means that certain Management Services Agreement dated as of May 29, 2008, as amended by that certain Amendment No. 1 to Management Services Agreement dated as of November 25, 2008, by and between Kellwood Holding Corp. and Sun Capital Partners Management V, LLC, as may be further amended in a manner not materially adverse to the Holders of the Notes.
“ Material Subsidiary ” means (i) any Domestic Subsidiary (other than a Receivables Subsidiary) that owns or generates any accounts (other than intercompany accounts) or inventory located in the United States of America in any fiscal year of $1.0 million or more or (ii) any Subsidiary that becomes a co-borrower or guarantor under the Credit Agreement.
“ Maturity Date ” means December 31, 2014.
“ Net Income ” means, with respect to any specified Person, the net income or loss, as applicable, of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends or accretion, less the amount of any payments made pursuant to clause (13) of Section 4.07(c) to enable the issuer or borrower of any Qualified Holdco Indebtedness to make a payment of interest thereon, but excluding, however:
 
 	(1)	any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any Asset Sale (without giving effect to the $7.5 million threshold provided for in the definition thereof); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and	
 
 	(2)	any gain or loss classified as extraordinary, unusual or nonrecurring (including without limitation severance, relocation and other restructuring costs), together with any related provision for taxes on such items.	
“ Net Proceeds ” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration, including without limitation Designated Noncash Consideration, received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under a Credit Facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale and the amounts of any reserve for adjustment in respect of the sale price of such asset or assets or liabilities associated with such asset or assets, in each case established in accordance with GAAP.
 
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“ Non-Recourse Debt ” means Indebtedness:
 
 	(1)	as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a Guarantor or otherwise, or (c) constitutes the lender;	
 
 	(2)	no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and	
 
 	(3)	as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries.	
“ Non-U.S. Person ” means a Person who is not a U.S. Person.
“ Notes ” has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.
“ Obligations ” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
“ Officers’ Certificate ” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 13.05 hereof.
“ Old Notes ” means the 7 7/8% Senior Notes due 2009 of the Company and the 7 5/8% Senior Notes due 2017 of the Company both issued pursuant to that indenture, dated as of September 20, 1997, by and between Kellwood Company, as Issuer, and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, as supplemented by that certain supplemental indenture, dated as of March 15, 2005.
“ Old Notes Indenture ” means the indenture, dated as of September 30, 1997, by and between Kellwood Company, as Issuer, and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, as supplemented by that certain supplemental indenture, dated as of March 15, 2005.
 
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“ Opinion of Counsel ” means an opinion from legal counsel that meets the requirements of Section 13.05 hereof. The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company except as expressly provided otherwise.
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, as the case may be (and, with respect to DTC, shall include Euroclear and Clearstream).
“ Permitted Business ” means any business that derives a majority of its revenues from the distribution or sale of fashion apparel, recreation apparel, recreation products, and other soft goods, and accessories and activities that are reasonably similar, ancillary or related to, or a reasonable extension or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the date of this Indenture.
“ Permitted Investments ” means:
 
 	(1)	any Investment (a) in the Company or in a Restricted Subsidiary of the Company that is a Guarantor, (b) in one or more Foreign Subsidiaries of the Company in an aggregate amount not to exceed $20.0 million and (c) by an entity that is not a Guarantor in an entity that is not a Guarantor;	
 
 	(2)	any Investment in Cash Equivalents;	
 
 	(3)	any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:	
 
 	(a)	such Person becomes a Restricted Subsidiary of the Company and, with respect to a Material Subsidiary, a Guarantor; or	
 
 	(b)	such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Guarantor or a Foreign Subsidiary of the Company;	
 
 	(4)	any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 of this Indenture;	
 
 	(5)	Investments made solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;	
 
 	(6)	any Investments received in compromise or resolution of (a) obligations of trade creditors, suppliers or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor, supplier or customer; or (b) litigation, arbitration or other disputes with Persons who are not Affiliates;	
 
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 	(7)	Investments represented by Hedging Obligations;	
 
 	(8)	loans or advances to employees made in the ordinary course of business of the Company or the Restricted Subsidiary of the Company in an aggregate principal amount not to exceed $3.0 million at any one time outstanding;	
 
 	(9)	repurchases of the Notes;	
 
 	(10)	Investments existing on the date of this Indenture;	
 
 	(11)	Guarantees otherwise permitted by the terms of this Indenture;	
 
 	(12)	the acquisition by a Receivables Subsidiary in connection with a Qualified Receivables Transaction of Equity Interests of a trust or other Person established by such Receivables Subsidiary to effect such Qualified Receivables Transaction; and any other Investment by the Company or a Restricted Subsidiary of the Company in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction; provided, that such other Investment is in the form of a note or other instrument that the Receivables Subsidiary or other Person is required to repay from available cash collections less amounts required to be established as reserves pursuant to contractual agreements with entities that are not Affiliates of the Company entered into as part of a Qualified Receivables Transaction; and	
 
 	(13)	other Investments in any Person other than an Affiliate of the Company having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding not to exceed $35.0 million; provided, however, that if an Investment pursuant to this clause (13) is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of the Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above, and shall cease to have been made pursuant to this clause (13).	
“ Permitted Liens ” means:
 
 	(1)	Liens on assets of the Company or any of its Restricted Subsidiaries securing Indebtedness and other Obligations that was incurred pursuant to clause (1), (2), (3), (5) or (15) of Section 4.09(b) and/or securing Hedging Obligations related thereto;	
 
 	(2)	Liens in favor of the Company or any of its Restricted Subsidiaries that are Guarantors;	
 
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 	(3)	Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary;	
 
 	(4)	Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to, such acquisition, and not incurred in contemplation of, such acquisition;	
 
 	(5)	Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;	
 
 	(6)	Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (5) of Section 4.09(b) of this Indenture covering only the assets acquired with or financed by such Indebtedness;	
 
 	(7)	Liens existing on the date of this Indenture;	
 
 	(8)	Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;	
 
 	(9)	Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;	
 
 	(10)	survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not materially impair their use in the operation of the business of such Person;	
 
 	(11)	Liens created for the benefit of (or to secure) the Notes (or the Subsidiary Guarantees, if any);	
 
 	(12)	Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that:	
 
 	(a)	the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and	
 
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 	(b)	the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement;	
 
 	(13)	Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course or business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contacts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);	
 
 	(14)	Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment, or storage of such inventory or other goods;	
 
 	(15)	Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;	
 
 	(16)	leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;	
 
 	(17)	Liens on assets of the Company or a Receivables Subsidiary incurred in connection with a Qualified Receivables Transaction;	
 
 	(18)	Liens arising from filing any Uniform Commercial Code financing statement regarding leases;	
 
 	(19)	Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;	
 
 	(20)	Liens securing Hedging Obligations which Hedging Obligations relate to Indebtedness that is otherwise permitted under this Indenture;	
 
 	(21)	Liens resulting from operation of law with respect to any judgments, awards or orders to the extent that such judgments, awards or orders do not cause or constitute an Event of Default;	
 
 	(22)	Liens in favor of banks that arise under Article 4 of the UCC on items in collection and documents relating thereto;	
 
 	(23)	Liens arising from transactions permitted pursuant to clause (10) of the second paragraph of the definition of Asset Sale; and	
 
 	(24)	Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding.	
 
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“ Permitted Refinancing Indebtedness ” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
 
 	(1)	the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith);	
 
 	(2)	(a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Permitted Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Permitted Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Notes;	
 
 	(3)	such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;	
 
 	(4)	if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is contractually subordinated in right of payment or otherwise subject to security interests of a junior priority to the Notes, such Permitted Refinancing Indebtedness is contractually subordinated in right of payment or otherwise subject to security interests of a junior priority to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;	
 
 	(5)	such Permitted Refinancing Indebtedness is not secured by any property or any Lien other than those securing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;	
 
 	(6)	if the Holders of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded are parties to the Intercreditor Agreement, the Holders of such Permitted Refinancing Indebtedness shall be a party to the Intercreditor Agreement and any such extension, refinancing, renewal, replacement, defeasance or refunding shall have been made in accordance with the terms of the Intercreditor Agreement; and	
 
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 	(7)	if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded was incurred either by the Company or by any Guarantor, such Permitted Refinancing Indebtedness is incurred by the Company or any Guarantor and, if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded was incurred by a Restricted Subsidiary that is not a Guarantor, such Permitted Refinancing Indebtedness is incurred by such Restricted Subsidiary.	
“ Permitted Tax Distributions ” means the payment of any distributions to permit direct or indirect beneficial owners of shares of Capital Stock of the Company to pay federal, state or local income tax liabilities arising from income to the Company and attributable to them solely as a result of the Company’s and any intermediate entity through which the Holder owns such shares being a limited liability company, partnership or similar entity for federal income tax purposes.
“ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.
“ Private Placement Legend ” means the legend set forth in Section 2.06(f)(1) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.
“ Qualified Capital Stock ” means any Capital Stock that is not Disqualified Stock.
“ Qualified Holdco Indebtedness ” means any Indebtedness incurred after the Issue Date by Kellwood Holding Corp. to finance some or all of its acquisition of assets of another Person (whether through the direct acquisition of such assets or the acquisition of Capital Stock of any Person owning such assets) that is designated by the chief financial officer of the Company as Qualified Holdco Indebtedness for purposes of this Indenture; provided that (i) such assets are used or useful in a Permitted Business and are contributed within five Business Days of the acquisition thereof to the Company or a Wholly Owned Restricted Subsidiary of the Company and (ii) at the time such Indebtedness is designated as Qualified Holdco Indebtedness, the Company could have incurred such Indebtedness under the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) of this Indenture or as Permitted Debt.
“ Qualified Holdco Proceeds ” means the portion of the purchase price of any property or assets that are contributed to the Company by a direct or indirect parent of the Company that was paid by such parent in cash other than the proceeds of Qualified Holdco Indebtedness; provided that such assets are used or useful in a Permitted Business and are contributed within ten Business Days of the acquisition thereof to the Company.
“ Qualified Receivables Transaction ” means any transaction or series of transactions entered into by the Company or any of its Restricted Subsidiaries pursuant to which , in return for the payment of fair market value to the Company or the applicable Restricted Subsidiary, the Company or any of its Restricted Subsidiaries sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Restricted
 
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Subsidiaries) and (ii) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.
“ Receivables Subsidiary ” means a Wholly Owned Restricted Subsidiary of the Company which engages in no activities other than in connection with the financing of accounts receivable and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction), (ii) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction or (iii) subjects any property or asset of the Company or any Restricted Subsidiary of the Company (other than accounts receivable and related assets as provided in the definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction, (b) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable and (c) with which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company will be evidenced to the Trustee by filing with the trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions.
“ Refinancing Transactions ” means the transactions contemplated by the Company’s offer to exchange up to $140,500,000 in aggregate principal amount of 12 7/8% Second-Priority Senior Secured PIK Notes due December 31, 2014, for up to $140,500,000 in aggregate principal amount of the Company’s 7 7/8% Senior Notes due 2009, and up to $26,089,400 in aggregate principal amount of 12 7/8% Second-Priority Senior Secured PIK Notes due December 31, 2014, for up to $130,447,000 in aggregate principal amount of the Company’s 7 5/8% Senior Notes due 2017, upon the terms and conditions of the Offering Memorandum, dated June 10, 2009, as it may be supplemented or amended from time to time, the “ Exchange Offer .”
“ Regulation S ” means Regulation S promulgated under the Securities Act.
 
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“ Regulation S Global Note ” means a Global Note bearing the Private Placement Legend and deposited with or on behalf of the Depositary and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S or a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
“ Regulation S Permanent Global Note ” means a permanent Global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.
“ Regulation S Temporary Global Note ” means a temporary Global Note in the form of Exhibit A2 hereto deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.
“ Responsible Officer ” when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject, and who shall have direct responsibility for the administration of this Indenture.
“ Restricted Definitive Note ” means a Definitive Note bearing the Private Placement Legend.
“ Restricted Global Note ” means a Global Note bearing the Private Placement Legend.
“ Restricted Investment ” means an Investment other than a Permitted Investment.
“ Restricted Period ” means the 40-day distribution compliance period as defined in Regulation S.
“ Restricted Subsidiary ” of a Person means any Subsidiary of the referenced Person that is not an Unrestricted Subsidiary.
“ Rule 144 ” means Rule 144 promulgated under the Securities Act.
“ Rule 144A ” means Rule 144A promulgated under the Securities Act.
“ Rule 144A Global Note ” means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
 
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“ Rule 501(a) Global Note ” means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes offered to Accredited Investors.
“ Rule 903 ” means Rule 903 promulgated under the Securities Act.
“ Rule 904 ” means Rule 904 promulgated under the Securities Act.
“ SEC ” means the Securities and Exchange Commission.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Security Documents ” means the Intercreditor Agreement and all security agreements executed in connection with the Indenture for the benefit of the Holders of the Notes, including: that certain Second Lien Security Agreement, dated on or about the date hereof, by and among the Company, the Guarantors and the Collateral Agent; that certain Trademark Security Agreement, dated on or about the date hereof, by and among the Company, the Guarantors and the Collateral Agent; that certain Patent Security Agreement, dated on or about the date hereof, by and among the Company, the Guarantors and the Collateral Agent; that certain Copyright Security Agreement, dated on or about the date hereof, by and among the Company, the Guarantors and the Collateral Agent; and all pledge agreements, collateral assignments, mortgages, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Agent, in each case, as amended, modified, renewed, restated, amended and restated, or replaced, in whole or in part, from time to time, in accordance with its terms and the provisions described in Article 10 hereof.
“ Significant Subsidiary ” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture.
“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of this Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
“ Subsidiary ” means, with respect to any specified Person:
 
 	(1)	any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or securityholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and	
 
 	(2)	any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).	
 
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“ Subsidiary Guarantee ” means the Guarantee by any Guarantor of the Company’s obligations under this Indenture and on the Notes, executed pursuant to the provisions of this Indenture.
“ TIA ” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided , however , that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.
“ Total Assets ” means, with respect to any Person, the aggregate of all assets of such Person and its Subsidiaries as would be shown on the consolidated balance sheet of such Person in accordance with GAAP.
“ Trustee ” means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
“ Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“ Unrestricted Global Note ” means a permanent global Note substantially in the form of Exhibit A1 attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend.
“ Unrestricted Subsidiary ” means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:
 
 	(1)	has no Indebtedness other than Non-Recourse Debt;	
 
 	(2)	except as permitted by Section 4.11 of this Indenture is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;	
 
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 	(3)	is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and	
 
 	(4)	has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries.	
“ U.S. Person ” means a U.S. Person as defined in Rule 902(o) under the Securities Act.
“ Voting Stock ” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
 
 	(1)	the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by	
 
 	(2)	the then outstanding principal amount of such Indebtedness.	
“ Wholly-Owned Restricted Subsidiary ” of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) will at the time be owned by such Person or by one or more Wholly-Owned Restricted Subsidiaries of such Person.
Section 1.02 Other Definitions.

Term 	  	Defined in
Section	

“Affiliate Transaction”	  	4.11	
“Asset Sale Offer”	  	3.09	
“Authentication Order”	  	2.02	
“Cash Interest”	  	2.02, Exhibit A1
and A2	
“Change of Control Offer”	  	4.15	
“Change of Control Payment”	  	4.15	
“Change of Control Payment Date”	  	4.15	
“Covenant Defeasance”	  	8.03	
“Defaulted Interest Payment Date”	  	2.12	
“DTC”	  	2.03	
“Event of Default”	  	6.01	
“Excess Proceeds”	  	4.10	
“incur”	  	4.09	
 
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Term 	  	Defined in
Section	
		
“Legal Defeasance”	  	8.02	
“Mandatory Principal Redemption Amount”	  	3.08	
“Offer Amount”	  	3.09	
“Offer Period”	  	3.09	
“OID”	  	2.03	
“Old 2017 Notes”	  	4.07	
“Paying Agent”	  	2.03	
“Payment Default”	  	6.01	
“Permitted Debt”	  	4.09	
“PIK Interest”	  	2.02, Exhibit A1
and A2	
“Purchase Date”	  	3.09	
“Registrar”	  	2.03	
“Restricted Equity Payments”	  	4.07	
“Restricted Payments”	  	4.07	
“Tax Payments”	  	4.07	
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
“ indenture securities ” means the Notes and any Guarantee;
“ indenture security holder ” means a Holder of a Note;
“ indenture to be qualified ” means this Indenture;
“ indenture trustee ” or “ institutional trustee ” means the Trustee; and
“ obligor ” on the Notes and the Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them therein.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
 
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(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) “or” is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act or the Exchange Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time;
(7) “including” means “including without limitation”; and
(8) “herein”, “hereof” and similar terms refer to this entire Indenture and not just to any individual Section or Article unless provided otherwise.
ARTICLE 2.
THE NOTES
Section 2.01 Form and Dating.
(a) General . The Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A1 and A2 hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be issued only in minimum denominations of $1,000 and integral multiples of $1.00 in excess thereof, subject to the issuance of Additional Notes in respect of interest payments, which may be issued in integral multiples of $1.00.
The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, any Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
In addition, with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for the Notes), the Company may increase the outstanding principal amount of the Notes under this Indenture on the same terms and conditions as the Notes offered hereby; provided, however , that the Company may, in accordance with Section 2.02, pay PIK Interest (with respect to Global Notes, by increasing the principal amount of the Notes, or with respect to Notes represented by Definitive Notes, by issuing Additional Notes) without the consent of the Holders.
(b) Global Notes . Notes issued in global form will be substantially in the form of Exhibit A1 or A2 attached hereto (including the Global Note Legend thereon and the “Schedule
 
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of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A1 attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S will be issued initially in the form of a Regulation S Temporary Global Note substantially in the form of Exhibit A2 hereto, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note will be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee will cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
(d) Automatic Exchange from Restricted Global Note to Unrestricted Global Note. Beneficial interests in a Global Note that is subject to restrictions set out in Section 2.06(f)(1)(A) (including the legend set forth in Section 2.06(f)(1)(A)) (the “Restricted Global Note”) will be automatically exchanged into beneficial interests in an unrestricted Global Note that is no longer subject to the restrictions set out in Section 2.06(f)(1)(A) (including removal of the legend set forth in Section 2.06(f)(1)(A)) (the “Unrestricted Global Note”) without any action required by or on behalf of the Noteholder (the “Automatic Exchange”). In order to effect such exchange, the Company shall at least 15 days but not more than 30 days prior to the automatic exchange date, deliver a notice of Automatic Exchange (an “Automatic Exchange Notice”) to each Noteholder at such Noteholder’s address appearing in the Note Register, with a copy to the Trustee. The Automatic Exchange Notice shall identify the Notes subject to the Automatic Exchange and shall state: (1) the date of the Automatic Exchange; (2) the section of this Indenture pursuant to which the Automatic Exchange shall occur; (3) the “CUSIP” number of the Restricted Global Note from which such Noteholders’ beneficial interests will be transferred and (4) the “CUSIP” number of the Unrestricted Global Note into which such Holders’ beneficial interests will be transferred. At the Company’s request on no less than 5 days’ prior notice, the Trustee shall deliver, in the Company’s name and at its expense, the Automatic Exchange Notice to each Noteholder at such Noteholder’s address appearing in the Note Register; provided, however, that the Company shall have delivered to the Trustee an Officers’ Certificate requesting
 
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that the Trustee give the Automatic Exchange Notice (in the name and at the expense of the Company) and setting forth the information to be stated in the Automatic Exchange Notice as provided in the preceding sentence. As a condition to any such Automatic Exchange, the Trustee shall be entitled to receive from the Company, and rely conclusively without any liability, upon an Officers’ Certificate and an Opinion of Counsel to the Company, in form and in substance reasonably satisfactory to the Trustee, to the effect that such transfer of beneficial interests to the Unrestricted Global Note shall be effected in compliance with the Securities Act. Upon such exchange of beneficial interests, the Registrar shall endorse the Schedule of Increases and Decreases in Global Note to the relevant Notes and reflect on its books and records the date of such transfer and a decrease and increase, respectively, in the principal amount of the applicable Restricted Global Note(s) and the Unrestricted Global Note, respectively, equal to the principal amount of beneficial interests transferred. If an Unrestricted Global Note is not then outstanding at the time of the Automatic Exchange, the Company shall execute and the Trustee shall authenticate and deliver an Unrestricted Global Note to the Depositary. Following any such transfer, the relevant Restricted Global Note shall be cancelled.
Section 2.02 Execution and Authentication; Interest on Notes .
Two Officers will sign the Notes for the Company by manual or facsimile signature. One Officer of each Guarantor will sign the Guarantee for such Guarantor by manual or facsimile signature.
If an Officer whose signature is on a Note or Guarantee no longer holds that office at the time a Note is authenticated, the Note and Guarantee will nevertheless be valid.
A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.
(a) The Trustee will authenticate and deliver: (i) on the Final Settlement Date, such amount of Initial Notes as are required to be issued by the Company in connection with the Exchange Offer, in aggregate principal amount specified in a written order of the Company pursuant to this Section 2.02, in each case, signed by two Officers of the Company (an “ Authentication Order ”) and (ii) from time to time in accordance with the terms hereof, Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to this Section 2.02, in each case, upon an Authentication Order. Such Authentication Order will specify the amount of the Notes to be authenticated and the date on which the original issue of the Notes is to be authenticated. In authenticating such Notes the Trustee shall receive, and (subject to Section 7.01) will be fully protected in relying upon, an Opinion of Counsel stating:
(1) the form of such Notes has been established in conformity with the provisions of this Indenture,
(2) the Indenture, the Notes and the Guarantees, when the Notes have authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company and each Guarantor enforceable in accordance with
 
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their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting creditors’ rights and by general principles of equity; and
(3) that all laws and requirements in respect of the execution and delivery by the Company and the Guarantors of such Notes have been complied with.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.
The Company shall pay interest on the Notes semi-annually in arrears on January 15 and July 15 of each year (each, an “Interest Payment Date”).
The first Interest Payment Date shall be January 15, 2010. Interest will accrue on the Notes beginning on the Issue Date through and including the date on which the Notes are paid in full in cash at the rate of 12 7/8% per annum, and will be paid (i) in cash at a rate of 7 7/8% per annum (“ Cash Interest ”); and (ii) at a rate of 5% per annum (“ PIK Interest ”), which interest will be payable either (x) with respect to Notes represented by Global Notes, by increasing the principal amount of the Notes, or (y) with respect to Notes represented by Definitive Notes, by issuing Additional Notes, in either case with a principal amount equal to the PIK Interest accrued on the outstanding principal balance of the Notes for the applicable interest period. Upon being added to the principal amount of any Notes represented by Global Notes on any Interest Payment Date, any capitalized PIK Interest amount shall be considered principal for all purposes of this Indenture and the Notes, which amount shall be due and payable on the Maturity Date (or such earlier date as the principal amount of the Notes may become due and payable under this terms of this Indenture and the Notes). Each such capitalized PIK Interest amount shall accrue interest at the rate set forth above beginning on, and including, the Interest Payment Date on which such amount is added to the principal amount of the Notes and such interest shall accrue and be paid, together with the interest on the remaining principal amount of the Notes, in accordance with the terms of this Indenture and the Notes.
On any interest payment date on which the Company pays interest on the Notes in the form of Additional Notes by issuing Additional Notes which are Definitive Notes, the principal amount of any such Additional Notes issued to any Holder, for the relevant interest period as of the relevant record date for such interest payment date, shall be rounded up to the nearest $1.00. With respect to Notes represented by certificated notes, interest in the form of Additional Notes shall be paid by issuing Additional Notes in certificated form in an aggregate principal amount equal to the amount of interest paid in the form of Additional Notes for the applicable period (rounded up to the nearest $1.00), the Company will prepare and execute, and cause the Guarantors to execute the Guarantees, and the Trustee will, at the request of the Company, authenticate and deliver such Additional Notes in certificated form for original issuance to the Holders on the relevant record date, as shown by the records of the register of Holders. Any payment of interest in Additional Notes shall be deemed to be payment in full of such interest amount to the same extent as if it were paid in cash.
 
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Section 2.03 Registrar and Paying Agent .
The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ( “ DTC ” ) to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.
Except as the Company and the Trustee may otherwise agree, the Company shall promptly file with the Trustee by each January 15th a written notice specifying the amount of the original issue discount (“ OID ”) accrued on the Notes for the previous calendar year, including daily rates and accrual periods, and such other information relating to OID as may be required under the United States Internal Revenue Code of 1986, as amended and applicable regulations, as amended from time to time.
Section 2.04 Paying Agent to Hold Money in Trust .
The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes.
Section 2.05 Holder Lists .
The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a), if this Indenture has been qualified under the TIA. If the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA § 312(a), if this Indenture has been qualified under the TIA.
 
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Section 2.06 Transfer and Exchange .
(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if:
(1) DTC (A) notifies the Company that it is unwilling or unable to continue as Depositary for the Global Notes or (B) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Company fails to appoint a successor Depositary;
(2) the Company, at its option, elects to exchange the Global Notes (in whole but not in part) for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or
(3) there has occurred and is continuing an Event of Default with respect to the Notes.
Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Definitive Notes shall be issued in such names, and issued in the approved denominations, as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(1) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend;
 
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provided, however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).
(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:
(A) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or
(B) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act.
Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
(3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who
 
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takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the Rule 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial interest in the Rule 501(a) Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof.
(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (5) thereof;
and if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to this subparagraph (4) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this subparagraph (4).
 
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Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred (other than pursuant to Rule 903 or Rule 904) to an Institutional Accredited Investor that is not a QIB, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3) thereof;
(E) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(a) thereof;
(F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(c) thereof,
 
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the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(2) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (5) thereof;
and if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
 
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(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests .
(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred (other than pursuant to Rule 903 or Rule 904) to an Institutional Accredited Investor that is not a QIB, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3) thereof;
(E) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(a) thereof;
 
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(F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4)(c) thereof,
the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the Rule 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, in the case of clause (D) above, the Rule 501(a) Global Note, as applicable.
(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(B) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (5) thereof;
and if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted
 
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Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(C) if the transfer will be made (other than pursuant to Rule 903 and Rule 904) to an Institutional Accredited Investor that is not a QIB, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof; and
(D) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (4) thereof, as applicable.
 
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(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (5) thereof;
and if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(1) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT:
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
 
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(i) (a) TO A PERSON WHO IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”)) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS),
(ii) TO THE ISSUER, OR
(iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.”
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2), (d)(3), (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.
(2) Global Note Legend . Each Global Note will bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
 
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UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”
(3) Regulation S Temporary Global Note Legend . The Regulation S Temporary Global Note will bear a legend in substantially the following form:
“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.”
(4) Definitive Note Legend . Each Definitive Note will also bear a legend in substantially the following form:
“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
Upon any sale or transfer of a Restricted Definitive Note pursuant to Rule 144, the Registrar will permit the transferee thereof to exchange such Restricted Definitive Note for a certificated Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Restricted Definitive Note, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note).
 
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(5) OID Legend . Each Global Note and Definitive Note will also bear a legend in substantially the following form:
“THIS NOTE WILL BE ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) WITHIN THE MEANING OF SECTION 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE HOLDER MAY CONTACT THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT (314) 576-3125 TO RECEIVE A CALCULATION OF THE ISSUE PRICE OF THIS NOTE, THE ACTUAL DATE OF ISSUANCE, THE YIELD TO MATURITY AND THE AMOUNT OF OID ON THIS NOTE.”
(g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges .
(1) To permit registrations of transfers and exchanges, the Company will prepare and execute, and cause the Guarantors to execute the Guarantees, and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s request.
(2) No service charge will be made to a Holder of a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(3) The Registrar will not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
 
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(5) The Registrar will not be required:
(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection;
(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.
(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
(9) Each Holder of a Note agrees to indemnify the Company, each Guarantor, the Registrar and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of this Indenture and/or applicable United States Federal or state securities law. The Trustee and the Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
(10) The Company and the Trustee may treat DTC (or its nominee) as the sole and exclusive owner of the Notes registered in its name for the purposes of payment of the principal of or interest on the Notes, giving any notice permitted or required to be given to Holders under the Indenture, registering the transfer of Notes, obtaining any consent or other action to be taken by registered owners and for all other purposes
 
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whatsoever; and neither the Company nor the Trustee shall be affected by any notice to the contrary. Neither the Company nor the Trustee shall have any responsibility or obligation to any participant in DTC, any Person claiming a beneficial ownership interest in the Securities under or through DTC or any such participant, or any other Person which is not shown on the register as being a registered owner, with respect to either the Notes, the accuracy of any records maintained by DTC or any such participant, the payment by DTC or any such participant of any amount in respect of the principal of or interest on the Notes, any notice which is permitted or required to be given to Holders under the Indenture, any consent given or other action taken by DTC as registered owner or any selection by DTC of any participant or other Person to receive payment of principal, interest or redemption price of the Notes.
Section 2.07 Replacement Notes .
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.08 Outstanding Notes .
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.
 
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Section 2.09 Treasury Notes .
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Affiliates of the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned will be so disregarded.
Section 2.10 Temporary Notes .
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes will be entitled to all of the benefits of this Indenture.
Section 2.11 Cancellation .
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of such canceled Notes (subject to the record retention requirement of the Exchange Act) in its customary manner. Certification of the destruction of all canceled Notes will be delivered to the Company upon request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12 Defaulted Interest .
If the Company defaults in a payment of Cash Interest or PIK Interest on the Notes, it will pay the defaulted interest in any lawful manner, which will be at a rate of an additional 1% per annum, plus, to the extent lawful, interest payable on the defaulted interest, to the Holders thereof. If the Company pays the defaulted interest prior to 30 days of the default in payment of interest, payment shall be paid to the record Holder of the Notes as of the original record date. If such default in payment of interest continues for 30 days, the Company will, in the case of Definitive Notes, establish a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest. If no special record date is required to be established pursuant to the immediately preceding sentence, (i) in the case of Definitive Notes, Holders of record on the original record date shall be entitled to such payment of defaulted interest and any such interest payable on the defaulted interest and (ii) in the case of Global Notes, Holders on the Defaulted Interest Payment Date (as defined in the next sentence) shall be to such defaulted interest and any such interest payable on the defaulted interest. The Company shall notify the Trustee and Paying Agent in writing of the amount of the
 
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defaulted interest proposed to be paid on the Notes and the date of the proposed payment (a “ Defaulted Interest Payment Date ”), and at the same time the Company shall deposit with the Trustee or Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee or Paying Agent for such deposit prior to the date of the proposed payment.
Section 2.13 CUSIP Numbers .
The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee will use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption will not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01 Notices to Trustee .
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days (subject to Section 3.03) but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:
(1) the clause of this Indenture pursuant to which the redemption shall occur;
(2) the redemption date;
(3) the principal amount of Notes to be redeemed; and
(4) the redemption price.
Section 3.02 Selection of Notes to Be Redeemed or Purchased .
If less than all of the Notes are to be redeemed at any time, and if the Notes are Global Notes held by DTC, the applicable operational procedures of DTC for selection of notes for redemption will apply, and as to any of the Notes that are not Global Notes, the Trustee will select Notes for redemption as follows:
(1) if the Company notifies the Trustee the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or
(2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem appropriate.
 
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In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase.
The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1.00 in excess of $1,000; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1.00, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.
Section 3.03 Notice of Redemption .
Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 12 of this Indenture.
The notice will identify the Notes (including CUSIP numbers) to be redeemed and will state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
 
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At the Company’s request, the Trustee will give the notice of redemption in the Company’s name and at the Company’s expense; provided, however , that the Company has delivered to the Trustee, at least 45 days prior to the redemption date (unless a shorter notice shall be satisfactory to the Trustee), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
Section 3.04 Effect of Notice of Redemption .
Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
Section 3.05 Deposit of Redemption or Purchase Price .
One Business Day prior to the redemption or purchase price date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06 Notes Redeemed or Purchased in Part .
Upon surrender of a Definitive Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered. For any Global Notes, the Trustee shall reflect the decrease in the principal amount on the Schedule of Exchanges attached thereto.
Section 3.07 Optional Redemption .
At any time, the Company may on any one or more occasions redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at a price equal to the principal amount outstanding under the Notes (including any Additional Notes issued in respect of interest payments) plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date (subject to the rights of Holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date).
 
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Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08 Mandatory Redemption .
Except as set forth under Sections 3.09, 4.10 and 4.15, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.09 Offer to Purchase by Application of Excess Proceeds .
In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an “ Asset Sale Offer ”), it will follow the procedures specified below.
The Asset Sale Offer shall be made to all Holders and, at the option of the Company (unless otherwise required by the terms thereof), all holders of other Indebtedness that is pari passu with the Notes pursuant to Section 4.10. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “ Offer Period ”). No later than three Business Days after the termination of the Offer Period (the “ Purchase Date ”), the Company will apply all Excess Proceeds (the “ Offer Amount ” ) to the purchase of Notes and such other pari passu Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as redemption payments are made.
If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state:
(1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open;
(2) the Offer Amount, the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will continue to accrue interest;
 
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(4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1.00 only;
(6) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;
(7) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;
(8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness surrendered by Holders exceeds the Offer Amount, the Company will select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1.00, or integral multiples thereof, will be purchased); and
(9) that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes and other pari passu Indebtedness tendered, and will deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon written request from the Company will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Definitive Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer on the Purchase Date.
 
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Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01 Payment of Notes .
The Company will pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal as provided in Section 2.12 to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest at the same rate to the extent lawful.
Section 4.02 Maintenance of Office or Agency .
The Company will maintain, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however , that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.
Section 4.03 Financial Statements .
So long as any Notes are outstanding, the Company will:
(a) file with the Trustee, on or prior to the date that the Company is required to file the same with the SEC or, if the Company is not subject to SEC reporting requirements under Section 13 or Section 15(d) of the Exchange Act, on or prior to the date that the Company would
 
54

otherwise be required to file the same with the SEC if the Company was subject to such SEC reporting requirements under Section 13 or Section 15(d) of the Exchange Act, copies of the annual reports and of the information, documents and other reports which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act (or copies of such portions thereof as may be prescribed by the SEC by rules and regulations); or, if the Company is not required to file with the SEC information, documents or reports pursuant to either Section 13 or Section 15(d) of the Exchange Act, then the Company will file with the Trustee and mail to the Holders of the Notes, as the names and addresses of such Holders appear upon the register of the Notes, (i) annual reports containing the information required by the Exchange Act to be contained in an Annual Report on Form 10-K, (ii) quarterly reports containing the information required by the Exchange Act to be contained in a Quarterly Report on Form 10-Q and (iii) promptly after the occurrence of an event required to be therein reported, such other reports containing information required by the Exchange Act to be contained in a Current Report on Form 8-K;
(b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in the Indenture as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, as to compliance with conditions or covenants, compliance with which is subject to verification by accountants; and
mail to the Holders of the Notes, as the names and addresses of such Holders appear upon the register of the Notes, such additional summaries of any information, documents and reports required to be filed with the Trustee pursuant to the provisions of clauses (a) and (b) of this Section 4.03 as may be required to be provided to such Holders by the rules and regulations of the SEC under the provisions of the TIA.
Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to conclusively rely exclusively on Officers’ Certificates delivered to the Trustee pursuant to Section 4.04.
Section 4.04 Compliance Certificate .
(a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture
 
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(or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.
(b) So long as any of the Notes are outstanding, the Company will deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
Section 4.05 Taxes .
The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
Section 4.06 Stay, Extension and Usury Laws .
Each of the Company and the Guarantors, if any, covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantors, if any, (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.07 Restricted Payments .
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries and including any payment of, or distribution or payment made for the purposes of paying, any Indebtedness of Kellwood Holding Corp. or any other obligations in respect of such Indebtedness) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the
 
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Company) any Equity Interests of the Company or any direct or indirect parent of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company); (b) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of the Company or any Guarantor owing to any Affiliate of the Company or such Guarantor (other than the Company and any of its Restricted Subsidiaries) that is contractually subordinated or otherwise junior in priority to the Old Notes or the Notes or any Subsidiary Guarantee (including such related to the Old Notes); or (c) pay any management, monitoring, transaction, advisory or similar fees to any Affiliate of the Company (other than the Company or any Restricted Subsidiary);
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, (a) the Company’s existing 7 5/8% senior notes due October 15, 2017 (the “ Old 2017 Notes ”) or (b) any Indebtedness (including Existing Indebtedness) of the Company or any Guarantor that is contractually subordinated or otherwise junior in priority to the Old Notes or the Notes or any Subsidiary Guarantee (including such related to the Old Notes) (excluding any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries), except (i) a payment of interest or principal at the Stated Maturity thereof or (ii) a payment, purchase, redemption, defeasance, acquisition or retirement of any such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of payment, purchase, redemption, defeasance, acquisition or retirement; or
(4) make any Restricted Investment.
(b) (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “ Restricted Payments ” and the payments and other actions set forth in clauses 4.07(a)(1) and (2) above being referred to herein as “ Restricted Equity Payments ”), unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;
(2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) of this Indenture; and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries since the date of the Indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (6), (8), (9), (10) and (13) of Section 4.07(c) below), is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from August 2, 2009, to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus
 
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(B) 100% of (i) the aggregate net cash proceeds received by the Company since the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company which Disqualified Stock or debt securities have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company) and (ii) Qualified Holdco Proceeds, plus
(C) to the extent that any Restricted Investment that was made after the date of this Indenture is sold or otherwise liquidated or repaid, 100% of any cash received in connection therewith, plus
(D) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary or a merger or consolidation of any Unrestricted Subsidiary into the Company or any of its Restricted Subsidiaries occurs, in each case after the date of this Indenture, the Fair Market Value of the Company’s Investment in such Subsidiary as of the date of such redesignation or such merger or consolidation, plus
(E) any dividends received by the Company or a Restricted Subsidiary of the Company after the date of this Indenture from an Unrestricted Subsidiary of the Company, to the extent that such dividends were not otherwise included in Consolidated Net Income of the Company for such period.
Notwithstanding the foregoing, the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Equity Payments, unless, at the time of and after giving effect to such Restricted Equity Payment:
(x) the aggregate outstanding principal amount of the Obligations evidenced by the Notes after giving effect to such Restricted Equity Payment is less than 50% of the aggregate principal amount of the Notes outstanding as of the Issue Date, or the Company has, since the date of the issuance of the Notes, offered to redeem at par (together with all accrued and unpaid interest on such Notes to the applicable redemption date) not less than 50% of the original aggregate principal amount of the Notes issued on the Issue Date; and
(y) the Company would, at the time of such Restricted Equity Payment and after giving pro forma effect thereto as if such Restricted Equity Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Alternative Fixed Charge Coverage Ratio Test.
 
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(c) The provisions of Section 4.07(a) above will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this Indenture;
(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the sale within 30 days (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock) or from the contribution within 30 days of common equity capital to the Company to the extent exchanged for Equity Interests of the Company; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from Section 4.07(b)(3)(B) of this Indenture;
(3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or to any Subsidiary Guarantee with the net cash proceeds from an incurrence within 30 days of Permitted Refinancing Indebtedness;
(4) the payment of any dividend or other distribution (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Company to the Holders of such Restricted Subsidiary’s Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any direct or indirect parent of the Company held by any present, future or former officer, director, employee or consultant of the Company or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, management equity agreement, shareholders’ agreement or similar agreement; provided that such repurchase, redemption or other acquisition or retirement occurs within 60 days after such person ceases to be such an officer, director, employee or consultant;
(6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options;
(7) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the declaration and payment of regularly scheduled or accrued dividends to (i) holders of any class or series of Disqualified Stock of the Company or any class or series of Disqualified Stock or preferred stock of any Guarantor issued on or after the date of this Indenture pursuant to Section 4.09(a) of this Indenture and (ii) Holders of any class or series of preferred stock (other than Disqualified Stock) of the Company issued after the date of the Indenture; provided that at the time of such issuance and after giving pro forma effect thereto, the Company would have been able to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(a) of this Indenture;
 
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(8) any payments made by the Company in connection with the Refinancing Transactions to the extent not Restricted Equity Payments;
(9) payments, advances, loans or expense reimbursements made to any direct or indirect parent corporation of the Company to permit the payment by such entity of reasonable general operating expenses, accounting, legal, corporate reporting and administrative expenses incurred in the ordinary course of its business in an amount not to exceed $1.0 million per annum (or $2.5 million per annum after the consummation of an Initial Public Offering by any direct or indirect parent of the Company);
(10) payments on or with respect to, or purchases, redemptions, defeasements or other acquisitions or retirements for value of the Old 2017 Notes for an amount not to exceed $25.0 million from the date of this Indenture; provided that, with respect to any Old 2017 Note, the aggregate consideration paid by the Company and its Affiliates in connection with any such purchase, redemption, defeasement or other acquisition or retirement of such Old 2017 Note shall not exceed an amount equal to 20.0% of the aggregate principal amount of such Old 2017 Note as of the Issue Date;
(11) (A) for so long as the Company is a member of a group filing a consolidated or combined tax return with a parent corporation, payments to the parent in respect of an allocable portion of the tax liabilities of such group that is attributable to the Company and its Subsidiaries (“ Tax Payments ”); provided, that the Tax Payments shall not exceed the lesser of (i) the amount of the relevant tax (including any penalties and interest) that the Company would owe if the Company were filing a separate tax return (or a separate consolidated or combined return with its Subsidiaries that are members of the consolidated or combined group), taking into account any carryovers and carrybacks of tax attributes (such as net operating losses) of the Company and such Subsidiaries from other taxable years and (ii) the net amount of the relevant tax that the parent actually owes to the appropriate taxing authority; provided, further, that any Tax Payments received from the Company shall be paid over to the appropriate taxing authority within 30 days of the parent’s receipt of such Tax Payments or refunded to the Company or (B) for so long as the Company is organized as a limited liability company or partnership, the payment of Permitted Tax Distributions;
(12) the repurchase, redemption or other acquisition or retirement for value of Indebtedness of the Company or any Guarantor that is contractually subordinated or otherwise junior in priority to the Notes or any Subsidiary Guarantee with Excess Proceeds to the extent such Excess Proceeds are permitted to be used for general corporate purposes under Section 4.10 of this Indenture;
(13) dividends, advances, loans or other distributions to Kellwood Holding Corp. to enable such entity to make any payment of interest or principal on any Qualified Holdco Indebtedness; provided that any such dividend, advance, loan or other distribution is used promptly by such parent solely to make such payment;
(14) the repurchase, redemption or other acquisition for value of Capital Stock of the Company or any direct or indirect parent of the Company representing fractional
 
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shares of such Capital Stock in connection with a merger, consolidation, amalgamation or other combination involving the Company or any direct or indirect parent of the Company;
(15) payments by the Company to Sun Capital Partners Management V, LLC pursuant to the Management Services Agreement (i) for an annual fee, as provided in Section 2(a) of the Management Services Agreement, not to exceed $2.2 million in any fiscal year, (ii) for reasonable out-of-pocket fees and expenses as provided in Section 2(b) of the Management Services Agreement and (iii) for any transaction fees payable pursuant to Section 2(c) of the Management Services Agreement; provided that payment of such transaction fees will be paid 50% in cash and 50% accrued, with such accrued amounts payable when the Company would, at the time of such accrued transaction fee payment, have satisfied the requirements to make a Restricted Equity Payment as set forth in clauses (x) and (y) of Section 4.07(b) above; provided further that no such transaction fees will be paid in connection with any transaction involving an Affiliate of Sun Capital Partners, Inc.;
(16) the repayment, repurchase, redemption, defeasement or other acquisition or retirement of Existing Indebtedness (other than the Old 2017 Notes) in an amount not to exceed $12.5 million;
(17) any payments on or with respect to Indebtedness incurred after the Issue Date (other than any Indebtedness of the Company or any Guarantor owing to any Affiliate of the Company or such Guarantor (other than the Company and any of its Restricted Subsidiaries) that is contractually subordinated or otherwise junior in priority to the Old Notes, the Notes or any Subsidiary Guarantee (including such related to the Old Notes)); and
(18) other Restricted Payments, to the extent not Restricted Equity Payments, in an amount not to exceed $10.0 million.
The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.07 will be determined by the Board of Directors whose resolution with respect thereto will be delivered to the Trustee.
Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries .
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of its Restricted Subsidiaries;
 
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(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.
(b) The restrictions in Section 4.08(a) will not apply to encumbrances or restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of this Indenture;
(2) this Indenture, the Notes and any Subsidiary Guarantees;
(3) applicable law, rule, regulation or order;
(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;
(5) customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business;
(6) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of Section 4.08(a) of this Indenture;
(7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;
(8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
 
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(9) any Indebtedness secured by a Lien that was otherwise permitted to be incurred under Sections 4.09 and 4.12 of this Indenture that limits the right of the debtor to dispose of the assets subject to such Liens;
(10) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Company’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;
(11) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(12) Indebtedness or other contractual requirements or restrictions of a Receivables Subsidiary in connection with a Qualified Receivables Transaction, provided that such restrictions apply only to such Receivables Subsidiary;
(13) Indebtedness of a Foreign Subsidiary incurred pursuant to clause (15) of Section 4.09(b) of this Indenture; provided that such restrictions apply only to such Foreign Subsidiary;
(14) Indebtedness incurred pursuant to clause (17) of Section 4.09(b) of this Indenture; provided, however, that the Board of Directors of the Company determines in good faith at the time such dividend or other payment restrictions are created that they do not materially adversely affect the Company’s ability to fulfill its Obligations under the Notes; and
(15) any encumbrances or restrictions of the type referred to in clauses (1), (2) and (3) of Section 4.08(a) imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (14) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company’s Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock .
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “ incur ”) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however , that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for the Company’s most recently
 
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ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) of this Indenture will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “ Permitted Debt ”):
(1) the incurrence by the Company and any of its Restricted Subsidiaries of Indebtedness under Credit Facilities and/or the incurrence by a Receivables Subsidiary of Indebtedness pursuant to a Qualified Receivables Transaction; provided that the aggregate principal amount of all Indebtedness under Credit Facilities and pursuant to Qualified Receivables Transactions at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) shall not exceed the greater of (i) $225.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date of the Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility (and permanently reduce the commitments thereunder) and (ii) the amount of the Borrowing Base;
(2) the incurrence by the Company and any of its Restricted Subsidiaries of additional Indebtedness, in each case, incurred for the purpose of financing some or all of its acquisition of assets of another Person (whether through the direct acquisition of such assets or the acquisition of Capital Stock of any Person owning such assets), provided that (i) such assets are used or useful in a Permitted Business and (ii) the Company’s Fixed Charge Coverage Ratio is greater after giving pro forma effect to such acquisition and any related financing transaction as if the same had occurred at the beginning of the applicable four-quarter period than the Company’s actual Fixed Charge Coverage Ratio for the period;
(3) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness (other than Indebtedness described in clause (1) above);
(4) the incurrence by the Company and any Guarantors of Indebtedness represented by the Notes and any Subsidiary Guarantees to be issued from time to time and the incurrence by the Company and any Guarantors of Indebtedness represented by the Old Notes and Subsidiary Guarantees issued from time to time under the Old Notes Indenture governing the Old Notes;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations, mortgage financings or purchase money obligations), in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment (whether through the direct acquisition of
 
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such assets or the acquisition of Capital Stock of any Person owning such assets) within 180 days thereafter used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (5), not to exceed the greater of (i) $10.0 million and (ii) 2.0% of Total Assets;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under clause (a) of this Section 4.09 or clauses (2), (3), (4), (5), (15) or (17) of this Section 4.09(b);
(7) the incurrence by the Company or any of its Restricted Subsidiaries that are Guarantors of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries that are Guarantors;
(8) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and
(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company;
will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (8);
(9) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business;
(10) the guarantee by (i) the Company or any of the Guarantors of any Indebtedness of the Company or a Guarantor and (ii) any Restricted Subsidiary of the Company that is not a Guarantor of any Indebtedness of the Company or any Restricted Subsidiary of the Company, in each case that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed;
(11) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business including, without limitation, in respect of workers’ compensation claims or self insurance, other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims and obligations in respect of performance and surety bonds provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business;
 
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(12) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;
(13) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
(14) Indebtedness arising from agreements of the Company or a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the acquisition or disposition of any business, assets or a Restricted Subsidiary of the Company in accordance with the terms of this Indenture, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that, with respect to any such disposition, the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(15) the incurrence of Indebtedness and/or the issuance of preferred stock by Foreign Subsidiaries; provided that the aggregate principal amount of Indebtedness incurred pursuant to this clause (15), including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), and the aggregate liquidation value of all preferred stock issued pursuant to this clause (15), does not exceed $10.0 million at any one time outstanding;
(16) Indebtedness arising from transactions permitted pursuant to clause (10) of the second paragraph of the definition of Asset Sale; and
(17) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (17), not to exceed $25.0 million.
The Company will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Subsidiary Guarantee on substantially identical terms; provided, however , that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.
 
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For purposes of this Section 4.09, any Permitted Debt and any Qualified Holdco Indebtedness incurred in reliance upon the Company’s ability to incur Permitted Debt will be treated as incurred by the Company for purposes of determining whether additional Permitted Debt can be incurred for so long as such Qualified Holdco Indebtedness remains outstanding. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (17) above, or is entitled to be incurred pursuant to clause (a) of this Section 4.09, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement outstanding on the date on which Notes are first issued and authenticated under the Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided , in each such case, that the amount of such Disqualified Stock is included in Fixed Charges of the Company as accrued.
Notwithstanding any other provision of this covenant, (i) the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values, and (ii) the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to the Last Out Term Loan Agreement shall not exceed the Last Out Facility Cap Amount. The principal amount of any Indebtedness supported by a letter of credit issued under a Credit Facility in accordance with clause (1) above of this Section 4.09(b) shall not be deemed a separate incurrence of Indebtedness for purposes of this Section 4.09, but only to the extent of the stated amount of such letter of credit.
The amount of any Indebtedness outstanding as of any date will be:
 
 	(1)	the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;	
 
 	(2)	the principal amount of the Indebtedness, in the case of any other Indebtedness; and	
 
 	(3)	in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:	
 
 	(a)	the Fair Market Value of such asset at the date of determination, and	
 
 	(b)	the amount of the Indebtedness of the other Person.	
 
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Section 4.10 Asset Sales .
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Company, or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;
(2) in the event of an Asset Sale involving assets or Equity Interests having a Fair Market Value in excess of $5.0 million, such Fair Market Value is determined by the Company’s chief financial officer and set forth in an Officers’ Certificate delivered to the Trustee at or promptly following the completion of such Asset Sale;
(3) in the event of an Asset Sale involving assets or Equity Interests having a Fair Market Value in excess of $10.0 million, the Company shall have received an opinion as to the fairness to the Company or relevant Subsidiary of such Asset Sale from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing; and
(4) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following will be deemed to be cash:
(A) any liabilities, as shown on the Company’s most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability;
(B) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days following the consummation of such Asset Sale, to the extent of the cash received in that conversion; and
(C) Designated Noncash Consideration.
(b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company, or the applicable Restricted Subsidiary, as the case may be, may apply those Net Proceeds at its option:
(1) to repay Indebtedness and other Obligations under Credit Facilities to the extent contractually senior or otherwise subject to security interests of a senior priority to the Notes;
(2) to repay or repurchase Old 2017 Notes existing on the date of this Indenture to the extent permitted under clause (10) of Section 4.07(c);
 
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(3) to acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of the Company;
(4) to make capital expenditures;
(5) to acquire other assets that are used or useful in a Permitted Business; and/or
(6) any combination of the preceding.
Pending the final application of any Net Proceeds, the Company may temporarily reduce revolving credit borrowings under any Credit Facilities that are contractually senior or otherwise subject to security interests of a senior priority to the Notes , or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture.
(c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) of this Indenture will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will notify the Trustee and make an Asset Sale Offer to all Holders of Notes and, at the option of the Company unless otherwise required by the terms of the Asset Sale Offer, all holders of other Indebtedness that is pari passu with the Notes to purchase the maximum principal amount of Notes and such other Indebtedness that is pari passu with the Notes, if applicable, that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other Indebtedness that is pari passu with the Notes that is Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, and the Notes are Global Notes held by DTC, DTC will select the notes in accordance with its operation arrangements. If the Notes are not Global Notes held by DTC, the Trustee will select the notes to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with Section 3.09 or Section 4.10 of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under those provisions of this Indenture by virtue of such conflict.
Section 4.11 Transactions with Affiliates .
(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an “ Affiliate Transaction ”), unless:
(1) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person; and
 
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(2) the Company delivers to the Trustee:
(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors authorizing such Affiliate Transaction and an Officers’ Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and
(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to the Company or such Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.
(b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a):
(1) any employment or other compensation arrangement or agreement, employee benefit plan, officer and director indemnification agreement or any similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;
(2) transactions between or among the Company and any of its Restricted Subsidiaries and transactions between the Company or any of its Restricted Subsidiaries and a Receivables Subsidiary and a Receivables Subsidiary and any Person in which the Receivables Subsidiary has an Investment;
(3) transactions with a Person (other than an Unrestricted Subsidiary of the Company) that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(4) payment of reasonable directors’ fees to Persons who are not otherwise Affiliates of the Company or otherwise affiliated with Sun Capital Partners, Inc. or its Affiliates and the payment of customary indemnification to directors and officers of the Company or any direct or indirect parent of the Company;
(5) any issuance or sale of Equity Interests (other than Disqualified Stock) of the Company to Affiliates of the Company;
 
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(6) Restricted Payments that do not violate Section 4.07 of this Indenture;
(7) loans or advances to employees or consultants in the ordinary course of business;
(8) the Refinancing Transactions and the payment of all fees and expenses related to the Refinancing Transactions;
(9) transactions effected pursuant to the Management Services Agreement;
(10) transactions effected pursuant to that certain Shared Serviced Agreement, dated as of November 25, 2008, by and between the Company and Gerber Childrenswear, LLC;
(11) transactions effected pursuant to that certain Shared Serviced Agreement, dated as of November 25, 2008, by and between the Company and Hanna Andersson, LLC;
(12) transactions effected pursuant to the Last Out Term Loan Agreement; and
(13) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are on terms no less favorable than those that would have been obtained in a comparable transaction with an unrelated party or that have been approved by a majority of the disinterested members of the Board of Directors.
Section 4.12 Liens .
The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur or permit to exist any Lien of any nature whatsoever on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Indebtedness (including Existing Indebtedness), other than:
(a) in the case of any property that does not constitute Collateral (including any property previously constituting Collateral that has been released from the Liens securing the Notes and the Guarantees), Permitted Liens; provided , however , that any Lien on such property shall be permitted notwithstanding that it is not a Permitted Lien if all Obligations under this Indenture, the Notes and the Subsidiary Guarantees are secured on an equal and ratable basis with (or, in the case of any such Indebtedness that is a subordinated Obligation to the Notes, on a prior basis to) the Obligations so secured until such time as such Obligations are no longer secured by a Lien on such property; and
(b) in the case of any property that constitutes Collateral, Permitted Liens.
 
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Section 4.13 Business Activities .
The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.
Section 4.14 Corporate Existence .
Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect:
(a) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary; and
(b) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15 Offer to Repurchase Upon Change of Control .
(a) If a Change of Control occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (with a minimum principal amount of $1,000 or an integral multiple of $1.00 in excess thereof) of that Holder’s Notes (a “ Change of Control Offer ”) at a purchase price in cash equal to 100% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest on the Notes repurchased, to the date of purchase, subject to the rights of Noteholders on the relevant record date to receive interest due on the relevant interest payment date (the “ Change of Control Paymen t” ). Within 30 days following any Change of Control, the Company will mail a notice to the Trustee and each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “ Change of Control Payment Date ”). Such notice, which will govern the terms of the Change of Control Offer, will state:
(1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment;
(2) that any Note not tendered will continue to accrue interest;
(3) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;
(4) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;
 
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(5) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter (or by applicable Depositary procedures for Global Notes) setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and
(6) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple of $1.00 in excess thereof.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change in Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.15, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.15 by virtue of such compliance.
(b) On the Change of Control Payment Date, the Company will, to the extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.
The Paying Agent will promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a minimum principal amount of $1,000 or an integral multiple of $1.00 in excess thereof.
(c) The Company will not be required to make a Change of Control Offer upon a Change of Control (1) if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 made by the Company and purchases all notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to this Indenture as described above under Section 3.07, unless and until there is a default in payment of the applicable redemption price.
 
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Section 4.16 Designation of Restricted and Unrestricted Subsidiaries .
The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default or an Event of Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07(a) of this Indenture or under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the conditions set forth in the definition of “Unrestricted Subsidiary” and was permitted by the covenant described under Section 4.07 of this Indenture. If, at any time, any Unrestricted Subsidiary would fail to meet such requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 of this Indenture the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate or redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation or redesignation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation or redesignation will only be permitted if (1) such Indebtedness is permitted under Section 4.09 of this Indenture calculated on a pro forma basis as if such designation or redesignation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation or redesignation.
Section 4.17 Payments for Consent .
The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Section 4.18 Additional Subsidiary Guarantees .
If the Company or any of its Restricted Subsidiaries acquires or creates a Domestic Subsidiary after the date of this Indenture that at any time is or becomes a Material Subsidiary (other than a Receivables Subsidiary), then the Company will promptly notify the Trustee and that newly acquired or created Domestic Subsidiary will become a Guarantor and (i) execute a
 
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supplemental indenture substantially in the form of Exhibit E hereto and execute an amendment, supplement, joinder or other instrument in respect of the Security Documents satisfactory to the Trustee and the Collateral Agent and deliver the same to the Trustee under the Security Documents, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required under the Security Documents and by applicable law to vest in the Collateral Agent (or any representative designated by it) valid and perfected Liens on the property and assets of such Domestic Subsidiary constituting Collateral (or continue the perfection thereof) as contemplated by the Security Documents, and (ii) deliver an Opinion of Counsel satisfactory to the Trustee within ten Business Days of the first date after which it was acquired or created and constitutes a Material Subsidiary. The form of such Subsidiary Guarantee is attached as Exhibit D hereto.
ARTICLE 5.
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets .
(a) The Company may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless:
(1) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made is a corporation, partnership or limited liability company organized or existing under the laws of the U.S., any state of the U.S. or the District of Columbia; provided that if the Person is a partnership or limited liability company, a corporation wholly owned by such Person organized or existing under the laws of the U.S., any state of the U.S. or the District of Columbia that does not and will not have any material assets or operations becomes a co-issuer of the Notes pursuant to a supplemental indenture substantially in the form of Exhibit E hereto;
(2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition has been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture reasonably satisfactory to the Trustee;
(3) immediately after such transaction, no Default or Event of Default exists;
(4) either: (a) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made, will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be
 
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permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) of this Indenture; or (b) the Company’s Fixed Charge Coverage Ratio is greater after giving pro forma effect to such consolidation or merger and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period than the Company’s actual Fixed Charge Coverage Ratio for the period; and
(5) an Officers’ Certificate and an Opinion of Counsel (from counsel who shall not be an employee of the Company) have been delivered to the Trustee to the effect that the conditions set forth in the preceding clauses (1) through (4) have been satisfied.
In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person.
(b) This Section 5.01 will not apply to:
(1) a merger of the Company with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction;
(2) any sale, transfer, assignment, conveyance, lease or other disposition of assets between or among the Company and any of its Wholly Owned Restricted Subsidiaries; and
(3) any consolidation or merger between or among (i) the Company and any of the Guarantors, (ii) any Subsidiary into the Company or any of the Guarantors or (iii) Subsidiaries who are not Guarantors.
Section 5.02 Successor Corporation Substituted .
Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the “Company” shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however , that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company’s assets in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof.
 
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ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default .
Each of the following is an “ Event of Default ”:
(1) default for 30 days in the payment when due of Cash Interest or PIK Interest on the Notes;
(2) default in payment when due of the principal (including payment of principal on the Notes consisting of PIK Interest that was added to the principal of the Notes in accordance with Section 2.02 and payment of principal on any Additional Notes issued as payment of PIK Interest) of, or premium, if any, on the Notes;
(3) default in the performance, or breach, of any covenant of the Company or any of its Restricted Subsidiaries or any Guarantor in this Indenture or any of the Security Documents (other than a covenant default the performance or breach of which is specifically dealt with elsewhere in this Section 6.01) and the continuation of such default or breach for a period of 60 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
(4) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, if that default:
(A) is caused by a failure to pay at final stated maturity (giving effect to any extension thereof) the principal amount of any Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a “ Payment Default ”); or
(B) results in the acceleration of such Indebtedness prior to its express maturity,
and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness or the maturity of which has been so accelerated, aggregates $25.0 million or more;
(5) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $25.0 million, which judgments are not paid, discharged or stayed for a period of 60 days after such judgments become final and non-appealable;
(6) except as permitted by this Indenture, any Subsidiary Guarantee (other than a Subsidiary Guarantee issued by a Guarantor that is not a Significant Subsidiary) shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of
 
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any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee (other than a Subsidiary Guarantee issued by a Guarantor that is not a Significant Subsidiary);
(7) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an involuntary case,
(C) consents to the appointment of a custodian of it or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due;
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case;
(B) appoints a custodian of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; or
(C) orders the liquidation of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; and
(D) and the order or decree remains unstayed and in effect for 60 consecutive days.
Section 6.02 Acceleration .
In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 hereof, with respect to the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice.
 
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If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences or waive any existing Default or Event of Default and its consequences, except as set forth under provisions (a)(1) and (a)(2) of Section 6.01.
Section 6.03 Other Remedies .
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture and exercise any rights and remedies under the Security Documents.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults .
Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium or interest on, the Notes (including in connection with an offer to purchase); provided, however , that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 6.05 Control by Majority .
Except as otherwise set forth herein, Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.
 
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Section 6.06 Limitation on Suits .
Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:
(1) the Holder of a Note gives to the Trustee notice that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;
(3) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 30 days after receipt of the request and the offer and, if requested, the provision of indemnity; and
(5) during such 30-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. The Trustee has no duty to determine whether any such requested remedy would prejudice the rights of another Holder of a Note or would create a preference or priority over another Holder of a Note.
Section 6.07 Rights of Holders of Notes to Receive Payment .
Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08 Collection Suit by Trustee .
If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09 Trustee May File Proofs of Claim .
The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for
 
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the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities .
After an Event of Default any money or other property distributable in respect of the Company’s or the Guarantors’ obligations under this Indenture, the Trustee shall pay out the money in the following order:
First : to the Trustee (including any predecessor Trustee) and the Collateral Agent, their agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the Collateral Agent (including any predecessor Trustee or Collateral Agent) and the costs and expenses of collection;
Second : to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and interest, respectively, and for all other amounts owed to the Holders under this Indenture, the Notes and any other document executed in connection therewith; and
Third : to the Company or to such party as a court of competent jurisdiction shall direct in writing.
The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs .
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may
 
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require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.
 
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(e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request or direction of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company (whether in original or facsimile form). Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) The permissive right of the Trustee to do things enumerated in the Indenture shall not be construed as a duty of the Trustee, and the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be within the discretion or power conferred upon it by the Indenture other than for its own negligence or willful misconduct.
Section 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee will not be liable for any action it takes or omits to take in good faith that it reasonably believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company.
(f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
(g) In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
 
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(h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
(j) The Trustee may request that the Company deliver an incumbency certificate (“Incumbency Certificate”) substantially in the form set forth on Exhibit F setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Incumbency Certificate may be signed by any person authorized to sign an Incumbency Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Guarantor or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04 Trustee’s Disclaimer.
The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee will mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal of, premium and interest on, any Note) so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of Notes.
 
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Section 7.06 Reports by Trustee to Holders of the Notes.
(a) Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with the provisions of TIA § 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA § 313(c).
(b) A copy of each report at the time of its mailing to the Holders of Notes will be mailed by the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA § 313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange or delisted therefrom.
Section 7.07 Compensation and Indemnity.
(a) The Company will pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for its acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
(b) The Company and the Guarantors, if any, jointly and severally will indemnify the Trustee against any and all losses, liabilities, claims, damages or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, the Guarantors or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is determined by a court of competent jurisdiction to have been caused by its own negligence or willful misconduct. The Company and the Guarantors, if any, jointly and severally will defend, indemnify, and hold harmless the Trustee from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of or in connection with the acceptance or administration of its duties under this Indenture that are in any way related to, (w) the presence, disposal, release, or threatened release of any Hazardous Materials which are on, from, or affecting the soil, water, vegetation, buildings, personal property, persons, animals, or otherwise; (x) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (y) any lawsuit brought or threatened, settlement reached, or government order relating to such
 
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Hazardous Materials, and/or (z) any violation of laws, orders, regulations, requirements or demands of government authorities, or any policies or requirements of the Environmental Protection Agency, which are based upon or in any way related to such Hazardous Materials including, without limitation, attorney and consultant fees and expenses, investigation and laboratory fees, court costs, and litigation expenses. For purposes of this paragraph, “Hazardous Material” includes, without limit, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et. seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 5108, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.), and in the regulations adopted and publications promulgated pursuant thereto, or any other Federal, state or local environmental law, ordinance, rule, or regulation. The provisions of this paragraph shall be in addition to any and all other obligations and liabilities the Company or any Guarantor may have to the Trustee at common law. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.
(c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge, covenant defeasance or legal defeasance of this Indenture and resignation or removal of the Trustee.
(d) To secure the Company’s payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien will survive the satisfaction and discharge, covenant defeasance or legal defeasance of this Indenture.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.08 Replacement of Trustee.
(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.
(b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
 
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(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a custodian or public officer takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
(d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.
(g) The Holders of at least a majority in principal amount of the Notes then outstanding may, for any or no reason whatsoever, replace the Trustee and appoint a successor of their choosing.
Section 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized
 
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under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition.
This Indenture will always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee will be subject to TIA § 310(b) if this Indenture has been qualified under the TIA.
Section 7.11 Preferential Collection of Claims Against Company.
If this Indenture has been qualified under the TIA, the Trustee will be subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed may be subject to TIA § 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option and at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes (including any Subsidiary Guarantees) upon compliance with the conditions set forth below in this Article 8.
Section 8.02 Legal Defeasance and Discharge.
Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Subsidiary Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Subsidiary Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Subsidiary Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:
(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium on such Notes when such payments are due from the trust referred to in Section 8.04 hereof;
(2) the Company’s obligations with respect to such Notes under Sections 2.06, 2.07, 2.10 and 4.02 hereof;
(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s and the Guarantors’ obligations in connection therewith; and
(4) this Section 8.02.
 
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Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance.
Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 hereof and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “ Covenant Defeasance ”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Subsidiary Notes and Subsidiary Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Subsidiary Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Section 6.01(3) through Section 6.01 (5) hereof will not constitute Events of Default.
Section 8.04 Conditions to Legal or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in United States dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, and interest and premium on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date;
(2) in the case of an election under Section 8.02 hereof, the Company has delivered to the Trustee an Opinion of Counsel (from counsel who shall not be an employee of the Company) reasonably acceptable to the Trustee confirming that:
(A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or
 
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(B) since the date of this Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel (from counsel who shall not be an employee of the Company) reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(6) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and
(7) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in
 
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respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06 Repayment to Company.
Subject to compliance with applicable abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium or interest on any Note and remaining unclaimed two years after such principal, premium or interest has become due and payable shall be paid to the Company or as required by applicable abandoned property law on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however , that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Notes and the Subsidiary Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with
 
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Section 8.02 or 8.03 hereof, as the case may be; provided, however , that, if the Company makes any payment of principal of, premium or interest on any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors, if any, and the Trustee may amend or supplement this Indenture, any Subsidiary Guarantees or the Notes without the consent of any Holder of a Note:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;
(3) to provide for the assumption of the Company’s obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(4) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the rights hereunder of any such Holder;
(5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or
(6) to conform the text of this Indenture or the Notes to any provision of the Description of Notes to the extent necessary to correct any ambiguity, defect or inconsistency in any provision in this Indenture or the Notes which was intended to be a verbatim recitation of a provision in the Description of Notes.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02 With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including, without limitation, Section 3.09, 4.10 and 4.15 hereof) and the Notes with the consent of the Holders of at least a majority in principal amount of the
 
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Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes).
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental indenture.
It is not necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it is sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(3) reduce the rate of or change the time for payment of interest on any Note;
(4) waive a Default or Event of Default in the payment of principal of, or interest or premium on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration);
(5) make any Note payable in money other than that stated in the Notes;
 
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(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium on the Notes;
(7) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); or
(8) make any change in Section 6.04 or 6.07 hereof or in this Section 9.02.
Section 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes will be set forth in an amended or supplemental indenture that complies with the TIA as then in effect; provided, however, that the Company will comply with the TIA only when and to the extent that the TIA is applicable to the Notes.
Section 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
Section 9.05 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06 Trustee to Sign Amendments, etc.
The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee will be provided with and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 13.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.
 
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ARTICLE 10.
COLLATERAL AND SECURITY
Section 10.01 Collateral and Security Documents.
(a) To secure the due and punctual payment of principal of, premium, if any and interest on the Notes by the Company when and as the same shall be due and payable (whether on an Interest Payment Date, at Stated Maturity, by acceleration, call for redemption, upon a Change of Control Offer or an Offer with respect to an Asset Sale or otherwise) and interest on the overdue principal of, and interest (to the extent permitted by law) on, the Notes and performance of all other obligations of the Company and the Guarantors to the Holders of the Notes, the Trustee or the Collateral Agent under this Indenture, the Notes, the Guarantees, and the Security Documents, according to the terms hereunder or thereunder, each of the Company, the Guarantors and the Trustee will enter into the Security Documents to create the security interests with respect to the Collateral. The Trustee, the Collateral Agent, the Guarantors and the Company hereby acknowledge and agree that the Collateral Agent holds the Collateral in trust for the benefit of the Holders of the Notes, the Collateral Agent and the Trustee pursuant to the terms of the Security Documents.
(b) Each Holder, by accepting a Note, agrees to all of the terms and provisions of the Security Documents (including, without limitation, to the extent permitted by the TIA, to the extent the TIA is applicable to the Notes, and applicable law, the provisions therein providing for foreclosure and release of Collateral and the waivers of certain rights and remedies) as the same may be in effect or may be amended from time to time in accordance with the terms thereof and hereof, and authorizes and directs the Trustee, in its capacity as Collateral Agent, to perform its obligations and exercise its rights under the Security Documents in accordance therewith; provided , however , that if any provisions of the Security Documents limit, qualify or conflict with the duties imposed by the provisions of the TIA, the TIA will control, to the extent the Indenture has been qualified under the TIA.
(c) As more fully set forth in, and subject to the provisions of, the Security Documents, the Holders, and the Trustee and the Collateral Agent on behalf of such Holders, will have rights in and to the Collateral that are subject to the rights that have been or may be created in favor of the holders of other Indebtedness and obligations of the Company under the Intercreditor Agreement.
(d) As among the Holders, the Collateral shall be held for the equal and ratable benefit of the Holders without preference, priority or distinction of any thereof over any other.
(e) With respect to the Trustee acting as Collateral Agent, the Trustee (i) shall not be deemed to have breached any duty as Trustee to the Holders as a result of the performance of its duties as Collateral Agent to the extent it acts in compliance with the Security Documents and (ii) shall not be liable to the Holders for any such action or inaction in the absence of its own gross negligence or willful misconduct. The rights and interests created under this Indenture shall be subject to the terms of the Security Documents.
 
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(f) The Company and each Guarantor will do or cause to be done all such acts and things as may be required by the provisions of the Security Documents to which it is a party, to assure and confirm to the Trustee, in its capacity as Collateral Agent, the Liens on the Collateral contemplated by the Security Documents to which it is a party, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes and each Guarantee secured thereby, as applicable, according to the intent and purposes herein and therein expressed. The Company will take all actions required pursuant to the Security Documents (subject to the Intercreditor Agreement) to create valid, enforceable and perfected (to the extent required therein) Liens in and on all the Collateral in favor of the Collateral Agent for the benefit of the Trustee and for the equal and ratable benefit of the Holders of the Notes. Each Guarantor will, and the Company will cause each Guarantor to, take any and all actions required pursuant to the Security Documents (subject to the Intercreditor Agreement) to cause the Liens created pursuant to the Security Documents to which it is a party to create and maintain for its obligations under each Guarantee and the Security Document related thereto, valid and enforceable, perfected (to the extent required therein), Liens in favor of the Collateral Agent for the benefit of the Trustee and for the equal and ratable benefit of the Holders of the Notes. Neither the Company nor any of the Guarantors will be permitted to take any action or knowingly or negligently omit to take any action, which action or omission might or would have the result of materially impairing the Liens with respect to the Collateral for the benefit of the Trustee and the Holders of the Notes.
Section 10.02 Release of Collateral.
(a) Collateral may be released from the Liens created by the Security Documents at any time or from time to time, and the Security Documents may be terminated, in each case, in accordance with the provisions of the Security Documents and in accordance with this Indenture. Upon the request of the Company pursuant to an Officers’ Certificate and an Opinion of Counsel certifying that all covenants and conditions precedent hereunder have been complied with, the Company and the Guarantors will be entitled to a release of assets included in the Collateral from the Liens securing the Notes, and the Holders hereby irrevocably authorize and direct the Trustee and Collateral Agent to modify, release and adjust the Liens, to the extent provided for herein and in the Intercreditor Agreement, including, without limitation, at the Company’s sole cost and expense, under one or more of the following circumstances:
(1) to enable the Company or any Restricted Subsidiary to sell, exchange or otherwise dispose of any of the Collateral as permitted under this Indenture and the Security Documents;
(2) in the case of a Guarantor that is released from its Guarantee with respect to the Notes, the release of the property and assets of such Guarantor;
(3) if the Notes have been defeased pursuant to Article 8 or satisfied and discharged pursuant to Article 12 of this Indenture;
(4) pursuant to an amendment or waiver in accordance with Article 9 of this Indenture;
(5) to the extent required under the Intercreditor Agreement.
 
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The release of any Collateral from the terms hereof and of the Security Documents or the release of, in whole or in part, the Liens created by the Security Documents, or the termination of the Security Documents, will not be deemed to impair the Liens on the Collateral in contravention of the provisions hereof if and to the extent that the Liens on Collateral are released, or the Security Documents are terminated, pursuant to this Indenture or the applicable Security Documents. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien in accordance with the terms of the Security Documents and this Indenture will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture.
The Collateral Agent shall promptly execute and deliver such documents and instruments as the Company and the Guarantors may reasonably request to evidence any such permitted release without the consent of the Holders of the Notes. In releasing any Collateral pursuant to the terms of the Indenture or any Security Documents, the Trustee shall, in the absence of its negligence or willful misconduct be entitled to receive, and shall be fully protected in relying upon, in addition to the documents required by Section 13.04, an Officers’ Certificate and an Opinion of Counsel certifying that such release is authorized or permitted by this Indenture and the Security Documents and that all conditions precedent, if any, to such release have been satisfied.
(b) If all Liens on such property or assets securing First-Priority Liens (including all commitments and letters of credit thereunder) are released, then the Company and its Subsidiaries will take all steps required to convert the Holders’ second-priority Liens on the Collateral into first-priority Liens on the Collateral; provided , however , that if the Company or any Guarantor subsequently incurs first-priority Liens in reliance on clause 12 of the definition of Permitted Liens, then the Company and its Subsidiaries will be required to reinstitute the second-priority security arrangement with respect to the Collateral in favor of the Notes, which, in the case of any such subsequent first-priority Liens, will be second-priority Liens on the Collateral securing such first-priority Liens to the same extent provided by the Security Documents and on the terms and conditions of the security documents relating to such first-priority Liens, with the second-priority Lien held either by the administrative agent, collateral agent or other representative for such first-priority Liens or by a collateral agent or other representative designated by the Company to hold the second-priority Liens for the benefit of the Holders of the Notes and the Trustee and subject to an intercreditor agreement in substantially the same form as the Intercreditor Agreement.
Section 10.03 Recording; Opinions as to Recording.
(a) The Company and the Guarantors shall furnish to the Trustee and the Collateral Agent on the Issue Date and annually on each anniversary of the Issue Date an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments under the Security Documents on Article 9 Collateral as is necessary to make effective the Liens intended to be created by the Security Documents on such Article 9 Collateral and reciting the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien on such Article 9 Collateral effective. Such Opinion of Counsel may contain such qualifications, assumptions and limitations as are customary for such
 
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opinions. For purposes of the foregoing, the term “Article 9 Collateral” shall mean collateral with respect to which a Lien thereon may be perfected by the filing of a UCC-1 financing statement pursuant to the Uniform Commercial Code as adopted in any applicable jurisdiction.
(b) The Company and the Guarantors shall otherwise comply with the provisions of §§ 314(b), (c), (d) and (e) of the TIA, if the Indenture has been qualified under the TIA.
Section 10.04 Further Assurances and Security.
Subject to the Intercreditor Agreement, the Company and the Guarantors will execute, acknowledge and deliver to the Trustee, at the Company’s and/or such Guarantor’s expense, at any time and from time to time such further assignments, transfers, assurances, continuation statements or other instruments as may be reasonably required by the Trustee, to assure and confirm to the Trustee, in its capacity as Collateral Agent, the Liens in the Collateral contemplated hereby and by the Security Documents, all to the extent contemplated by the Security Documents.
Section 10.05 Authorization of Receipt of Funds by the Trustee under the Security Documents.
The Trustee and the Collateral Agent are authorized and empowered to receive any funds for the benefit of the Holders distributed under the Security Documents, and to make further distributions of such funds to the Holders according to the provisions of this Indenture and the Security Documents.
Section 10.06 Concerning the Collateral Agent; Authorizations
(a) Subject to the terms of the Intercreditor Agreement, the Collateral Agent, may, in its sole discretion and without the consent of the Holders, on behalf of the Holders, take all actions it deems necessary or appropriate in order to (i) enforce any of the terms of the Security Documents and (ii) collect and receive any and all amounts payable in respect of the obligations of the Company and the Guarantors hereunder, provided that neither the Trustee nor the Collateral Agent shall have any right to take any such actions prior to its actual knowledge of the occurrence of an Event of Default, which it shall have no duty to discover or ascertain except as otherwise provided in this Indenture.
(b) The Collateral Agent will be subject to such directions as may be given it by the Trustee from time to time as required or permitted by this Indenture.
(c) The Company will deliver to the Trustee copies of all Security Documents delivered to the Collateral Agent.
(d) The Collateral Agent will be accountable only for amounts that it actually receives as a result of the enforcement of the Liens granted pursuant to the Security Documents.
(e) In acting as Collateral Agent, all of the rights, protections and immunities, granted to the Trustee hereunder shall inure to the benefit of the Collateral Agent acting hereunder and under the Security Documents.
 
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(f) Each successor Trustee will become the successor Collateral Agent as and when the successor Trustee becomes the Trustee and shall comply with the provisions of Section 10.07(g) below unless, at the time such successor Trustee becomes Trustee, the immediately preceding Trustee was not the Collateral Agent.
(g) Each Holder, by its acceptance of its Note, consents and agrees to the terms of each Security Document, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of this Indenture, authorizes and directs the Collateral Agent to enter into the Security Documents, and authorizes and empowers the Trustee and the Collateral Agent to bind the Holders as set forth in the Security Documents and to perform its obligations and exercise its rights and powers thereunder.
(h) The Trustee may, subject to the terms of the Intercreditor Agreement, in its sole discretion and without the consent of the Holders, direct, on behalf of the Holders, the Collateral Agent to take all actions it deems necessary or appropriate in order to:
 
 	(i)	foreclose upon or otherwise enforce any or all of the Liens granted by the Security Documents;	
 
 	(ii)	enforce any of the terms of the Security Documents; or	
 
 	(iii)	collect and receive payment of any and all amounts owing under this Indenture, the Notes and the Security Documents.	
(i) Subject to the Intercreditor Agreement, the Collateral Agent is authorized and empowered to institute and maintain such suits and proceedings as it may deem expedient to protect or enforce the Liens granted by the Security Documents or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents or this Indenture, and such suits and proceedings as the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders, the Trustee or the Collateral Agent.
(j) The Collateral Agent shall have no duty as to any Collateral in its possession or control, other than those duties specifically set forth in this Indenture and the Security Documents, or the possession or control of any agent or bailee or any income thereon or as to the preservation or rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.
(k) All moneys received by the Collateral Agent under or pursuant to any provision of this Indenture or any Security Document shall be paid over or delivered to the Trustee in the form received (with any necessary endorsements) for application by the Trustee pursuant to the provisions of this Indenture.
 
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(l) The Collateral Agent may execute any power and perform any duty under this Indenture or any Security Document either directly or by or through agents, nominees or attorneys-in-fact. The Collateral Agent may act and conclusively rely, and shall be protected in acting and conclusively relying on, the opinion or advice of, or information obtained from, any counsel (which shall include counsel to the Company), accountant, appraiser or other expert or adviser, whether retained or employed by the Collateral Agent or the Trustee in relation to any matter in connection with this Indenture, the Security Documents or any other document, instrument or writing. The Collateral Agent shall be entitled to rely on the advice of counsel selected by it concerning all matters pertaining to such powers and duties. The Collateral Agent shall not be responsible for any acts or omissions, including any negligence or misconduct, of any agents, nominees or attorneys-in-fact selected by it with due care.
(m) If the Collateral Agent has been requested or is otherwise required to take action pursuant to this Indenture or any Security Document, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in the Collateral Agent by this Indenture or any Security Document unless the Collateral Agent shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Collateral Agent. Under no circumstances shall the Collateral Agent be required to expend or risk its own funds or incur or risk any liability.
(n) Except as to any of the Collateral in its possession or control and except as otherwise set forth in this Indenture and in the Security Documents or under the TIA (when and to the extent that the TIA is applicable to the Notes), the Collateral Agent shall not be responsible for (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under the Security Documents, (ii) the filing, re-filing, recording, re-recording or continuing of any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any property subject to any of the Security Documents.
(o) In no event shall the Collateral Agent be liable for incidental, indirect, special or consequential damages, regardless of the form of action and even if the same were foreseeable. Notwithstanding anything set forth herein to the contrary, the Collateral Agent shall have a duty of reasonable care with respect to any Collateral which is delivered to the Collateral Agent and is in the Collateral Agent’s possession and control.
(p) Subject to the TIA, to the extent the TIA is applicable to the Notes, in the absence of its negligence or willful misconduct, the Collateral Agent may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Indenture or any Security Document.
Section 10.07 Resignation and Removal of Collateral Agent; Appointment of Successor.
(a) No resignation or removal of the Collateral Agent and no appointment of a successor Collateral Agent pursuant to this Article 10 shall become effective until the acceptance of appointment by the successor Collateral Agent in accordance with the applicable requirements of Section 10.07(g) below.
 
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(b) The Collateral Agent may resign at any time by giving written notice thereof to the Company (and, if the Collateral Agent and the Trustee are not the same Person, to the Trustee). If the instrument of acceptance by a successor Collateral Agent required by Section 10.07(g) below shall not have been delivered to the Collateral Agent within thirty (30) days after the giving of such notice of resignation, the resigning Collateral Agent, the Trustee or the Company may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent.
(c) The Collateral Agent may be removed at any time by the Trustee, by instrument delivered to the Company and to the Collateral Agent, or by the written direction of the Holders of a majority in aggregate principal amount of the Notes, delivered to the Trustee, the Collateral Agent and the Company. If the instrument of acceptance by a successor Collateral Agent required by Section 10.07(g) below shall not have been delivered to the Collateral Agent within thirty (30) days after the giving of such notice of removal, the removed Collateral Agent, the Trustee or the Company may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent.
(d) If at any time:
(1) the Collateral Agent shall cease to be eligible under Section 10.07(h) below and shall fail to resign after written request therefor by the Company, the Trustee or by any Holder of a Note; or
(2) the Collateral Agent shall become incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of the Collateral Agent or of its property shall be appointed or any public officer shall take charge or control of the Collateral Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;
then, if the Collateral Agent is not removed by the Trustee pursuant to clause (c) above, any Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Collateral Agent and the appointment of a successor Collateral Agent.
(e) If the Collateral Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Collateral Agent for any cause, the Trustee shall promptly appoint a successor Collateral Agent and shall comply with the applicable requirements of this Section 10.07. If, within one (1) year after such resignation, removal or incapability, or occurrence of such vacancy, a successor Collateral Agent shall be appointed by an act of the Holders of a majority in principal amount of the Notes delivered to the Company, the Trustee and the Collateral Agent, the successor Collateral Agent so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of this Section 10.07, become the successor Collateral Agent and supersede the successor Collateral Agent appointed by the Trustee. If no successor Collateral Agent shall have been so appointed by the Trustee or the Holders of Notes and accepted appointment in the manner required by this Section 10.07, any Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Collateral Agent.
 
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(f) The Trustee shall give notice of each resignation and each removal of the Collateral Agent and each appointment of a successor Collateral Agent to all Holders of Notes in the manner provided in Section 13.02. Each notice shall include the name of the successor Collateral Agent and the address of its Corporate Trust Office.
(g) Every successor Collateral Agent appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Collateral Agent (and, if the retiring Collateral Agent and the Trustee are not the same Person, to the Trustee) an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Collateral Agent shall become effective and such successor Collateral Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Collateral Agent. Such retiring Collateral Agent shall, upon payment of its charges, promptly execute and deliver an instrument transferring to such successor Collateral Agent all the rights, powers and trusts of the retiring Collateral Agent and shall duly assign, transfer and deliver to such successor Collateral Agent all property and money held by such retiring Collateral Agent hereunder. Upon request of any such successor Collateral Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Collateral Agent all such rights, powers and trusts.
(h) No Person shall accept appointment as Collateral Agent hereunder unless at the time of such acceptance such successor Person shall be a corporation having a combined capital and surplus (or for such purposes, the combined capital and surplus of any parent holding company) of at least U.S.$250,000,000, subject to supervision or examination by federal or state authority, in good standing and having an established place of business or agency in the Borough of Manhattan, The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 10.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Collateral Agent shall cease to satisfy the requirements of this paragraph for being a Collateral Agent, it shall resign immediately in the manner and with the effect hereinafter specified in this Section 10.07 and a successor shall be appointed pursuant to this Section 10.07.
 
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ARTICLE 11.
SUBSIDIARY GUARANTEES
Section 11.01 Guarantee.
(a) Subject to this Article 11, each of the Guarantors, if any, hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:
(1) the principal of, premium and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and performance and not a guarantee of collection.
(b) The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.
(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Subsidiary Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee.
 
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Section 11.02 Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.
Section 11.03 Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form attached as Exhibit D hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 11.01 will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any Domestic Subsidiary after the date of this Indenture, if required by Section 4.18 hereof, the Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.18 hereof and this Article 11, to the extent applicable.
Section 11.04 Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.05, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor, unless:
(1) immediately after giving effect to such transaction, no Default or Event of Default exists; and
 
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(2) either:
(a) subject to Section 11.05 hereof, the Person acquiring the property in such sale or disposition or the Person formed by or surviving any such consolidation or merger unconditionally assumes all the obligations of that Guarantor under this Indenture and the Subsidiary Guarantees pursuant to a supplemental indenture substantially in the form set forth in Exhibit E hereto; or
(b) any such sale is permitted under Section 4.10 hereof and the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation, Section 4.10 hereof.
In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.
Section 11.05 Releases of Subsidiary Guarantees.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of this Indenture;
(2) in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or a Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 of this Indenture;
 
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(3) if the Company designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;
(4) upon legal defeasance or satisfaction and discharge of the notes as provided under Article 8 or Article 12 of this Indenture; or
(5) with the consent of the Holders of at least 75% in principal amount of the Notes then outstanding.
Any Guarantor not released from its obligations under its Subsidiary Guarantee will remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11. The Company will provide written notice to the Trustee upon any release of a Guarantor. Upon request of the Company, and delivery to the Trustee of an Officers’ Certificate and an Opinion of Counsel certifying that all covenants and conditions precedent hereunder to the release of such Guarantor have been complied with, the Trustee will execute and deliver a release of such Guarantor to the Company and the released Guarantor.
ARTICLE 12.
SATISFACTION AND DISCHARGE
Section 12.01 Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:
(1) either:
(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or
(b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and accrued interest to the date of maturity or redemption;
(2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of
 
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funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions of Section 12.02, Section 7.07 and Section 8.06 will survive.
Section 12.02 Application of Trust Money.
Subject to the provisions of Section 8.06, all money deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 12.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.
ARTICLE 13.
MISCELLANEOUS
Section 13.01 Trust Indenture Act Controls.
The Company and Guarantors represent to the Trustee and the Collateral Agent that this Indenture is not required to be, and has not been, qualified under the TIA on the Issue Date, and will promptly inform the Trustee if this Indenture is to be so qualified. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA §318(c), the imposed duties will control; provided, however, that the Company will comply with the TIA only when and to the extent this Indenture has been qualified under the TIA.
 
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Section 13.02 Notices.
Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company and/or any Guarantor:
Kellwood Company
600 Kellwood Parkway
Chesterfield, Missouri 63017
Attention: Chief Financial Officer
Facsimile: (314) 576-3439
With a copy to:
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, IL 60601
Facsimile No.: (312) 862-2200
Attention: Gerald T. Nowak, P.C.
If to the Trustee:
Wells Fargo Bank National Association
230 West Monroe Street, Suite 2900
Chicago, IL 60606
Attention: Greg Clarke, Corporate Trust Services
Facsimile No.: (312) 726-2158
With a copy to:
Drinker Biddle & Reath LLP
191 North Wacker Drive, Suite 3700
Chicago, IL 60606-1698
Attention: Steve Wagner
Telecopier: (312) 569-3000
The Company, any Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day, if sent by overnight air courier guaranteeing next day delivery.
 
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Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication will also be so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.
Section 13.03 Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate as permitted under TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection set forth under TIA § 312(c).
Section 13.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
Section 13.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and must include:
(1) a statement that the Person making such certificate or opinion has read such covenant or condition;
 
109

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.
Section 13.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 13.07 Payments Due on Non-Business Days.
Anything in this Indenture or the Notes to the contrary notwithstanding, any payment of principal, premium or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on the next succeeding Business Day; provided that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such Maturity Date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
Section 13.08 No Personal Liability of Directors, Officers, Employees, Stockholders or Securityholders.
No director, officer, employee, incorporator, stockholder or securityholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture, any Subsidiary Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
Section 13.09 Governing Law; Jury Trial Waiver
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE COMPANY, THE SUBSIDIARY GUARANTORS, THE TRUSTEE, AND EACH HOLDER OF A NOTE BY ITS ACCEPTANCE THEREOF, HEREBY IRREVOCABLY WAIVES, TO
 
110

THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 13.11 Successors.
All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 11.05.
Section 13.12 Severability.
In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.
Section 13.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement.
Section 13.14 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.
Section 13.15 Force Majeure.
In no event shall the Trustee be responsible or liable, nor shall the Company or the Guarantors be responsible or liable to the Trustee, for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee or the Company or the Guarantors, as the case may be, shall use reasonable efforts which are consistent with accepted practices to resume performance as soon as practicable under the circumstances.
( Signature Pages Follow )
 
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SIGNATURES

Dated as of July    , 2009	 		 	COMPANY:	
			
	 		 	KELLWOOD COMPANY, a Delaware corporation	
				
	 		 	By:	 	/s/ Steven Baginski	
	 		 	Name:	 	Steven Baginski	
	 		 	Title:	 	Senior Vice President, Chief Financial Officer and Treasurer	
 
F-1

			
GUARANTORS:	
	
HALMODE APPAREL, INC.
KELLWOOD FINANCIAL RESOURCES, INC.
(formerly known as Newkell, Inc.)
KELLWOOD RETAIL GROUP, INC.
KWD HOLDINGS, INC.
NEW CAMPAIGN, INC.
PHAT FASHIONS LLC
PHAT LICENSING LLC	
		
By:	 	/s/ Steven Baginski	
Name:	 	Steven Baginski	
Title:	 	Chief Financial Officer for each of the above listed companies	
 
2

			
GUARANTORS:	
	
AMERICAN RECREATION PRODUCTS, INC.
ROYAL ROBBINS, INC.
SIERRA DESIGNS ACQUISITION CORPORATION	
		
By:	 	/s/ Steven Baginski	
Name:	 	Steven Baginski	
Title:	 	Treasurer for each of the above listed companies	
 
3

					
TRUSTEE AND COLLATERAL AGENT:	
		
	 	WELLS FARGO BANK NATIONAL ASSOCIATION	
			
	 	By:	 	 	
	 		 	Name:	
	 		 	Title:	
 
4

Exhibit 10.41
KELLWOOD COMPANY,
ISSUER
INDENTURE
DATED AS OF SEPTEMBER 30, 1997
THE CHASE MANHATTAN BANK,
TRUSTEE
PROVIDING FOR THE ISSUANCE OF
SENIOR DEBT SECURITIES IN SERIES

TABLE OF CONTENTS

 	 	 	  	PAGE	 	
ARTICLE I	 		  				
DEFINITIONS AND INCORPORATION	  				
BY REFERENCE	  				
Section 1.1.	 	Definitions	  	 	1	  	
Section 1.2.	 	Other Definitions	  	 	9	  	
Section 1.3.	 	Incorporation by Reference of Trust Indenture Act	  	 	10	  	
Section 1.4.	 	Rules of Construction	  	 	11	  	
			
ARTICLE II	 		  				
THE SECURITIES	  				
Section 2.1.	 	Terms and Forms	  	 	11	  	
Section 2.2.	 	Execution and Authentication	  	 	15	  	
Section 2.3.	 	Registrar, Paying Agent, Conversion Agent, Depository and Securities Custodian	  	 	18	  	
Section 2.4.	 	Securityholder Lists	  	 	18	  	
Section 2.5.	 	Transfer, Registration and Exchange	  	 	18	  	
Section 2.6.	 	Replacement Securities	  	 	21	  	
Section 2.7.	 	Outstanding Securities	  	 	22	  	
Section 2.8.	 	Treasury Securities	  	 	23	  	
Section 2.9.	 	Temporary Securities	  	 	23	  	
Section 2.10.	 	Securities in Global Form	  	 	24	  	
Section 2.11.	 	Cancellation	  	 	24	  	
Section 2.12.	 	Defaulted Interest	  	 	24	  	
Section 2.13.	 	Persons Deemed Owners	  	 	25	  	
			
ARTICLE III	 		  				
REDEMPTION	  				
Section 3.1.	 	Applicability of Article	  	 	25	  	
Section 3.2.	 	Notices to Trustee	  	 	25	  	
Section 3.3.	 	Selection of Securities to Be Redeemed	  	 	26	  	
Section 3.4.	 	Notice of Redemption	  	 	27	  	
Section 3.5.	 	Effect of Notice of Redemption	  	 	28	  	
Section 3.6.	 	Deposit of Redemption Price	  	 	29	  	
Section 3.7.	 	Securities Redeemed in Part	  	 	29	  	
			
ARTICLE IV	 		  				
COVENANTS	  				
Section 4.1.	 	Payment of Securities	  	 	30	  	
Section 4.2.	 	Maintenance of Office or Agency for Notices and Demands	  	 	30	  	
 
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Section 4.3.	 	Money for Securities Payments to Be Held in Trust	  	 	31	  	
Section 4.4.	 	Commission Reports; Reports to Trustee; Reports to Holders	  	 	33	  	
Section 4.5.	 	Compliance Certificates	  	 	33	  	
Section 4.6.	 	Corporate Existence	  	 	34	  	
Section 4.7.	 	Limitation on Liens	  	 	34	  	
Section 4.8.	 	Limitations on Sale and Lease-Back Transactions	  	 	34	  	
Section 4.9.	 	Exempted Indebtedness	  	 	35	  	
Section 4.10.	 	Waiver of Stay; Extension of Usury Laws	  	 	35	  	
			
ARTICLE V	 		  				
SUCCESSORS	  				
Section 5.1.	 	When Company May Merge, etc.	  	 	36	  	
Section 5.2.	 	Successor Corporation Substituted	  	 	36	  	
			
ARTICLE VI	 		  				
DEFAULTS AND REMEDIES	  				
Section 6.1.	 	Events of Default	  	 	37	  	
Section 6.2.	 	Acceleration	  	 	38	  	
Section 6.3.	 	Other Remedies	  	 	39	  	
Section 6.4.	 	Waiver of Past Defaults	  	 	39	  	
Section 6.5.	 	Control by Majority	  	 	39	  	
Section 6.6.	 	Limitation on Suits by Holders	  	 	40	  	
Section 6.7.	 	Rights of Holders to Receive Payment	  	 	40	  	
Section 6.8.	 	Collection Suit by Trustee	  	 	40	  	
Section 6.9.	 	Trustee May File Proofs of Claim	  	 	41	  	
Section 6.10.	 	Application of Money Collected	  	 	41	  	
Section 6.11.	 	Undertaking for Costs	  	 	42	  	
Section 6.12.	 	Discontinuance or Abandonment of Proceedings	  	 	42	  	
			
ARTICLE VII	 		  				
TRUSTEE	  				
Section 7.1.	 	Duties of Trustee	  	 	43	  	
Section 7.2.	 	Rights of Trustee	  	 	44	  	
Section 7.3.	 	Individual Rights of Trustee	  	 	45	  	
Section 7.4.	 	Trustee’s Disclaimer	  	 	45	  	
Section 7.5.	 	Notice of Defaults	  	 	45	  	
Section 7.6.	 	Reports by Trustee to Holders	  	 	45	  	
Section 7.7.	 	Compensation and Indemnity	  	 	46	  	
Section 7.8.	 	Replacement of Trustee	  	 	46	  	
Section 7.9.	 	Successor Trustee by Merger	  	 	47	  	
Section 7.10.	 	Eligibility; Disqualification	  	 	47	  	
Section 7.11.	 	Preferential Collection of Claims Against Company	  	 	48	  	
 
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ARTICLE VIII	 		  				
DISCHARGE OF INDENTURE; DEFEASANCE	  				
Section 8.1.	 	Discharge of Indenture; Defeasance	  	 	48	  	
Section 8.2.	 	Conditions to Defeasance	  	 	49	  	
Section 8.3.	 	Application of Trust Money	  	 	50	  	
Section 8.4.	 	Repayment to Company	  	 	50	  	
Section 8.5.	 	Reinstatement of Company’s Obligations	  	 	51	  	
			
ARTICLE IX	 		  				
AMENDMENTS AND WAIVERS	  				
Section 9.1.	 	Without Consent of Holders	  	 	51	  	
Section 9.2.	 	With Consent of Holders	  	 	52	  	
Section 9.3.	 	Compliance with Trust Indenture Act	  	 	53	  	
Section 9.4.	 	Revocation and Effect of Consents and Waivers	  	 	53	  	
Section 9.5.	 	Notation on or Exchange of Securities	  	 	54	  	
Section 9.6.	 	Trustee to Sign Amendments	  	 	54	  	
			
ARTICLE X	 		  				
REPAYMENT AT THE OPTION OF HOLDERS	  				
Section 10.1.	 	Applicability of Article	  	 	55	  	
			
ARTICLE XI	 		  				
SINKING FUNDS	  				
Section 11.1.	 	Applicability of Article	  	 	55	  	
Section 11.2.	 	Satisfaction of Sinking Fund Payments with Securities	  	 	55	  	
Section 11.3.	 	Redemption of Securities for Sinking Fund	  	 	56	  	
			
ARTICLE XII	 		  				
CONVERSION OF SECURITIES	  				
Section 12.1.	 	Applicability of Article	  	 	56	  	
Section 12.2.	 	Exercise of Conversion Privilege	  	 	57	  	
Section 12.3.	 	Fractional Interests	  	 	58	  	
Section 12.4.	 	Adjustment of Conversion Price	  	 	59	  	
Section 12.5.	 	Continuation of Conversion Privilege in Case of Merger, Consolidation or Sale of Assets	  	 	61	  	
Section 12.6.	 	Notice of Certain Events	  	 	62	  	
Section 12.7.	 	Taxes on Conversion	  	 	63	  	
Section 12.8.	 	Company to Provide Stock	  	 	64	  	
Section 12.9.	 	Disclaimer of Responsibility for Certain Matters	  	 	64	  	
Section 12.10.	 	Return of Funds Deposited for Redemption of Converted Securities	  	 	65	  	
Section 12.11.	 	Rights Issued in Respect of Common Stock Issued upon Conversion	  	 	65	  	
 
-iii-

							
ARTICLE XIII	 		  				
MISCELLANEOUS	  				
Section 13.1.	 	Trust Indenture Act Controls	  	 	65	  	
Section 13.2.	 	Notices	  	 	66	  	
Section 13.3.	 	Communication by Holders with Other Holders	  	 	67	  	
Section 13.4.	 	Certificate and Opinion as to Conditions Precedent	  	 	67	  	
Section 13.5.	 	Statements Required in Certificate or Opinion	  	 	67	  	
Section 13.6.	 	Rules by Trustee and Agents	  	 	68	  	
Section 13.7.	 	Legal Holidays	  	 	68	  	
Section 13.8.	 	No Recourse Against Others	  	 	68	  	
Section 13.9.	 	Governing Law	  	 	68	  	
Section 13.10.	 	No Adverse Interpretation of Other Agreements	  	 	68	  	
Section 13.11.	 	Successors	  	 	68	  	
Section 13.12.	 	Severability	  	 	68	  	
Section 13.13.	 	Multiple Originals	  	 	69	  	
Section 13.14.	 	Table of Contents; Headings	  	 	69	  	
Section 13.15.	 	Securities in Foreign Currencies	  	 	69	  	
 
-iv-

CROSS-REFERENCE TABLE

TIA Section	  	Indenture Section	
310    (a) (1)	  	7.10	
(a) (2)	  	7.10	
(a) (3)	  	N.A.	
(a) (4)	  	N.A.	
(b)	  	7.8, 7.10, 13.2	
(c)	  	N.A.	
311    (a)	  	7.11	
(b)	  	7.11	
(c)	  	N.A.	
312    (a)	  	2.4	
(b)	  	13.3	
(c)	  	13.3	
313    (a)	  	7.6	
(b) (1)	  	N.A.	
(b) (2)	  	7.6	
(c)	  	7.6, 13.2	
(d)	  	7.6	
314    (a)	  	4.4, 13.2	
(b)	  	N.A.	
(c) (1)	  	13.4	
(c) (2)	  	13.4	
(c) (3)	  	N.A.	
(d)	  	N.A.	
(e)	  	13.5	
(f)	  	N.A.	
315    (a)	  	7.1(b)	
(b)	  	7.5, 10.2	
(c)	  	7.1(a)	
(d)	  	7.1(c)	
(e)	  	6.11	
316    (a) (Last Sentence)	  	2.8	
(a) (1) (A)	  	6.5	
(a) (1) (B)	  	6.4	
(a) (2)	  	N.A.	
(b)	  	6.7	
317    (a) (1)	  	6.8	
(a) (2)	  	6.9	
(b)	  	4.3	
318    (a)	  	13.1	
N.A. means not applicable.
 
-v-

INDENTURE dated as of September 30, 1997 between KELLWOOD COMPANY, a Delaware corporation (the “Company”), and The Chase Manhattan Bank, a New York banking corporation (the “Trustee”).
Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company’s Securities issued hereunder:
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
 
SECTION 1.1.	DEFINITIONS.	
“Additional Amounts” means any additional amounts which are required by a Security or by or pursuant to a Board Resolution, under circumstances specified therein, to be paid by the Company in respect of certain taxes imposed on certain Holders, or as otherwise specified in the terms of a Security established pursuant to Section 2.1, and which are owing to such Holders.
“Affiliate” shall mean another Person directly or indirectly controlling or controlled by or under direct or indirect common control with such first Person. For the purposes of this definition, “control,” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. The Trustee may request and conclusively rely on an Officers’ Certificate to determine whether any Person is an Affiliate of the Company.
“Agent” shall mean any Registrar or Paying Agent or authenticating agent or co-registrar.
“Authorized Newspaper” means a newspaper printed in the official language of the country of publication and customarily published at least once a day on each Business Day in each calendar week and of general circulation in New York, New York or in any other place as required in this Indenture, whether or not such newspaper is published on Legal Holidays, or, with respect to the Securities of any series, such other newspapers as may be specified in or pursuant to the Board Resolution of the Company or supplement to this Indenture pursuant to which such series of Securities is issued. Whenever, under the provisions of this Indenture or such Board Resolution, two or more publications of a notice or other communication are required or permitted, such publications may be in the same or different newspapers. If, because of temporary or permanent suspension of publication or general circulation of any newspaper or

for any other reason, it is impossible or impracticable to publish any notices required by this Indenture or a Board Resolution in the manner provided, then such publication in lieu thereof or such other notice as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice.
“Bankruptcy Law” shall mean Title 11, United States Code or any similar federal or state law for the relief of debtors.
“Bearer Security” means any security in the form established pursuant to Section 2.1 hereunder which is payable to bearer.
“Board” or “Board of Directors” shall mean the Board of Directors of the Company or any authorized committee of such Board.
“Board Resolution” means a copy of the resolutions certified by the Secretary or an Assistant Secretary of the Company as properly adopted by the Board of Directors of the Company and in full force and effect and delivered to the Trustee.
“Business Day” shall mean each day that is not a Legal Holiday.
“Capitalized Lease Obligation” shall mean an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with such principles; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
“Commission” shall mean the Securities and Exchange Commission.
“Common Stock” shall mean the common stock, $.01 par value per share, of the Company.
“Company” shall mean Kellwood Company, a Delaware corporation, until a successor replaces it in accordance with Article V and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.
“Company Request” or “Company Order” shall mean a written request or order signed in the name of the Company by any two of the following: the Chairman of the Board, the President, a Vice President, the Chief Financial Officer or the Treasurer thereof or any other officer specifically authorized to act by the Board of Directors of the Company, and delivered to the Trustee.
 
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“Consolidated Net Worth” shall mean the excess of assets over liabilities of the Company and its consolidated Subsidiaries, plus Minority Interests, as determined from time to time in accordance with GAAP.
“consolidation” shall mean, with respect to any Person, the consolidation of the accounts of such Person if and to the extent the accounts of such Person and each of its Subsidiaries (or, if such Person is the Company, its Restricted Subsidiaries) would normally be consolidated with those of such Person, all in accordance with GAAP. The term “consolidated” shall have a similar meaning.
“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 13.2 or such other address as the Trustee may give to the Company.
“coupon” shall mean any interest coupon appertaining to a Bearer Security.
“Currency Agreement” shall mean any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person or any of its Restricted Subsidiaries against fluctuations in currency values.
“Default” shall mean any event that is, or after notice or passage of time or both would be, an Event of Default as defined in Section 6.1 of this Indenture.
“Depository” or “U.S. Depository” shall mean, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more global Securities, the Person designated as U.S. Depository pursuant to Section 2.1, which must be a clearing agency registered under the Exchange Act, and, if so provided pursuant to Section 2.1 with respect to the Securities of any series, any successor to such Person. If at any time there is more than one such Person, “Depository” or “U.S. Depository” shall mean, with respect to any series of Securities, the qualifying entity which has been appointed with respect to the Securities of that series.
“Eligible Obligations” shall mean obligations as a result of the deposit of which (along with the simultaneous deposit, if any, of money or U.S. Government Obligations or both) the Securities will be rated in the highest generic long-term debt rating category assigned by one or more nationally recognized rating agencies to debt with respect to which the issuer thereof has been released from its obligations to the same extent that the Company has been released from its obligations under this Indenture pursuant to the defeasance provision of this Indenture.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, consistently applied, that are applicable to the
 
-3-

circumstances as of the date of determination; provided that, for purposes of calculating the Consolidated Net Worth of a Person (including all components thereof), “GAAP” shall mean such generally accepted accounting principles as described above in effect on the date of this Indenture.
“Holder,” “Securityholders” or “Holders of Securities” or other similar term shall mean, with respect to a Registered Security, the person in whose name a particular Security shall be registered on the books of the Registrar kept for that purpose in accordance with the terms hereof and, with respect to a Bearer Security or any coupon, the bearer thereof, and the word “majority,” used in connection with the term “Holder,” “Securityholders” or “Holder of Securities” or other similar term, shall signify the “majority in principal amount” whether or not so expressed.
“incur” shall mean, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and “incurrence,” “incurred,” “incurrable,” and “incurring” shall have meanings correlative to the foregoing); provided that a change in GAAP that results in an obligation of such Person that exists at such time becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
“Indebtedness” shall mean, with respect to any Person, at any date, any of the following, without duplication, (i) any liability, contingent or otherwise, of such Person (A) for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (B) evidenced by a note, bond, debenture or similar instrument or (C) for the payment of money relating to a Capitalized Lease Obligation or other obligation (whether issued or assumed) relating to the deferred purchase price of property; (ii) all conditional sale obligations and all obligations under any title retention agreement (even if the rights and remedies of the seller under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade accounts payable arising in the ordinary course of business; (iii) all obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction other than entered into in the ordinary course of business; (iv) all indebtedness of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on any asset or property (including, without limitation, leasehold interests and any other tangible or intangible property) of such Person, whether or not such indebtedness is assumed by such Person or is not otherwise such Person’s legal liability; provided, that if the obligations so secured have not been assumed in full by such Person or are otherwise not such Person’s legal liability in full, the amount of such indebtedness for the purposes of this definition shall be limited to the lesser of the amount of such indebtedness secured by such Lien or the fair market value of the assets of the property securing such Lien; (v) all indebtedness of others (including all interest and dividends on any Indebtedness or preferred stock of any other Person for the payment of which is) guaranteed, directly or indirectly, by such Person or that is otherwise its legal liability or
 
-4-

which such Person has agreed to purchase or repurchase or in respect of which such Person has agreed contingently to supply or advance funds; and (vi) obligations in respect of Currency Agreements and Interest Swap Obligations.
“Indenture” shall mean this Indenture as amended or supplemented from time to time.
“Interest Swap Obligations” shall mean the obligations of any Person pursuant to any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates.
“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor federal income tax laws.
“Issue Date” shall mean the first date on which a Security is authenticated by the Trustee pursuant to this Indenture.
“Legal Holiday” shall mean a Saturday, a Sunday or a day on which banking institutions and trust companies in the City of New York or in a state where a Place of Payment is located are authorized or obligated by law, regulation or executive order to remain closed.
“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien, charge or adverse claim affecting title or resulting in an encumbrance against real or personal property or a security interest of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party or property leased to the Company or any of its Subsidiaries under a lease that is not in the nature of a conditional sale or title retention agreement).
“Maturity” when used with respect to any Security shall mean the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“Minority Interest” shall mean any shares of stock of any class of a Subsidiary that are not owned by the Company or a Subsidiary.
“Officer” shall mean the Chairman of the Board of Directors, the Vice Chairman, the President, the Treasurer, any Assistant Treasurer, Controller, Secretary, Assistant Secretary, or any Vice President of the Company.
 
-5-

“Officers’ Certificate” shall mean, with respect to any Person, a certificate signed by the Chairman of the Board of Directors, the Vice Chairman, the President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of such Person that shall comply with applicable provisions of this Indenture.
“Opinion of Counsel” shall mean an opinion in writing signed by a Person’s legal counsel (who may be an employee of or counsel to such Person or the Trustee) who is acceptable to the Trustee.
“Original Issue Discount Security” shall mean any Security which provides that an amount less than its principal amount is due and payable upon the acceleration of the maturity thereof after an Event of Default.
“Periodic Offering” shall mean an offering of Securities of a series from time to time the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the maturity or maturities thereof, the original issue date or dates thereof, the redemption provisions, if any, and any other terms specified as contemplated by Section 2.1 with respect thereto, are to be determined by the Company, or one or more of the Company’s agents designated in an Officers’ Certificate, upon the issuance of such Securities.
“Permitted Liens” shall mean, with respect to any Person:
(i) Liens existing on the Issue Date;
(ii) Liens on property or assets of, or any shares of stock of or secured debt of, any corporation existing at the time such corporation becomes a Restricted Subsidiary of the Company or at the time such corporation is merged into the Company or any of its Restricted Subsidiaries;
(iii) Liens in favor of the Company or any of its Restricted Subsidiaries;
(iv) Liens in favor of governmental bodies to secure progress or advance payments;
(v) Liens securing industrial revenue or pollution control bonds;
(vi) Liens on Property to secure Indebtedness incurred for the purpose of (i) financing all or any part of the purchase price of such Property incurred prior to, at the time of, or within 180 days after, the acquisition of such property or assets or (ii) financing all or any part of the cost of construction, improvement, development or expansion of any such Property;
 
-6-

(vii) Statutory liens or landlords’, carriers’, warehouseman’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens on current assets of Restricted Subsidiaries securing Indebtedness of such Restricted Subsidiaries; and
(ix) any extensions, substitutions, replacements or renewals in whole or in part of a Lien (an “existing Lien”) enumerated in clauses (i) through (viii) above; provided that the Lien may not extend beyond (A) the Property or Indebtedness subject to the existing Lien and (B) improvements and construction on such Property and the Indebtedness secured by the Lien may not exceed the Indebtedness secured at the time by the existing Lien.
“Person” shall mean any individual, corporation, partnership, limited partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof, or any other entity.
“Place of Payment” when used with respect to the Securities of any series, means the place or places where the principal of and interest and any Additional Amounts on the Securities of that series are payable as specified as provided pursuant to Section 2.1.
“principal” of a debt security (including the Securities) shall mean the principal of the security plus the premium, if any, payable on the security which is due or overdue or is to become due at the relevant time.
“Principal Property” shall mean any manufacturing plant or warehouse owned or leased by the Company or any Subsidiary whether owned or leased on the date hereof or hereafter, the gross book value of which exceeds one percent of Consolidated Net Worth, other than manufacturing plants and warehouses which the Board of Directors by resolution declares are not of material importance to the total business conducted by the Company and its Restricted Subsidiaries as an entirety and which, when taken together with all other plants and warehouses as to which such a declaration has been so made, is so declared by the Board of Directors to be not of material importance to the total business conducted by the Company and its Restricted Subsidiaries as an entirety.
“Property” of any Person means all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included in the most recent consolidated balance sheet of such Person and its Subsidiaries under GAAP.
 
-7-

“Redemption Date” when used with respect to any Security to be redeemed shall mean the date fixed for such redemption by or pursuant to this Indenture.
“Redemption Price” shall mean the amount payable for the redemption of any Security on the Redemption Date, and shall always include interest accrued and unpaid to the Redemption Date and any Additional Amounts payable with respect thereto, unless otherwise specifically provided.
“Registered Security” shall mean any Security registered on the books of the Registrar kept for that purpose in accordance with the terms hereof.
“Responsible Officer,” when used with respect to the Trustee, shall mean any officer in the corporate trust department of the Trustee or any officer of the Trustee customarily performing functions similar to those performed by any officer in the corporate trust department of the Trustee with respect to a particular corporate matter or any other officer to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject.
“Restricted Subsidiary” shall mean any Subsidiary which owns (i) a Principal Property or (ii) any trademark, trade name, brand name or license (collectively, “Intangible Property”), excluding any Intangible Property the use of which did not give rise to revenues in excess of $25 million during the Company’s most recently completed fiscal year.
“Securities” shall mean the debt securities, as amended or supplemented from time to time pursuant to this Indenture, that are issued under this Indenture.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Stated Maturity,” when used with respect to any Security or any installment of interest thereon, shall mean the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable.
“Subsidiary” of any Person shall mean (i) any Person of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more of the Subsidiaries of that Person or a combination thereof, and (ii) any partnership, joint venture or other Person in which such Person or one or more of the Subsidiaries of that Person or a combination thereof has the power to control by contract or otherwise the board of directors or equivalent governing body or otherwise controls such entity.
“TIA” or “Trust Indenture Act” shall mean the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as amended and as in effect on the date of this Indenture, except as provided in Sections 9.1 and 9.3 hereof.
 
-8-

“Transfer Agent” shall mean any Person, which may be the Company, authorized by the Company to exchange or register the transfer of Securities.
“Trustee” shall mean the party named as such in this Indenture unless a successor replaces it pursuant to the provisions hereunder, and thereafter shall mean such successor.
“U.S. Government Obligations” shall mean securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as full faith and credit obligation by the United States of America, that, in either case, are not callable or redeemable at the option of the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligations or a specific payment of interest on or principal of any such U.S. Government Obligations held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt for any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of interest on or principal of the U.S. Government Obligations evidenced by such depository receipt.
“Yield to Maturity” means the yield to maturity on a series of Securities at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice.
 
SECTION 12.	OTHER DEFINITIONS.	

Term	  	Defined in
Section	 	
		
“Conversion Agent”	  	 	2.3	  	
		
“Conversion Price”	  	 	12.4	  	
		
“covenant defeasance option”	  	 	8.1	  	
		
“Date of Conversion”	  	 	12.2	  	
		
“Events of Default”	  	 	6.1	  	
		
“Funded Debt”	  	 	4.8	  	
		
“Last Sale Price”	  	 	12.3	  	
		
“legal defeasance option”	  	 	8.1	  	
		
“mandatory sinking fund payment”	  	 	11.1	  	
		
“optional sinking fund payment”	  	 	11.1	  	
		
“Paying Agent”	  	 	2.3	  	
		
“Rights”	  	 	12.11	  	
		
“Registrar”	  	 	2.3	  	
		
“Sale/Leaseback Transaction”	  	 	4.8	  	
		
“Securities Custodian”	  	 	2.3	  	
		
“Surviving Entity”	  	 	5.1	  	
		
“Trading Day”	  	 	12.3	  	
		
“Value”	  	 	4.8	  	
 
-9-

SECTION 1.3.	INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.	
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
“indenture securities” means the Securities;
“indenture security holder” means a Securityholder;
“indenture to be qualified” means this Indenture;
“indenture trustee” or “institutional trustee” means the Trustee; and
“obligor” on the Securities means the Company, any other obligor upon the Securities or any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them.
 
-10-

In addition, for purposes of Sections 311(b)(4) and 311(b)(6) of the TIA, the following terms shall have the following meanings:
“cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks’ or bankers’ acceptances and payable upon demand.
“self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
 
SECTION 1.4.	RULES OF CONSTRUCTION.	
Unless the context otherwise requires:
 
 	(1)	a term has the meaning assigned to it;	
 
 	(2)	an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;	
 
 	(3)	“or” is not exclusive;	
 
 	(4)	words in the singular include the plural and words in the plural include the singular;	
 
 	(5)	provisions apply to successive events and transactions; and	
 
 	(6)	times of day shall refer to New York City time.	
ARTICLE II
THE SECURITIES
 
SECTION 2.1.	TERMS AND FORMS.	
The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series of Securities and shall bear the title, interest, if any, at the rates and from the dates, shall mature at the times, may be redeemable at the prices and upon the terms, shall be denominated and payable at the place or places and in the currency or currencies (which may be other than United
 
-11-

States dollars), including composite currencies, and shall contain or be subject to such other terms as shall be approved by or pursuant to a Board Resolution of the Company or in one or more supplements to this Indenture.
The Securities of each series hereunder shall be in one or more forms approved from time to time by or pursuant to a Board Resolution of the Company or in one or more supplements to this Indenture establishing the following:
 
 	(1)	the title or designation of the Securities and the series in which such Securities shall be included (which, unless such Securities constitute part of a series of Securities previously issued, shall distinguish the Securities of the series from all other Securities);	
 
 	(2)	any limit upon the aggregate principal amount of the Securities of such title or the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Sections 2.5, 2.6, 2.9 or 3.7);	
 
 	(3)	whether Securities of the series are to be issuable as Registered Securities, Bearer Securities (with or without coupons) or both; any restrictions applicable to the offer, sale or delivery of Bearer Securities and the terms upon which Bearer Securities of the series may be exchanged for Registered Securities of the series; and whether any Securities of the series are to be issuable initially in global form and, if so, (i) whether beneficial owners of interests in any such global Security may exchange such interest for Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner specified in Section 2.9 and (ii) the name of the Depository or the U.S. Depository, as the case may be, with respect to any global Security;	
 
 	(4)	the date as of which any Bearer Securities of the series and any temporary global Security representing outstanding Securities of the series shall be dated if other than the date of original issuance of the first Security of the series to be issued;	
 
 	(5)	if Securities of the series are to be issuable as Bearer Securities, whether interest in respect of any portion of a temporary Bearer Security in global form (representing all of the outstanding Bearer Securities of the series) payable in respect of any date or dates prior to the exchange of such temporary Bearer Security for definitive Securities of the series shall be paid to any clearing organization with respect to the portion of such temporary Bearer Security held for its account and, in such event, the	
 
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 	terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such date or dates;	
 
 	(6)	the date or dates on which the principal of such Securities is payable;	
 
 	(7)	the rate or rates at which such Securities shall bear interest, if any, or the method in which such rate or rates are determined, the date or dates from which such interest shall accrue, the dates on which such interest shall be payable and the record date for Holders entitled to the interest payable on Registered Securities on any such date, whether and under what circumstances Additional Amounts on such Securities shall be payable and, if so, whether the Company has the option to redeem the affected Securities rather than pay such Additional Amounts, and the basis upon which interest shall be calculated if other than as otherwise provided in this Indenture;	
 
 	(8)	the place or places, if any, in addition to or other than the City of New York, New York, where the principal of and interest on or Additional Amounts, if any, payable in respect of such Securities shall be payable;	
 
 	(9)	the period or periods within which, the price or prices at which and the terms and conditions upon which such Securities may be redeemed, in whole or in part, at the option of the Company;	
 
 	(10)	the obligation, if any, of the Company to redeem or purchase such Securities pursuant to a sinking fund, at the option of a Holder thereof or otherwise and the period or periods within which, the price or prices at which and the terms and conditions upon which such Securities shall be redeemed or purchased in whole or in part, pursuant to such obligation, and any provisions for the remarketing of such Securities;	
 
 	(11)	the denominations in which Registered Securities of the series, if any, shall be issuable, and the denominations in which Bearer Securities of the series, if any, shall be issuable, in either case if other than as otherwise provided in this Indenture;	
 
 	(12)	if other than the principal amount thereof, the portion of the principal amount of such Securities which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;	
 
 	(13)	if other than such coin or currency of the United States of America as at the time of payment is legal tender for payment of public or private debts,	
 
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 	the coin or currency, including composite currencies, in which payment of the principal of or interest, if any, and any Additional Amounts in respect of such Securities shall be payable and whether the Securities of the series may be discharged other than as provided in Article VIII;	
 
 	(14)	if the principal of or interest, if any, and any Additional Amounts in respect of such Securities are to be payable, at the election of the Company or a Holder thereof, in a coin or currency, including composite currencies, other than that in which the Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made;	
 
 	(15)	if the amount of payments of principal of or interest, if any, or any Additional Amounts in respect of such Securities may be determined with reference to an index, formula or other method based on a coin or currency other than that in which the Securities are stated to be payable, the manner in which such amounts shall be determined;	
 
 	(16)	if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions;	
 
 	(17)	any terms which may be related to warrants issued by the Company in connection with, or for the purchase of, Securities of such series, including whether and under what circumstances the Securities of any series may be used toward the exercise price of any such warrants;	
 
 	(18)	whether the Securities of the series are to be convertible into shares of common stock or other securities of the Company, and the conversion price, conversion period and any conversion provisions other than as provided in Article XII;	
 
 	(19)	any other events of default or covenants with respect to Securities of such series; and	
 
 	(20)	any other terms of such Securities (which terms shall not be inconsistent with the provisions of this Indenture).	
If the form of the Security of any series is approved by or pursuant to a Board Resolution, an Officers’ Certificate delivered to the Trustee shall state that all conditions precedent relating to the authentication and delivery of such Security have been complied with and shall be accompanied by a copy of the Board Resolution by or pursuant to which the form of such Security have been complied with and shall be accompanied by a copy of the Board Resolution by or pursuant to which the form of
 
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such Security has been approved. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company and the Trustee). Each Security shall be dated the date of its authentication. Each Security may contain any other terms as are not inconsistent with the provisions of this Indenture.
All Securities of any one series and coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except as to denomination and the rate or rates of interest, if any, the time or times at which the principal thereof may be payable, the date from which interest, if any, shall accrue and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in the Officers’ Certificate hereinabove described or in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities.
The Securities of each series may be issued as Registered Securities without coupons or, if provided by the terms of the instrument establishing such series of Securities, as Bearer Securities, with or without coupons and, in either case, may be issued initially, temporarily or permanently in global form (as provided in Section 2.10). Unless the form of a Security for a series provides otherwise, the Registered Securities shall be issued in denominations of $1,000 or integral multiples thereof and Bearer Securities shall be issuable in the denomination of $5,000.
Except as otherwise specified as contemplated by this Section 2.1 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
If any of the terms of the series are established by action taken by or pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Officer’s Certificate setting forth, or providing the manner for determining, the terms of the series.
With respect to Securities of a series subject to a Periodic Offering, such Board Resolution or Officer’s Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a Company Order or that such terms shall be determined by the Company, or one or more of the Company’s agents designated in an Officer’s Certificate, in accordance with a Company Order.
 
SECTION 2.2.	EXECUTION AND AUTHENTICATION.	
Two Officers shall sign the Securities and the coupons for the Company by manual or facsimile signature. The Company’s seal may be reproduced on the Securities, but the Company’s seal shall not be required to be included on the Securities.
 
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If an Officer whose signature is on a Security or coupon no longer holds that office at the time the Security is authenticated by the Trustee, the Security and coupon shall nevertheless be valid.
The aggregate principal amount of Securities outstanding hereunder at any time shall be unlimited except that such outstanding amount (exclusive of any premium) may not exceed the amount authorized from time to time by the Board of Directors of the Company and except as provided in Section 2.6. Upon receipt of a Company Order for the authentication and delivery of Securities of a series, the Trustee shall authenticate and deliver for original issue Securities of a series as to which an Officers’ Certificate of the Company or a supplemental indenture has been delivered to the Trustee pursuant to Section 2.1.
No Security or any coupon appertaining thereto shall be valid until the Trustee or the authenticating agent referred to below manually signs the certificate of authentication on the Security. Each Registered Security shall be dated the date of its authentication. Bearer Securities and any temporary Bearer Security in global form shall be dated as specified in the Officers’ Certificate of the Company or in the supplements to this Indenture contemplated by Section 2.1. The signature of the Trustee or the authenticating agent referred to below shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless otherwise provided in the appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate.
Except as permitted by Section 2.6, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and canceled.
The Trustee’s certificate of authentication shall be in the following form:
This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

 	
The Chase Manhattan Bank, as Trustee	
		
By:	 	 	
	 	Authorized Officer	
 
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If the forms and terms of the Securities of the series and any related coupons have been established in or pursuant to one or more Officers’ Certificates as permitted by Section 2.1 and 2.2, in authenticating such Securities and accepting the additional responsibilities under this Indenture relating to such Securities the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon an Opinion of Counsel to the effect that:
(a) the form and terms of such Securities and coupons, if any, have been duly authorized and established pursuant to Sections 2.1 and 2.2 and comply with this Indenture, and
(b) such Securities, when authenticated and delivered by the Trustee and issued by the Company, and such coupons, if any, when issued by the Company, in the manner and subject to any conditions specified in such Opinion of Counsel will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to customary exceptions,
provided, however, that, with respect to Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to receive such Opinion of Counsel only once at or prior to the time of the first authentication of Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities have been, and the terms of such Securities (when established in accordance with such procedures as may be specified from time to time in a Company Order, all as contemplated by and in accordance with a Board Resolution or any Officers’ Certificate pursuant to Section 2.1, as the case may be) will have been, duly authorized by the Company and established in conformity with the provisions of this Indenture; and
(y) that such Securities, together with the coupons, if any, appertaining thereto, when (1) executed by the Company, (2) completed, authenticated and delivered by the Trustee in accordance with this Indenture, and (3) issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to customary exceptions.
With respect to Securities of a series subject to a Periodic Offering, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and other documents delivered pursuant to Section 2.1 and this Section 2.2, as applicable, at or prior to the time of the first authentication of Securities of such series unless and until it has received written notification that such opinion or other documents have been superseded or revoked. In connection with the authentication and delivery of Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to assume that the Company’s
 
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instructions to authenticate and deliver such Securities do not violate any rules, regulations or orders of any governmental agency or commission having jurisdiction over the Company.
 
SECTION 2.3	REGISTRAR, PAYING AGENT, CONVERSION AGENT, DEPOSITORY AND SECURITIES CUSTODIAN.	
The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”), an office or agency including the office or agency maintained by the Company pursuant to Section 4.2 where Securities may be presented for payment (the “Paying Agent”) and, if applicable, an office or agency where the Securities may be presented for conversion (the “Conversion Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents or conversion agents. The term “Paying Agent” includes any additional paying agent, and the term “Conversion Agent” includes any additional conversion agent.
The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent, Depository, Securities Custodian or co-registrar not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such agent and incorporate the terms of the TIA. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent, if applicable, or Securities Custodian, if applicable, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.7. The Company or any of its Subsidiaries may act as Paying Agent, Conversion Agent, Registrar, co-registrar or Transfer Agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities and the Trustee accepts such appointment.
 
SECTION 2.4.	SECURITYHOLDER LISTS.	
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date (and in all events at intervals of not more than six months) and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. The Company and the Trustee shall otherwise comply with TIA Section 312(a).
 
SECTION 2.5.	TRANSFER, REGISTRATION AND EXCHANGE.	
When a Registered Security is presented at an office or agency maintained for that series pursuant to Section 4.2 in proper form for registration of transfer with a request to register a transfer, the Registrar or co-registrar at that office shall register the transfer as requested.
 
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At the option of the Securityholder, Registered Securities of any series may be exchanged upon surrender to the Registrar or a co-registrar for Registered Securities of the same series of like aggregate principal amount, stated maturity and tenor and of other authorized denominations upon surrender at any office or agency maintained for that series pursuant to Section 4.2.
If so provided with respect to Securities of a series, at the option of the Holder, Bearer Securities of any such series may be exchanged for Registered Securities of the same series containing identical terms and provisions, of any authorized denominations and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any office or agency maintained for that series pursuant to Section 4.2, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to save each of them and any Paying Agent for that series harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent for that series any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment; provided, however, that except as otherwise provided in Section 4.2, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency maintained for that series pursuant to Section 4.2 in exchange for a Registered Security of the same series and like tenor after the close of business at such office or agency on any record date for the payment of interest and any Additional Amounts thereon and before the opening of business at such office or agency on the relevant payment date therefor, such Bearer Security shall be surrendered without the coupon relating to such payment date or proposed date of payment, as the case may be (or if such coupon is so surrendered with such Bearer Security, such coupon shall be returned to the person so surrendering the Bearer Security), and interest will not be payable on such payment date or proposed date for payment, as the case may be, in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture.
Every Security presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Registrar or co-registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by the Holder thereof or his attorney duly authorized in writing. To permit transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar’s or co-registrar’s request.
 
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Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 2.1, any global Security shall be exchangeable only if (i) the Depository or U.S. Depository, as applicable, is at any time unwilling, unable or ineligible to continue as Securities Depository and a successor Depository, or U.S. Depository as applicable, is not appointed by the Company within 90 days of the date the Company is so informed in writing, (ii) the Company executes and delivers to the Trustee a Company Order to the effect that such global Security shall be so exchangeable, or (iii) an Event of Default has occurred and is continuing with respect to the Securities. If the beneficial owners of interests in a global Security are entitled to exchange such interests for Securities of such series and of like tenor and principal amount of any authorized form and denomination, as specified as contemplated by Section 2.1, then without unnecessary delay but in any event not later than the earliest date on which such interests may be so exchanged, the Company shall deliver to the Trustee definitive Securities of that series in aggregate principal amount equal to the principal amount of such global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such global Securities shall be surrendered from time to time by the U.S. Depository or such other Depository as shall be specified in the Company Order with respect thereto, and in accordance with instructions given to the Trustee and the U.S. Depository or such other Depository, as the case may be, which instructions shall be in writing but need not be accompanied by an Officers’ Certificate of the Company or an Opinion of Counsel, as shall be specified in the Company Order with respect thereto to the Trustee, as the Company’s agent for such purpose, to be exchanged, in whole or in part, for definitive Securities of the same series without charge. The Trustee shall authenticate and make available for delivery, in exchange for each portion of such surrendered global Security, a like aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such global Security to be exchanged which shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the beneficial owner thereof (unless the Securities of the series are not issuable both as Bearer Securities and as Registered Securities, in which case the definitive Securities exchanged for the global Security shall be issuable only in the form in which the Securities are issuable, as specified as contemplated by Section 2.1); provided, however, that no such exchanges may occur (a) for a period of 15 days next preceding the 15th day of any selection of Securities of that series to be redeemed pursuant to Section 3.3, or to exchange any Securities of a series selected, called or being called for redemption in whole or in part except in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed; and provided, further, that (unless otherwise specified as contemplated by Section 2.1) no Bearer Security delivered in exchange for a portion of a global Security shall be mailed or otherwise delivered to any location in the United States. Promptly following any such exchange in part, such global Security shall be returned by the Trustee to the U S. Depository or such other Depository referred to above in accordance with the instructions of the Company referred to above. If a Registered Security is issued in exchange for any portion of a global Security after the close of business at the office or agency where such exchange occurs on any record date for the payment of interest or any Additional Amounts thereon, and before the opening of business at such office or agency on the relevant payment date therefor, interest and any Additional Amounts in respect of such Registered Security will not be payable on such payment date, but will be payable on such payment date only to the Person to whom interest or any Additional Amounts in respect of such portion of such global Security is payable in accordance with the provisions of this Indenture.
 
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No service charge shall be made for any registration of transfer or exchange, or redemption of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 2.9 or 9.5 not involving any transfer.
The Company shall not be required (a) to issue, register the transfer of, or exchange any Securities of any series for a period of 15 days next preceding the day of any selection of Securities of such series to be redeemed pursuant to Section 3.3, or (b) to register the transfer of or exchange any Securities of any series selected, called or being called for redemption in whole or in part except, in the case of any Registered Security to be redeemed in part, the portion thereof not so to be redeemed or (c) to exchange any Bearer Security so selected for redemption except, to the extent provided with respect to Securities of a series, that such a Bearer Security may be exchanged for a Registered Security of that series, provided that such Registered Security shall be immediately surrendered for redemption with written instruction for payment consistent with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities endorsed thereon surrendered upon such registration of transfer or exchange.
 
SECTION 2.6.	REPLACEMENT SECURITIES.	
If the Holder of a mutilated or defaced Security or a Security with a mutilated or defaced coupon appertaining to it surrenders such Security to the Trustee or if the Holder of a Security presents evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of the Security or the destruction, loss or theft of a coupon and surrenders the Security to which such coupon appertains with all appurtenant coupons not so lost, stolen or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security of the same series and of like tenor, with coupons corresponding to the coupons, if any, appertaining to the surrendered Security, if the requirements set forth in the next succeeding paragraph are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Security is replaced.
Upon the issuance of any substitute Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or coupon which has matured or is about to mature or
 
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has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security or coupon, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security or coupon); provided, however, that the applicant for such payment shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee and any agent of the Company or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or coupon and of the ownership thereof.
Every substitute Security of any series, with coupons, if any, issued pursuant to the provisions of this Section 2.6 by virtue of the fact that any Security is destroyed, lost or stolen or that a coupon appertaining to it is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security or coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by the law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.
 
SECTION 2.7.	OUTSTANDING SECURITIES.	
The Securities of any series outstanding at any time are all the Securities of such series authenticated and delivered by the Trustee except for those cancelled by it, those delivered to it for cancellation, those described in this Section as not outstanding and in the case of any global Securities, the principal amount by which such global Securities have been reduced by the Trustee or the Securities custodian in accordance with this Indenture.
If any Security is replaced or paid pursuant to Section 2.6, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under Section 4.1 or 8.1, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities of a particular series (or portions thereof) to be redeemed or maturing, as the case may be (and in the case of any Security which is to be redeemed prior to the Maturity thereof, notice of such redemption has been duly given or
 
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provision satisfactory to the Trustee has been made for giving such notice), and the Paying Agent is not prohibited from paying such money to Securityholders on that date pursuant to the terms of this Indenture, then on and after that date such Securities of that series (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
If any Security is canceled by the Trustee or delivered to the Trustee for cancellation, it ceases to be outstanding and interest on it ceases to accrue.
A Security of any series does not cease to be outstanding because the Company or an Affiliate holds such Security, except as otherwise provided in Section 2.8 hereof.
In determining whether the Holders of the requisite principal amount of outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 6.1 and (ii) the principal amount of a Security denominated in a foreign currency or currencies, of the principal amount (or, in the case of an Original Issue Discount Security, the United States dollar equivalent, determined pursuant to Section 13.15, of such Security of the amount determined as provided in (i) above) of such Security.
 
SECTION 2.8.	TREASURY SECURITIES.	
In determining whether the Holders of the required principal amount of Securities (in the aggregate or with respect to a particular series, in each case only as expressly provided herein) have concurred in any direction, waiver or consent, any Securities owned by the Company or an Affiliate shall be disregarded (including for purposes of determining the outstanding principal amount of Securities or any series of Securities) except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded.
 
SECTION 2.9.	TEMPORARY SECURITIES.	
Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon receipt of the written order of the Company signed by two Officers. Temporary Securities and, if Bearer Securities, temporary coupons shall be substantially in the form of definitive Securities and, if Bearer Securities, definitive coupons, but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee, upon receipt of the written order of the Company signed by two Officers, shall authenticate definitive Securities in exchange for temporary Securities. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as definitive Securities.
 
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SECTION 2.10.	SECURITIES IN GLOBAL FORM.	
If Securities of a series are issuable in global form, any such Security may provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and may also provide that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount or changes in the rights of Holders, of outstanding Securities represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein.
 
SECTION 2.11.	CANCELLATION.	
The Company at any time may deliver Securities or coupons to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment and any coupons surrendered for payment. The Trustee shall cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and all coupons surrendered for payment and shall destroy cancelled Securities in accordance with the usual destruction procedures of the Trustee and deliver evidence of such destruction to the Company, unless the Company directs the Trustee to return such cancelled Securities to the Company by written order signed by two Officers. The Company may not issue new Securities to replace Securities that it has redeemed or paid or that have been delivered to the Trustee for cancellation.
 
SECTION 2.12.	DEFAULTED INTEREST.	
If the Company defaults in a payment of interest or any Additional Amounts on any series of Registered Securities, and so long as the Trustee deems the following procedure practicable, the Company shall pay the defaulted interest and any Additional Amounts to Persons who are Holders of Registered Securities of such series on a subsequent special record date in the following manner. The Company shall fix the special record date (which shall be at least five days before the payment date) for the payment of such defaulted interest and any Additional Amounts on such Securities and the payment date for such defaulted interest. At least 15 days before the special record date, the Company (or the Trustee) shall mail each Holder of Registered Securities a notice that states the special record date, the payment date and the amount of defaulted interest and any Additional Amounts to be paid, provided the Company has made arrangements satisfactory to the Trustee for payment of the aggregate amount to be paid on such payment date. On such payment date the Trustee shall pay out of funds provided by the Company such defaulted interest and any Additional Amounts. In case a Bearer Security of any series is surrendered at the office or agency of the Company maintained pursuant to Section 4.2 in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any special record date and before the opening of business at such office or agency on the related proposed date for payment of defaulted interest and any Additional Amounts, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and defaulted interest and any Additional
 
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Amounts will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon on or after such payment date in accordance with the provisions of this Indenture. The Company may pay defaulted interest and any Additional Amounts in any other lawful manner.
 
SECTION 2.13.	PERSONS DEEMED OWNERS.	
Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any Agent may deem and treat the Person in whose name any Security shall be registered upon the register of Securities kept by the Registrar as the absolute owner of such Registered Security (whether or not such Security shall be overdue and notwithstanding any notation of the ownership or other writing thereon made by anyone other than the Company, any Registrar or co-registrar) for the purpose of receiving payments of principal of, interest on or any Additional Amounts payable with respect to such Registered Security and for all other purposes whatsoever and neither the Company, the Trustee nor any Agent shall be affected by any notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Security or coupon shall be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
ARTICLE III
REDEMPTION
 
SECTION 3.1.	APPLICABILITY OF ARTICLE.	
This Article shall apply to the Securities of each series, if any, that by their terms are subject to redemption at the option of the Company or pursuant to the operation of a sinking fund or otherwise are required to be redeemed pursuant to the terms of the Securities. If the terms of any Security shall conflict with any provision of this Article III, the terms of such Security shall govern.
 
SECTION 3.2.	NOTICES TO TRUSTEE.	
If the Company elects to redeem Securities pursuant to the optional redemption provisions, if any, set forth in such Securities, it shall furnish to the Trustee an Officers’ Certificate setting forth the paragraph of the Securities of the applicable series pursuant to which the redemption shall occur, the Redemption Date, the principal amount of Securities to be redeemed and the Redemption Price.
 
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If Securities of any series by their terms are redeemable pursuant to the operation of a sinking fund or pursuant to another mandatory redemption provision of the Securities, the Company shall notify the Trustee by an Officers’ Certificate of the amount of the next sinking fund payment or amount required to satisfy such mandatory redemption payment and the portion of such payment which is to be satisfied by delivering and crediting Securities of the same series pursuant to Section 3.6.
If the Company elects to reduce pursuant to the terms of such Securities the principal amount of Securities to be redeemed, it shall notify the Trustee by Officers’ Certificate of the amount of the reduction and the basis for it. If the Company elects to credit against any such redemption Securities of the same series it has not previously delivered to the Trustee for cancellation, it shall deliver the Securities with such Officers’ Certificate.
The Company shall give each notice or Officers’ Certificate provided for in this Section at least 45 days (unless a shorter period shall be satisfactory to the Trustee or a longer period required by Section 3.4) but not more than 60 days before the applicable Redemption Date.
If the Registrar is not the Trustee, the Company shall, concurrently with each notice of redemption or repurchase, cause the Registrar to deliver to the Trustee a certificate (upon which the Trustee may rely) setting forth the principal amounts of Securities held by each Holder.
 
SECTION 3.3.	SELECTION OF SECURITIES TO BE REDEEMED.	
If less than all of the Securities of a series are to be redeemed, the Trustee shall select the Securities to be redeemed on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. In the event of partial redemption by lot, the particular Securities of a series to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee from the outstanding Securities not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed. Securities and portions of Securities selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Securities of a Holder are to be redeemed, the entire outstanding amount of Securities held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.
 
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SECTION 3.4.	NOTICE OF REDEMPTION.	
The Company shall give notice of a redemption at least 30 days but not more than 60 days before the Redemption Date, with respect to Registered Securities, by mailing a notice of redemption to each Holder of Registered Securities of such series to be redeemed at such Holder’s address as it appears on the Securities register maintained by the Registrar and, with respect to Bearer Securities, by publishing in an Authorized Newspaper notice of such redemption on two separate days.
The notice shall identify the Securities to be redeemed and shall state:
 
 	(1)	the Redemption Date;	
 
 	(2)	the Redemption Price;	
 
 	(3)	the name and address of the Paying Agent;	
 
 	(4)	that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price;	
 
 	(5)	the paragraph of the Securities pursuant to which the Securities called for redemption are being redeemed;	
 
 	(6)	that, unless the Company defaults in making the redemption payment, interest on Securities called for redemption ceases to accrue on and after the Redemption Date and the only remaining right of the Holders of such Securities is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Securities to be redeemed;	
 
 	(7)	if any Security is to be redeemed in part, the portion of the principal amount (equal to $1,000 or any integral multiple thereof) of such Security to be redeemed and that, on or after the Redemption Date, upon surrender of such Security, a new Security or Securities of the same series in aggregate principal amount equal to the unredeemed portion thereof will be issued without charge to the Securityholder;	
 
 	(8)	if less than all of the Securities of a series are to be redeemed, the identification of the particular Securities of such series (or portion thereof) to be redeemed, as well as the aggregate principal amount of Securities of such series to be redeemed and the aggregate principal amount of Securities of such series estimated to be outstanding after such partial redemption; and	
 
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 	(9)	the CUSIP number, if any. The Trustee shall not be responsible for the correctness or accuracy of any such CUSIP number.	
At the Company’s request, the Trustee shall give the notice of redemption in the name and at the expense of the Company. In such event, the Company shall provide the Trustee with the information required by this Section and shall provide notice of such redemption to the Trustee at least 45 days prior to the Redemption Date (unless a shorter period shall be satisfactory to the Trustee). If such notice is given by the Company, the Company shall provide a copy of such notice given to the Holders to the Trustee and any Paying Agent at least 2 days prior to the date such notice is given to such Holders, but in any event at least 15 days prior to the Redemption Date (unless a shorter period shall be satisfactory to the Trustee).
 
SECTION 3.5.	EFFECT OF NOTICE OF REDEMPTION.	
Once notice of redemption is mailed, Securities of the series called for redemption become due and payable on the Redemption Date at the Redemption Price. Upon surrender to any Paying Agent, such Securities shall be paid at the Redemption Price, plus accrued interest to the Redemption Date and any Additional Amounts with respect thereto; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable, in the case of Bearer Securities, to bearers of the coupons for such interest and Additional Amounts upon surrender thereof and, in the case of Registered Securities, to the Holders of such series of Securities, registered as such, at the close of business on the relevant record date for the payment of such installment of interest and Additional Amounts.
Notice of redemption shall be deemed to be given when mailed or published, as the case may be, whether or not the Holder receives the notice. In any event, failure to give such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of the Securities.
If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of each missing coupon or coupons may be waived by the Company and the Trustee if there shall be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent for such Security harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent for such Security any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest (and any Additional Amounts) represented by coupons shall be payable only upon presentation and surrender of these coupons at an office or agency located outside of the United States except as otherwise provided in Section 4.2.
 
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SECTION 3.6.	DEPOSIT OF REDEMPTION PRICE.	
On or prior to the Redemption Date, the Company shall irrevocably deposit with the Trustee or with the Paying Agent (or if the Company or a Subsidiary of the Company is acting as the Paying Agent, set aside, segregate and hold in trust, as provided herein) in immediately available funds money sufficient to pay the Redemption Price of and accrued and unpaid interest on all Securities to be redeemed on that date.
If the Company complies with the preceding paragraph, interest on the Securities to be redeemed will cease to accrue on the applicable Redemption Date, whether or not such Securities are presented for payment. If any Security called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the Redemption Date until such principal is paid, and, to the extent lawful, on any interest not paid on such unpaid principal, in each case at the rate provided in the Securities for the applicable series.
If any Security by its terms permits any sinking fund payment obligation to be satisfied by delivering and crediting Securities, the Company shall deliver such Securities to the Trustee for crediting against such payment obligation in accordance with the terms of such Securities and this Indenture.
 
SECTION 3.7.	SECURITIES REDEEMED IN PART.	
Upon surrender of a Security that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Security of the same series equal in principal amount to the unredeemed portion of the Security surrendered.
If a Security in global form is surrendered upon redemption in part, the Company shall execute, and the Trustee shall authenticate and deliver to the U.S. Depository or other Depository for such Security in global form as shall be specified in the Company Order to the Trustee with respect thereto, without service charge, a new Security in global form in a denomination equal to and in exchange for the unredeemed portion of the principal of the Security in global form so surrendered.
 
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ARTICLE IV
COVENANTS
Subject to the provisions of Section 8.1, so long as Securities are outstanding hereunder, the Company covenants for the benefit of the Securityholders that:
 
SECTION 4.1.	PAYMENT OF SECURITIES.	
The Company will punctually pay the principal of, interest and Additional Amounts, if any, on the Securities on the dates and in the manner provided in the Securities, any coupons appertaining thereto and this Indenture. Principal, interest and any Additional Amounts shall be considered paid on the date due if the Paying Agent (other than the Company or any of its Subsidiaries) holds on that date money sufficient to pay all principal, interest and any Additional Amounts then due.
Any interest due on and any Additional Amounts payable in respect of Bearer Securities on or before their maturity, in respect of the principal of such a Security, shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature.
The Company shall pay interest on overdue principal and, to the extent lawful, interest on overdue installments of interest or Additional Amounts, if any, at the rate borne by such Securities.
In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any record date established to determine the Person to whom interest or any Additional Amounts are payable on the next following interest payment date therefor and before the opening of business (at such office or agency) on such interest payment date, such Bearer Security shall be surrendered without the coupon relating to such interest payment date, and interest will not be payable on such interest payment date in respect of the Registered Security issued in exchange of such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture.
 
SECTION 4.2.	MAINTENANCE OF OFFICE OR AGENCY FOR NOTICES AND DEMANDS.	
The Company shall maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series (but not Bearer Securities, except as otherwise provided below, unless such Place of Payment is located outside the United States) may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the Company shall maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series that is located outside the United States where Securities of such series and the related coupons may be presented and surrendered for payment (including payment of any Additional Amounts payable on Securities of such series); provided, however, that if the Securities of such series are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited or the Luxembourg Stock Exchange or any other stock
 
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exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London, Luxembourg or any other city so required located outside the United States, as the case may be, so long as the Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any Additional Amounts payable on Bearer Securities of that series) at the place specified for that purpose pursuant to Section 2.1.
Except as otherwise provided in the form of Bearer Security of any particular series pursuant to the provisions of this Indenture, no payment of principal or interest or Additional Amounts on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, payment of principal of and interest in U.S. dollars (including Additional Amounts payable in respect thereof) on any Bearer Security may be made at the office of the Paying Agent in the City of New York, State of New York if (but only if) payment of the full amount of such principal, interest or Additional Amounts at all offices outside the United States maintained for that purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions.
The Company may from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
 
SECTION 4.3.	MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.	
If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it shall, on or before each due date of the principal of, or interest or Additional Amounts on, any of the Securities of that series, segregate and hold in trust for the benefit of the Person entitled thereto a sum sufficient to pay the principal or interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and shall promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of, or interest or Additional
 
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Amounts on, any Securities of that series, deposit with any Paying Agent a sum sufficient to pay the principal or interest and Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, interest or Additional Amounts, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall:
 
 	(1)	hold all sums held by it for the payment of the principal of or interest or any Additional Amounts on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;	
 
 	(2)	give the Trustee notice of any Default by the Company in the making of any payment of principal or interest or any Additional Amounts on the Securities of that series; and	
 
 	(3)	at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.	
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Except as otherwise provided in the form of Securities of any particular series pursuant to the provisions of this Indenture, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest or any Additional Amounts on any Security of any series and remaining unclaimed for two years after such principal or interest has or Additional Amounts have become due and payable shall be paid to the Company upon receipt of a Company Order to that effect or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment, or to be mailed to Holders of Registered Securities, or both, notice that such money
 
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remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining shall be repaid to the Company.
 
SECTION 4.4.	COMMISSION REPORTS; REPORTS TO TRUSTEE; REPORTS TO HOLDERS.	
So long as any Security is outstanding, the Company will:
(a) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act (or copies of such portions thereof as may be prescribed by the Commission by rules and regulations); or, if the Company is not required to file with the Commission information, documents or reports pursuant to either Section 13 or Section 15(d) of the Exchange Act, then the Company will file with the Trustee and mail to the Holders of the Securities, as the names and addresses of such Holders appear upon the register of Securities, (i) annual reports containing the information required by the Exchange Act to be contained in an Annual Report on Form 10-K, (ii) quarterly reports containing the information required by the Exchange Act to be contained in a Quarterly Report on Form 10-Q and (iii) promptly after the occurrence of an event required to be therein reported, such other reports containing information required by the Exchange Act to be contained in a Current Report on Form 8-K;
(b) file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Sections 13.4 and 13.5, as to compliance with conditions or covenants, compliance with which is subject to verification by accountants; and
(c) mail to the Holders of the Registered Securities, as the names and addresses of such Holders appear upon the register of Securities, in the manner and to the extent provided in Section 7.6, such additional summaries of any information, documents and reports required to be filed with the Trustee pursuant to the provisions of paragraphs (a) and (b) of this Section 4.4 as may be required to be provided to such Holders by the rules and regulations of the Commission under the provisions of the TIA.
 
SECTION 4.5.	COMPLIANCE CERTIFICATES.	
Within 60 days after the close of each fiscal year of the Company ending after the date hereof, the Company shall deliver to the Trustee a statement signed by the Chairman of its Board of Directors, or its Vice Chairman or its President or any Vice President and by the
 
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Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company (provided that one of such signatories shall be the Company’s principal executive officer, principal financial officer or principal accounting officer), stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally obtain knowledge of any Default by the Company and whether or not they have obtained knowledge of any such Default, and, if so, specifying each such Default of which the signers have knowledge and the nature thereof and what action the Company is taking or proposes to take with respect thereto. The Company shall also comply with TIA Section 314(a)(4).
 
SECTION 4.6.	CORPORATE EXISTENCE.	
Subject to Article V, the Company will do or cause to be done all things necessary to and will cause each of its Restricted Subsidiaries to preserve and keep in full force and effect its corporate existence, material rights (charter and statutory) and franchises of the Company and each of its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such material right or franchise or the corporate existence of any of its Subsidiaries if (a) the preservation thereof is no longer desirable in the conduct of the business of the Company or such Subsidiary and (b) the loss thereof is not disadvantageous in any material respect to the Holders of the Securities.
SECTION 4.7. LIMITATION ON LIENS.
Subject to Article VIII (to the extent they are applicable to the Securities of any series) the Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur or otherwise cause or suffer to exist or become effective any Liens of any kind upon any Principal Property or any shares of stock or debt of any Restricted Subsidiary now owned or hereafter acquired, unless all payments due under this Indenture and the Securities are secured on an equal and ratable basis with the obligation so secured until such time as such obligation is no longer secured by a Lien, except for Permitted Liens.
The covenant contained in this section will be subject to the provision for exempted indebtedness in Section 4.9.
 
SECTION 4.8.	LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS.	
Subject to Article VIII (to the extent they are applicable to the Securities of any series), the Company will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any Principal Property (whether such Principal Property is now owned or hereafter acquired), except for temporary leases for a term, including any renewal, of not more than five years and except for leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries, which Principal Property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person (hereinafter, a “Sale and Lease-Back Transaction”), unless either (i) the Company or such Restricted Subsidiary would be entitled, in
 
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accordance with the provisions of Section 4.7 (other than provisions with respect to exempted Indebtedness), to incur Indebtedness secured by a lien on such property without equally and ratably securing the Securities, or (ii) the Company within 180 days after the effective date of the Sale and Lease-Back Transaction applies an amount equal to the Value of such transaction to the voluntary retirement of its Funded Debt. For the purposes of this Article, “Value” shall mean an amount equal to the greater of the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction, or the fair value in the opinion of the Board of Directors of the leased property at the time of entering into such Sale and Lease-Back Transaction. For the purposes of this Article, “Funded Debt” shall mean indebtedness (including Securities) maturing by the terms thereof more than one year after the original creation thereof.
The covenant contained in this Section will be subject to the provision for exempted indebtedness in Section 4.9.
 
SECTION 4.9.	EXEMPTED INDEBTEDNESS.	
Notwithstanding the provisions contained in Sections 4.7 and 4.8, the Company and its Restricted Subsidiaries may issue, assume, suffer to exist or guarantee Indebtedness secured by a lien which would otherwise be subject to the limitation of Section 4.7, without securing the Securities, or may enter into Sale and Lease-Back Transactions which would otherwise be subject to the limitation of Section 4.8, without retiring Funded Debt, or enter into a combination of such transactions, if the sum of (i) the principal amount of all such Indebtedness incurred after the date hereof, and which would otherwise be or have been prohibited by the limitations of Section 4.7 or 4.8 and (ii) the aggregate Value of all such Sale and Lease-Back Transactions after the date hereof does not at any such time exceed 10% of the consolidated total assets of the Company and its consolidated Subsidiaries as shown in the audited consolidated balance sheet contained in the latest annual report to the shareholders of the Company.
 
SECTION 4.10.	WAIVER OF STAY; EXTENSION OF USURY LAWS.	
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of, or interest on or any Additional Amounts payable with respect to the Securities as contemplated herein or in the Securities, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
 
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ARTICLE V
SUCCESSORS
 
SECTION 5.1.	WHEN COMPANY MAY MERGE, ETC.	
The Company will not consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets in one transaction or a series of related transactions or assign any of its obligations under this Indenture or the Securities to, any Person unless:
(a) the entity formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, lease, conveyance or other disposition or assignment shall have been made (the “Surviving Entity”), is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia;
(b) the Surviving Entity assumes by a supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Securities and this Indenture; and
(c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers’ Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture.
 
SECTION 5.2.	SUCCESSOR CORPORATION SUBSTITUTED.	
Upon any consolidation or merger or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or any assignment of its obligations under this Indenture or the Securities in accordance with Section 5.1, the Surviving Entity shall succeed to, and may be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation has been named as the Company herein, and, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities.
 
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ARTICLE VI
DEFAULTS AND REMEDIES
 
SECTION 6.1	EVENTS OF DEFAULT.	
“Event of Default” is hereby defined for all purposes of this Indenture and with respect to any series of Securities (except where the term is otherwise defined for specific purposes) as any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) the Company defaults in the payment of any installment of interest on or any Additional Amounts payable in respect of any Security of that series when and as the same shall become due and payable and such failure continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of any Security of that series when and as the same shall become due and payable at Stated Maturity, upon redemption or otherwise;
(c) the Company fails to perform or observe any of its other covenants, conditions or agreements in this Indenture or in the Securities (other than a covenant, condition or agreement a Default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and such failure continues for a period of 90 days after the date on which written notice of such Default has been given to the Company by the Trustee or to the Company and to the Trustee by the Holders of not less than 25% of the principal amount of the Securities of that series then outstanding under this Indenture;
(d) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company or any of its Subsidiaries in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company or any of its Subsidiaries a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any of its Subsidiaries under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any of its Subsidiaries or of any substantial part of their property, or ordering the winding up or liquidation of their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or
(e) the commencement by the Company or any of its Subsidiaries of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or of any other case or proceeding to be adjudicated a
 
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bankrupt or insolvent, or the consent by the Company or any of its Subsidiaries to the entry of a decree or order for relief in respect of the Company or any of its Subsidiaries in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or any of its Subsidiaries, or the filing by the Company or any of its Subsidiaries of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by the Company or any of its Subsidiaries to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any of its Subsidiaries or of any substantial part of their property, or the making by the Company or any of its Subsidiaries of an assignment for the benefit of creditors, or the admission by the Company or any of its Subsidiaries in writing of their inability to pay their debts generally as they become due, or the taking of corporate action by the Company or any of its Subsidiaries in furtherance of any such action.
The Company must furnish to the Trustee a statement, detailing any Defaults of which it is aware, within 5 days of becoming aware of the occurrence of any Default.
 
SECTION 6.2.	ACCELERATION.	
If an Event of Default specified in Section 6.1(d) or (e) shall occur and be continuing, then the principal of (or, with respect to a series of Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series), and any accrued and unpaid interest on and any Additional Amounts payable in respect of the Securities shall immediately become due and payable without any declaration or other act on the part of the Trustee or any Securityholder. If one or more Events of Default specified in Sections 6.1(a) through (c) with respect to any series of Securities at the time outstanding shall occur and be continuing, then, and in each and every such case, either the Trustee, by notice in writing to the Company, or the Holders of not less than 25% of the principal amount of the Securities of that series then outstanding, by notice in writing to the Company and the Trustee, may declare due and payable, if not already due and payable, the principal of (or, with respect to a series of Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) plus any accrued interest on and any Additional Amounts payable in respect of all of the Securities of that series; and upon any such declaration all such amounts upon such Securities shall become and be immediately due and payable, anything in this Indenture or in the Securities to the contrary notwithstanding. This provision is subject to the condition that if, after any declaration of acceleration and before Stated Maturity of the principal with respect to Securities of any series, all arrears of interest and any Additional Amounts and the expenses of the Trustee, its agents or counsel shall be paid by or for the account of the Company, and all Defaults (other than the payment of principal that has been declared due and payable) have been cured to the satisfaction of the Trustee, then the Trustee shall, upon the written request of the Holders of a majority in principal amount of the Securities of that series, waive such Default and rescind or annul the declaration of acceleration; but no such waiver or rescission or annulment shall extend to or affect any subsequent Default, or impair any right consequent thereon.
 
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SECTION 6.3.	OTHER REMEDIES.	
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, interest on or any Additional Amounts payable in respect of the Securities of that series or to enforce the performance of any provision of the Securities of that series or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities of that series or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon any Event of Default shall not impair any such right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.
 
SECTION 6.4.	WAIVER OF PAST DEFAULTS.	
Provided the applicable series of Securities shall not then be due and payable by reason of a declaration pursuant to Section 6.2, the Holders of a majority in principal amount of the Securities of any series at the time outstanding may on behalf of the Holders of all the Securities of such series waive any past Default hereunder with respect to such series and its consequences by providing written notice thereof to the Company and the Trustee, except a Default (i) in the payment of interest on, any Additional Amounts payable in respect of or the principal of any Security of such series or (ii) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each outstanding Security of such series affected. In the case of any such waiver, the Company, the Trustee and the Holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; provided that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.
 
SECTION 6.5.	CONTROL BY MAJORITY.	
The Holders of a majority in principal amount of the Securities then outstanding of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any power or trust conferred upon the Trustee under this Indenture with respect to the Securities of such series; provided, however, that subject to the provisions of Sections 7.1 and 7.2, the Trustee shall have the right to decline to follow any such direction if the Trustee, advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith shall by Responsible Officers determine that the action or proceeding so directed would involve the Trustee in liability or that the Trustee is not satisfactorily indemnified from the costs thereof.
 
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SECTION 6.6.	LIMITATION ON SUITS BY HOLDERS.	
No Holder of any Security of any series or any coupon appertaining thereto shall have the right to pursue a remedy with respect to this Indenture or the Securities unless:
 
 	(1)	such Holder gives to the Trustee notice of a continuing Event of Default with respect to Securities of that series;	
 
 	(2)	the Holders of at least a majority in principal amount of the Securities of that series make a request to the Trustee to pursue the remedy;	
 
 	(3)	such Holder or Holders offer to the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense; and	
 
 	(4)	the Trustee does not comply with the request within 30 days after receipt of the request and the offer of security or indemnity.	
A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder.
 
SECTION 6.7.	RIGHTS OF HOLDERS TO RECEIVE PAYMENT.	
Notwithstanding any other provision of this Indenture, the right of any Holder of a Security or coupon to receive payment of principal of, interest on and any Additional Amounts payable with respect to the Security or coupon, on or after the respective due dates expressed in the Security or coupon, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder.
 
SECTION 6.8.	COLLECTION SUIT BY TRUSTEE.	
If an Event of Default specified in Section 6.1(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal, interest and any Additional Amounts remaining unpaid, together with interest on overdue principal and, to the extent lawful, interest on overdue installments of interest and any Additional Amounts, in each case at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.7.
 
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SECTION 6.9.	TRUSTEE MAY FILE PROOFS OF CLAIM.	
The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and the Trustee shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute it, and any trustee, receiver, liquidator, custodian or other similar official in any such judicial proceedings is hereby authorized by each Securityholder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to Securityholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of any claim of any Securityholder in such proceeding.
 
SECTION 6.10.	APPLICATION OF MONEY COLLECTED.	
Any money or property collected by the Trustee with respect to any series of the Securities under this Article VI shall be paid out by the Trustee in the following order and, in the case of the distribution of moneys on account of principal, interest or any Additional Amounts, upon presentation of such Securities and coupons appertaining to such Securities in respect of which monies have been collected (except that the Trustee may waive presentation of Registered Securities when interest alone is to be paid), and stamping thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection, and reasonable compensation to the Trustee, its agents and counsel, and of all other expenses, losses, and liabilities incurred, and all advances made, by the Trustee including but not limited to all amounts due to the Trustee under section 7.7 except as a result of its negligence or bad faith;
SECOND: In case the principal of the outstanding Securities of such series shall not have become due and be unpaid, to the payment of interest on and any Additional Amounts Payable with respect to such Securities, in the order of the maturity of the installments of such interest and Additional Amounts, with interest, to the extent lawful, upon the overdue installments of interest and Additional Amounts at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the Persons entitled thereto, without discrimination or preferences;
THIRD: In case the principal of the outstanding Securities of such series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing
 
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and unpaid upon such Securities for principal, interest and any Additional Amounts, with interest at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities on the overdue principal, and, to the extent lawful, on the overdue installments of interest and Additional Amounts; and in case such monies shall be insufficient to pay in full the whole amount so due and unpaid upon such Securities, then to the payment of such principal, interest and any Additional Amounts, ratably, without preference or priority of any kind, to the aggregate of such principal and accrued and unpaid interest and Additional Amounts; and
FOURTH: In case the Trustee shall retain possession of any funds after all obligations of the Company hereunder have been fully paid and satisfied, such funds shall be paid to the Company, its successors or assigns.
The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and the amount to be paid.
 
SECTION 6.11.	UNDERTAKING FOR COSTS.	
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit instituted by the Trustee, a suit instituted by a Holder pursuant to Section 6.7 or a suit instituted by Holders of more than 10% in principal amount of the Securities then outstanding. This Section 6.11 shall be in lieu of section 315(c) of the TIA and said section 315(c) is hereby expressly excluded from this Indenture, as permitted by the TIA.
 
SECTION 6.12.	DISCONTINUANCE OR ABANDONMENT OF PROCEEDINGS.	
If the Trustee or any Holder shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver, or for any other reason, or shall have been determined adversely to the Trustee or such Holder, then, and in any such case, the Company and the Trustee and such Holder or Holders shall each be restored to its former position and rights hereunder, and all rights, remedies and powers of the Trustee and the Holders shall continue as though no such proceedings had been taken.
 
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ARTICLE VII
TRUSTEE
 
SECTION 7.1.	DUTIES OF TRUSTEE.	
(a) If an Event of Default has occurred and is continuing, the Trustee, subject to paragraph (e) below, shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any opinions or certificates which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of this Section 7.1;
(ii) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties
 
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hereunder or in the exercise of any of its rights or powers, if the Trustee shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to determine the maximum interest rate permissible under applicable law.
(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.
 
SECTION 7.2.	RIGHTS OF TRUSTEE.	
(a) The Trustee may rely on and shall be protected in acting or refraining from acting on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate and an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it hereunder; provided, however, that the Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
 
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SECTION 7.3	INDIVIDUAL RIGHTS OF TRUSTEE.	
The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
 
SECTION 7.4	TRUSTEE’S DISCLAIMER.	
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities; it shall not be accountable for the Company’s use of the proceeds from the sale of the Securities; and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s certificate of authentication.
 
SECTION 7.5	NOTICE OF DEFAULTS.	
If a Default occurs with respect to Securities of any series and is continuing and if it is known to the Trustee, the Trustee shall give to each Securityholder of such series a notice of the Default within 90 days after it occurs in the manner and to the extent provided in TIA 313(c), and otherwise as provided in Section 13.2 hereof. Except in the case of a Default in payment of the principal of, interest on and any Additional Amount payable with respect to any Security (including payments pursuant to a redemption or repurchase of the Securities pursuant hereto), the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders.
The Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) a Default under Section 6.1(a) or (b) so long as the Trustee is Paying Agent or (ii) any Default or Event of Default of which the Trustee shall have received written notification or a Responsible Officer charged with the administration of this Indenture shall have obtained actual knowledge, and such notification shall not be deemed to include receipt of information obtained in any report or other documents furnished under Section 4.4 of this Indenture, which reports and documents the Trustee shall have no duty to examine.
 
SECTION 7.6	REPORTS BY TRUSTEE TO HOLDERS.	
Within 60 days after each January 1 beginning with the January 1 following the date of this Indenture, the Trustee shall mail to each Holder of a Registered Security a brief report dated as of such reporting date if required by, and in compliance with, TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a copy of each report at the time of its mailing to Securityholders shall be filed with the Commission and each
 
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securities exchange, if any, on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any securities exchange and of any delisting thereof.
 
SECTION 7.7	COMPENSATION AND INDEMNITY.	
The Company shall pay to the Trustee from time to time such compensation as shall be agreed to in writing from time to time between the Company and the Trustee for all services rendered by it hereunder. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, advances and expenses incurred or made by the Trustee in accordance with any provision of this Indenture. Such expenses shall include the reasonable compensation and the disbursements, advances and expenses of the Trustee’s agents and counsel, except to the extent any such disbursement, advance or expense may be attributable to its negligence or bad faith.
The Company shall indemnify the Trustee and its directors, officers, agents and employees against any and all loss, liability, damage, claim or expense (including attorneys’ fees and expenses) incurred by it or such officer, director, agent or employee in connection with the acceptance or administration of its duties under this Indenture, except as set forth in the next paragraph.
The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct, negligence or bad faith.
To secure the Company’s payment obligations in this Section, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay the principal of, interest on or any Additional Amounts payable with respect to particular Securities. The Company’s payment obligations pursuant to this Section 7.7 shall survive the resignation or replacement of the Trustee and any discharge or defeasance under Sections 8.1 and 8.2.
When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 6.1(d) or (e), the expenses are intended to constitute expenses of administration under any Bankruptcy Law.
 
SECTION 7.8	REPLACEMENT OF TRUSTEE.	
The Trustee may resign at any time by so notifying the Company; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.8. The Holders of a majority in principal amount of the then outstanding Securities may remove the Trustee by so notifying the Trustee and the Company. The Company shall remove the Trustee if:
 
 	(a)	the Trustee fails to comply with Section 7.10;	
 
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 	(b)	the Trustee is adjudged bankrupt or insolvent;	
 
 	(c)	a receiver or public officer takes charge of the Trustee or its property; or	
 
 	(d)	the Trustee otherwise becomes incapable of acting.	
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the Lien provided for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 shall continue for the benefit of the retiring Trustee.
If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the then outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.
 
SECTION 7.9	SUCCESSOR TRUSTEE BY MERGER.	
If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee.
 
SECTION 7.10	ELIGIBILITY; DISQUALIFICATION.	
The Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
 
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SECTION 7.11	PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.	
The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
 
SECTION 8.1	DISCHARGE OF INDENTURE; DEFEASANCE.	
(a) This Indenture shall cease to be of further effect with respect to a series of Securities (except that the Company’s obligations under Section 7.7 and the Trustee’s and Paying Agent’s obligations under Section 8.4 shall survive) when (a) all outstanding Securities of such series theretofore authenticated and issued have been delivered (other than destroyed, lost or stolen Securities which have been replaced or paid pursuant to Section 2.6) to the Trustee for cancellation and (b) the Company has paid all sums payable hereunder.
(b) Subject to Sections 8.1(c), 8.2 and 8.5, the Company at any time may terminate (i) all its obligations under the Securities of any series and this Indenture with respect to such series of Securities (“legal defeasance option”) or (ii) its obligations under Article IV (except those obligations set forth in Sections 4.1, 4.2 and 4.10 thereof) with respect to any series of Securities (“covenant defeasance option”). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Securities of the applicable series may not be accelerated because of an Event of Default.
Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.3, 2.4, 2.5, 2.6, 7.7, 8.4 and 8.5 and Article XI and Article XII shall survive until the Securities have been paid in full. Thereafter, the Company’s obligations in Sections 7.7 and 8.4 shall survive.
 
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SECTION 8.2	CONDITIONS TO DEFEASANCE.	
The Company may exercise its legal defeasance option or its covenant defeasance option with respect to a series of Securities only if the following conditions are satisfied:
(a) the Company has irrevocably deposited or caused to be deposited in trust for the benefit of the Holders of such series with the Trustee or a Paying Agent or a trustee satisfactory to the Trustee and the Company, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee and any such Paying Agent, (i) money in an amount or Eligible Obligations sufficient, or (ii) U.S. Government Obligations or Eligible Obligations that shall be payable as to principal and interest in such amounts and at such times as are sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (without consideration of any reinvestment of such interest), or (iii) any combination thereof in an amount sufficient, to pay the principal of, interest on and any Additional Amounts payable with respect to the outstanding Securities of such series on the dates such installments are due to redemption or Stated Maturity, (b) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such money or the proceeds of such U.S. Government Obligations or Eligible Obligations to the Trustee and (c) the Trustee or Paying Agent shall have been irrevocably instructed in writing to apply the deposited money and the proceeds from U.S. Government Obligations or Eligible Obligations in accordance with the terms of this Indenture and the terms of the Securities of such series to the payment of principal of, interest on and any Additional Amounts payable with respect to the Securities of such series;
(b) such deposit described in clause (1) of this Section 8.2 will not result in a breach or violation of, or constitute a Default under, any other agreement or instrument to which the Company is a party or by which it is bound;
(c) no Default or Event of Default shall have occurred and be continuing (i) as of the date of such deposit or (ii) insofar as Sections 6.1(d) and 6.1(e) are concerned at any time during the period ending on the 91st day after the date of such deposit or, if longer, ending on the day following the expiration of the longest preference period applicable to the Company in respect of such deposit (it being understood that the condition in this clause (ii) is a condition subsequent and shall not be deemed satisfied until the expiration of such period);
(d) the Company has paid or caused to be paid all sums currently due and payable by the Company hereunder and under the Securities with respect to such series including but not limited to all amounts due under section 7.7;
(e) such defeasance shall not cause or permit any Securities then listed on any national securities exchange to be delisted;
(f) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the termination by the Company of its obligations as provided in this Section 8.2 have been complied with;
(g) in the case of the legal defeasance option, the Company has delivered to the Trustee either (i) a ruling received from the Internal Revenue Service to the effect that, or (ii)
 
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an Opinion of Counsel by recognized counsel who is not an employee of the Company stating that, since the date first set forth hereinabove, there has been a change in the applicable federal income tax law, and based upon either case (i) or (ii) such Opinion of Counsel shall confirm that, the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of the Company’s exercise of its legal defeasance option under this Section 8.2 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such legal defeasance option had not been exercised; and
(h) in the case of the covenant defeasance option, the Company has delivered to the Trustee either (i) a ruling received from the Internal Revenue Service to the effect that, or (ii) an Opinion of Counsel by recognized counsel who is not an employee of the Company stating that, the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of the Company’s exercise of its covenant defeasance option under this paragraph and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such covenant defeasance option had not been exercised.
 
SECTION 8.3.	APPLICATION OF TRUST MONEY.	
The Trustee or a trustee satisfactory to the Trustee and the Company shall hold in trust money, U.S. Government Obligations or Eligible Obligations deposited with it pursuant to Section 8.2. It shall apply the deposited money and the money from U.S. Government Obligations and Eligible Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of, interest on and any Additional Amounts payable with respect to the Securities.
 
SECTION 8.4.	REPAYMENT TO COMPANY.	
The Trustee and the Paying Agent shall promptly turn over to the Company upon written request any money, U.S. Government Obligations or Eligible Obligations held by them in trust pursuant to Section 8.2 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect such defeasance, in accordance with the provisions of this Indenture.
The Trustee or the Paying Agent shall pay promptly to the Company upon written request any money held by them for the payment of principal, interest or Additional Amounts that remains unclaimed for two years after the date upon which such payment shall have become due, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law (except that with respect to any amounts then held by the Company in trust as its own Paying Agent no such request need be given and at such time the Company shall be discharged from its duties to hold such money in trust as Paying Agent). After payment to the Company, Securityholders entitled to the money must look to the Company for payment as
 
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general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.
 
SECTION 8.5.	REINSTATEMENT OF COMPANY’S OBLIGATIONS.	
If the Trustee or Paying Agent is unable to apply any money, U.S. Government Obligations or Eligible Obligations in accordance with Section 8.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Securities of the applicable series shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 until such time as the Trustee or Paying Agent is permitted to apply all such money, U.S. Government Obligations or Eligible Obligations in accordance with Section 8.2; provided, however, that if the Company has made any payment of interest on, Additional Amounts payable with respect to or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money, U.S. Government Obligations or Eligible Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS AND WAIVERS
 
SECTION 9.1.	WITHOUT CONSENT OF HOLDERS.	
The Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto to amend this Indenture or the Securities with respect to a particular series without prior notice to or the consent of any Securityholder of such series:
 
 	(1)	to cure any ambiguity, omission, defect or inconsistency;	
 
 	(2)	to comply with Article V;	
 
 	(3)	to comply with any requirements of the Commission in connection with the qualification of this Indenture under the TIA as then in effect;	
 
 	(4)	to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2) of the Internal Revenue Code;	
 
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 	(5)	to make any change that does not materially adversely affect the legal rights of any Securityholder under this Indenture as then in effect;	
 
 	(6)	to secure the Securities and to make intercreditor arrangements with respect to any such security, unless the incurrence of such obligations or the security thereof is prohibited by this Indenture;	
 
 	(7)	to evidence or to provide for a replacement Trustee under Section 7.8; or	
 
 	(8)	to add to the covenants and agreements of the Company for the benefit of all of the Holders of all of the Securities with respect to a series (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are being included solely for the benefit of such series) and to surrender any right or power herein reserved to the Company.	
After an amendment under this Section becomes effective, the Company shall give to Securityholders a notice briefly describing the substance thereof in the manner as provided in Section 13.2. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of any supplemental indenture.
 
SECTION 9.2	WITH CONSENT OF HOLDERS.	
The Company, when authorized by a Board Resolution, and the Trustee may enter into one or more supplemental indentures to amend this Indenture or the Securities with respect to a particular series with the written consent of the Holders of a majority of the principal amount of the then outstanding Securities of such series. The Holders of a majority in principal amount of the then outstanding Securities of a particular series may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such series without prior notice to any other Securityholder.
Notwithstanding the first paragraph of this Section 9.2, without the consent of each Securityholder affected, an amendment or waiver under this Section may not:
 
 	(1)	reduce the amount of Securities whose Holders must consent to an amendment or waiver;	
 
 	(2)	reduce the rate of or change the time for payment of interest or Additional Amounts, including default interest, on any Security;	
 
 	(3)	reduce the principal of or change the Stated Maturity of any Security or alter the provisions with respect to redemption pursuant to Section 3.5;	
 
 	(4)	make any Security payable in money other than that stated in the Security;	
 
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 	(5)	make any change in this paragraph of this Section 9.2;	
 
 	(6)	make any change in this Indenture that adversely affects ranking of the Securities; or	
 
 	(7)	make any change in Section 6.4 or 6.7.	
It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or waiver but it shall be sufficient if such consent approves the substance thereof.
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has been included solely for the benefit of one or more series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
Any amendment shall be effective upon certification to the Trustee by the Company or an agent of the Company that such amendment has been authorized by the Company and that the consent of the majority in principal amount of the Securities has been obtained unless such consents specify that they shall become effective at a later date, in which case such amendment shall become effective in accordance with the terms of such consent.
After an amendment or waiver under this Section becomes effective, the Company shall give to Securityholders a notice briefly describing the substance thereof in the manner as provided in Section 13.2. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of any supplemental indenture.
 
SECTION 9.3.	COMPLIANCE WITH TRUST INDENTURE ACT.	
Every amendment to this Indenture or the Securities or waiver of the provisions hereof or thereof shall be set forth in a supplemental indenture that complies with the TIA as then in effect.
 
SECTION 9.4.	REVOCATION AND EFFECT OF CONSENTS AND WAIVERS.	
Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives written notice of revocation before the date the amendment or waiver becomes effective.
 
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The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If a record date is fixed, then notwithstanding the first sentence of the immediately preceding paragraph, those persons who were Holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
After an amendment or waiver becomes effective, it shall bind every Securityholder, subject to the fourth paragraph of Section 9.2 and unless it makes a change described in any of clauses (1) through (7) of Section 9.2. In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or a portion of a Security that evidences the same debt as the consenting Holder’s Security.
 
SECTION 9.5.	NOTATION ON OR EXCHANGE OF SECURITIES.	
If a supplemental indenture changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company shall so determine, the Company in exchange for all Securities may issue and the Trustee shall authenticate new Securities of the same series that reflect the changed terms.
 
SECTION 9.6.	TRUSTEE TO SIGN AMENDMENTS.	
Upon the written request of the Company, accompanied by a Board Resolution authorizing the execution of a supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Securityholders if such consent shall be required under Section 9.2, the Trustee shall sign any supplemental indenture authorized pursuant to this Article IX; provided that the Trustee shall not be obligated to sign any supplemental indenture that adversely affects the Trustee’s rights, duties, liabilities or immunities. In signing such supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 7.1, shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Company in accordance with its terms.
 
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ARTICLE X
REPAYMENT AT THE OPTION OF HOLDERS
 
SECTION 10.1.	APPLICABILITY OF ARTICLE.	
Securities of any series which are repayable at the option of the Holders thereof before their maturity shall be repaid in accordance with the terms of the Securities of such series. The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their maturity shall not operate as a payment, redemption or satisfaction of the indebtedness represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with a directive that such Securities be canceled. Notwithstanding anything to the contrary contained in this Article X, in connection with any repayment of Securities, the Company may arrange for the purchase of any Securities by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Holders of such Securities on or before the close of business on the repayment date an amount not less than the repayment price payable by the Company on repayment of such Securities, and the obligation of the Company to pay the repayment price of such Securities shall be satisfied and discharged to the extent such payment is so paid by such purchasers.
ARTICLE XI
SINKING FUNDS
 
SECITON 11.1.	APPLICABILITY OF ARTICLE.	
The provisions of this Article XI shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise permitted or required by any form of Security of such series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is referred to in this Article XI as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of such series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
 
SECTION 11.2.	SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.	
The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series to be made pursuant to the terms of such Securities as provided for by the terms of such series (1) deliver outstanding Securities of such series (other than any of such Securities previously called for redemption or any of such Securities in respect of which cash shall have been released to the Company), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) apply as a credit Securities of such series which have been redeemed either at the election of the Company
 
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pursuant to the terms of such series of Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, provided that such series of Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities of any series in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such series for redemption, except upon Company request, and such cash payment shall be held by the Trustee or a Paying Agent for Securities of that series and applied to the next succeeding sinking fund payment; provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company.
 
SECTION 11.3.	REDEMPTION OF SECURITIES FOR SINKING FUND.	
Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so credited and not theretofore delivered. If such Officers’ Certificate shall specify an optional amount to be added in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.4. Such notice having been duly given , the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.5 and 3.6.
ARTICLE XII
CONVERSION OF SECURITIES
 
SECTION 12.1.	APPLICABILITY OF ARTICLE.	
The provisions of this Article XII shall be applicable to the Securities of any series which are convertible into Common Stock or, if so provided in a Board Resolution, Officers’ Certificate or executed supplemental indenture referred to in Section 2.1 by or pursuant
 
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to which the form and terms of the Securities of such series were established, cash in lieu thereof, as provided by the terms of the Securities of such series.
 
SECITON 12.2.	EXERCISE OF CONVERSION PRIVILEGE.	
In order to exercise the conversion privilege, the Holder of any Security to be converted shall surrender such Security to the Conversion Agent at any time during usual business hours at its office or agency maintained for the purpose as provided in Section 4.2, accompanied by a fully executed written notice, in substantially the form set forth on the reverse of the Security, that the Holder elects to convert such Security or a stated portion thereof constituting a multiple of $1,000 in principal amount and, if such Security is surrendered for conversion during the period between the close of business on any record date for such Security and the opening of business on the related interest payment date and has not been called for redemption on a Redemption Date within such period (or on such interest payment date), accompanied also by payment of an amount equal to the interest payable on such interest payment date on the portion of the principal amount of the Security being surrendered for conversion. No interest shall be payable on any Security called for redemption which is converted between the record date and the opening of business of the next succeeding interest payment date. Such notice shall also state the name or names (and address) in which the certificate or certificates for shares of Common Stock shall be issued (or to whom payment in cash in lieu of Common Stock shall be made). Securities surrendered for conversion shall (if so required by the Company or the Conversion Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Conversion Agent duly executed by, the Holder or his attorney duly authorized in writing. As promptly as practicable after the receipt of such notice and the surrender of such Security as aforesaid, the Company shall, subject to the provisions of Section 12.7, issue and deliver at such office or agency to such Holder, or on his written order, a certificate or certificates for the number of full shares of Common Stock issuable on conversion of such Security in accordance with the provisions of such Security and cash, as provided in Section 12.3, in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion or, if so provided in a Board Resolution, Officers’ Certificate or executed supplemental indenture referred to in Section 2.1 by or pursuant to which the form and terms of the Securities of such Series were established, cash, in lieu of shares of Common Stock. Such conversion shall be at the Conversion Price in effect, and shall be deemed to have been effected, immediately prior to the close of business on the date (herein called the “Date of Conversion”) on which such notice in proper form shall have been received by the Conversion Agent and such Security shall have been surrendered as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable, if any, upon such conversion shall be deemed to have become on the Date of Conversion the holder or holders of record of the shares represented thereby; provided, however, that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the Person or Persons in whose name or names the certificate or certificates for such shares are to be issued, if any, as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open but such conversion shall nevertheless be at the Conversion Price
 
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in effect at the close of business on the date when such Security shall have been so surrendered with the conversion notice in proper form. In the case of conversion of a portion, but less than all, of a Security, the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a Security or Securities in the aggregate principal amount of the unconverted portion of the Security surrendered. Except as otherwise expressly provided in this Indenture, no payment or adjustment shall be made for interest accrued on any Security (or portion thereof) converted or for dividends or distributions on any Common Stock issued upon conversion of any Security. The right, if any, of a Holder of any Security to cause the Company to redeem, purchase or repay such Security shall terminate upon receipt by the Company of any notice of conversion of such Security.
 
SECTION 12.3.	FRACTIONAL INTERESTS.	
No fractions of shares or scrip representing fractions of shares shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities so surrendered. If any fraction of a share of Common Stock would, except for the provisions of this Section 12.3, be issuable on the conversion of any Security or Securities, the Company shall make payment in lieu thereof in cash equal to the value of such fraction computed on the basis of the Last Sale Price of one share of Common Stock on the most recent Trading Day prior to the Date of Conversion.
“Last Sale Price” on any Trading Day shall mean (i) the closing price regular way (or, if no closing price is reported the average of the bid and asked prices) as reported on the New York Stock Exchange Composite Tape, or (ii) if on such Trading Day the Common Stock is not listed or admitted to trading on such exchange, the closing price regular way (or, if no closing price is reported the average of the bid and asked prices) on the principal national securities exchange on which the Common Stock is listed or admitted, or (iii) if not listed or admitted to trading on any national securities exchange on such Trading Day, then the average of the closing bid and asked prices as reported through the National Association of Securities Dealers, Inc. on its NASDAQ National Market System or NASDAQ System or a similar organization if NASDAQ is no longer reporting information, or (iv) if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on such National Market System or NASDAQ System on such Trading Day, then the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose, or (v) if not quoted by any such organization on such Trading Day, the fair value of such Common Stock on such Trading Day, as determined by the Board of Directors. The term “Trading Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not traded on the applicable above mentioned exchanges or markets.
 
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SECTION 12.4.	ADJUSTMENT OF CONVERSION PRICE.	
The “Conversion Price” for a Series of Securities shall be as set forth in a Board Resolution, Officers’ Certificate or executed supplemental indenture referred to in Section 2.1 by or pursuant to which the form and terms of the Securities of such Series were established, and shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend or make a distribution in shares of Common Stock to holders of Common Stock, (2) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (3) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (4) issue by reclassification of its Common Stock any shares of capital stock of the Company, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock of the Company which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately, except as provided in subsection (e) below, after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If as a result of an adjustment made pursuant to this subsection (a), the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock (including shares of Common Stock and other capital stock) of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Trustee) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock.
(b) In case the Company shall issue rights or warrants to all holders of Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of Common Stock or Securities convertible into Common Stock at a price per share less than the current market price per share (as determined pursuant to subsection (d) below) of the Common Stock on the record date mentioned below, the Conversion Price shall be adjusted to a price, computed to the nearest cent, so that the same shall equal the price determined by multiplying:
 
 	(1)	the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by	
 
 	(2)	a fraction, of which (i) the numerator shall be (A) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus (B) the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock (or the aggregate conversion price of the convertible securities) so offered for subscription or purchase would	
 
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purchase at such current market price (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such current market price), and of which (ii) the denominator shall be (A) the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus (B) the number of additional shares of Common Stock (or into which the convertible securities are convertible) which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided in subsection (e) below, after the record date for the determination of holders entitled to receive such rights or warrants.
(c) In case the Company shall distribute to substantially all holders of Common Stock, evidences of indebtedness, equity securities (including equity interests in the Company’s Subsidiaries) other than common stock, or other assets (other than cash dividends paid out of surplus of the Company), or shall distribute to substantially all holders of Common Stock rights or warrants to subscribe for securities (other than those referred to in subsection (b) above) then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in subsection (d) below) of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive evidence of such fair market value) of the portion of the assets so distributed or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such current market price per share of the Common Stock. Such adjustment shall become effective immediately, except as provided in subsection (e) below, after the record date for the determination of stockholders entitled to receive such distribution.
(d) For the purpose of any computation under subsections (b) and (c) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the Last Sale Prices for the 30 consecutive Trading Days commencing 45 Trading Days before the date in question.
(e) In any case in which this Section 12.4 shall require that an adjustment be made immediately following a record date, the Company may elect to defer the effectiveness of such adjustment (but in no event until a date later than the effective time of the event giving rise to such adjustment), in which case the Company shall, with respect to any Security converted after such record date and before such adjustment shall have become effective, (i) defer paying any cash payment pursuant to Section 12.3 or issuing to the Holder of such Security the number of shares of Common Stock and other capital stock of the Company issuable upon such conversion in excess of the number of shares of Common Stock and other capital stock of the Company issuable thereupon only on the basis of the Conversion Price prior to adjustment and (ii), not later than five Business Days after such adjustment shall have become effective, pay to
 
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such Holder the appropriate cash payment pursuant to Section 12.3 and issue to such Holder the additional shares of Common Stock and other capital stock of the Company issuable on such conversion.
(f) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of the Conversion Price; provided that any adjustments which by reason of this subsection (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment and provided, further, that adjustment shall be required and made in accordance with the provisions of this Article XII (other than this subsection (f)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Securities or Common Stock. All calculations under this Article XII shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(g) Anything in this Section 12.4 to the contrary notwithstanding, no adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for rights to purchase Capital Stock pursuant to any future dividend or distribution which the Company determines to be comparable in purpose and in effect to the dividend and subsequent distribution of Rights contemplated by the Rights Agreement and no adjustment need be made for a change in the par value or no par value of the Common Stock.
(h) Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly (i) file with the Trustee and each Conversion Agent an Officers’ Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) mail or cause to be mailed a notice of such adjustment to each Holder of Securities at his address as the same appears on either the registry books of the Company or in the filings described in Section 2.4. Anything in this Section 12.4 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 12.4, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities, or distribution of other assets (other than cash dividends) hereafter made by the Company to its stockholders shall not be taxable.
 
SECTION 12.5.	CONTINUATION OF CONVERSION PRIVILEGE IN CASE OF MERGER, CONSOLIDATION OR SALE OF ASSETS.	
If any of the following shall occur, namely: (a) any consolidation or merger of the Company as a result of which the holders of Common Stock shall be entitled to receive stock, other securities or other assets (including cash) with respect to or in exchange for Common Stock; or (b) any sale or conveyance of all or substantially all of the property or business of the Company as an entirety, then the Company, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such consolidation, merger, sale or conveyance,
 
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execute and deliver to the Trustee a supplemental indenture (which shall conform to the TIA as in force at the date of the execution thereof) providing that the Holder of each convertible Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock issuable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article XII. If, in the case of any such consolidation, merger, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of shares of Common Stock includes shares of stock or other securities and property (including cash) of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 12.5 shall similarly apply to successive consolidations, mergers, sales or conveyances.
Within 30 days after the execution of such supplemental indenture the Company shall give notice of the execution of such supplemental indenture, with respect to Registered Securities affected by such supplemental indenture, by mailing a notice of the execution of such supplemental indenture to each Holder of Registered Securities at such Holder’s address as it appears on the Securities register maintained by the Registrar and, with respect to Bearer Securities affected by such supplemental indenture, by publishing in an Authorized Newspaper notice of the execution of such supplemental indenture on two separate days.
Neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of Securities upon the conversion of their Securities after any such consolidation, merger, sale or conveyance or to any adjustment to be made with respect thereto, but, subject to the provisions of Sections 7.1 and 7.2, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.
 
SECTION 12.6.	NOTICE OF CERTAIN EVENTS.	
IF:
(a) the Company shall declare a dividend (or any other distribution) payable to the holders of Common Stock otherwise than in cash; or
 
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(b) the Company shall authorize the granting to the holders of Common Stock of rights to subscribe for or purchase any shares of stock of any class or of any other rights; or
(c) the Company shall authorize any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding shares of Common Stock), or any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or the sale or conveyance of all or substantially all the property or business of the Company; or
(d) there shall be authorized or ordered any voluntary or involuntary dissolution, liquidation or winding-up of the Company; or
(e) such other event shall occur as may be specified in any Securities issued pursuant to this Indenture,
then, the Company shall cause to be filed at the office or agency maintained for the purpose of conversion of the Securities as provided in Section 4.2, and shall, with respect to Registered Securities convertible into Common Stock, cause to be mailed to each Holder of such Registered Securities, at such Holder’s address as it shall appear on the Securities register maintained by the Registrar and, with respect to Bearer Securities convertible into Common Stock, cause to be published in an Authorized Newspaper on two separate days, at least 20 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified), a notice stating the date on which (1) a record is expected to be taken for the purpose of such dividend, distribution or rights, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (2) such reclassification, change, consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up is expected to become effective and the date, if any is to be fixed, as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up.
 
SECTION 12.7.	TAXES ON CONVERSION.	
The Company will pay any and all documentary, stamp or similar taxes payable to the United States of America or any political subdivision or taxing authority thereof or therein in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant thereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the Holder of the Securities to be converted (or payment of cash in lieu thereof to a Person other than such Holder) and no such issue or delivery (or payment) shall be made unless and until the Person requesting such issue or delivery (or payment) has paid to the Company the amount of any such tax or has established, to the
 
63

satisfaction of the Company, that such tax has been paid. The Company extends no protection with respect to any other taxes imposed in connection with conversion of Securities.
 
SECTION 12.8.	COMPANY TO PROVIDE STOCK.	
The Company shall reserve, free from preemptive rights, out of its authorized but unissued shares, sufficient shares to provide for the conversion of convertible Securities from time to time as such Securities are presented for conversion; provided, however, that nothing contained herein shall be construed to preclude the Company from satisfying its obligations in respect of the conversion of Securities by delivery of repurchase shares of Common Stock which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of conversion of Securities hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly issued or delivered upon conversion, then the Company covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be; provided, however, that nothing in this Section 12.8 shall be deemed to affect in any way the obligations of the Company to convert Securities into Common Stock as provided in this Article XII.
Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the Common Stock, the Company will take all corporate action which may, in the Opinion of Counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and non-assessable by the Company and free of preemptive rights.
 
SECTION 12.9.	DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS.	
Neither the Trustee, the Conversion Agent nor any agent of either shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the Officers’ Certificate referred to in Section 12.4(h), or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee, the Conversion Agent nor any agent of either shall be accountable with respect to the validity of value (or the kind or amount) or any shares of Common Stock, or of any securities or property (including cash), which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee, the Conversion Agent nor any agent of either makes any representation with respect thereto. Neither the Trustee, the Conversion Agent nor any agent of either shall be responsible for any failure of the Company to issue, register the transfer of or
 
64

deliver any shares of Common Stock or stock certificates or other securities or property (including cash) upon the surrender of any Security for the purpose of conversion or, subject to Sections 7.1 and 7.2, to comply with any of the covenants of the Company contained in this Article XII.
 
SECTION 12.10.	RETURN OF FUNDS DEPOSITED FOR REDEMPTION OF CONVERTED SECURITIES.	
Any funds which at any time shall have been deposited by the Company or on its behalf with the Trustee or any Conversion Agent for the purpose of paying the principal of and interest, if any, on any of the Securities and which shall not be required for such purposes because of the conversion of such Securities, as provided in this Article XII, shall after such conversion be repaid to the Company by the Trustee or such Conversion Agent.
 
SECTION 12.11.	RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON CONVERSION.	
Each share of Common Stock issued upon conversion of Securities pursuant to this Article XII shall be entitled to receive the appropriate number of preferred share purchase rights (the “Rights”), if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as provided by and subject to the terms of the Rights Agreement, dated as of June 11, 1986, as amended as of August 21, 1990, as further amended as of May 31, 1996, between the Company and Centerre Trust Company of St. Louis, as Rights Agent (the “Rights Agreement”), as in effect at the time of such conversion. Notwithstanding anything else to the contrary in this Article XII, there shall not be any adjustment to the conversion privilege or conversion rate as a result of (i) the distribution of separate certificates representing the Rights, (ii) the occurrence of certain events entitling holders of Rights to receive, upon exercise thereof, Common Stock of the Company or Capital Stock of another corporation or (iii) the exercise of such Rights in accordance with the Rights Agreement.
ARTICLE XIII
MISCELLANEOUS
 
SECTION 13.1.	TRUST INDENTURE ACT CONTROLS.	
If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of subsection (c) of Section 318 of the TIA, the imposed duties shall control.
 
65

SECTION 13.2.	NOTICES.	
Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or by registered or certified mail (postage prepaid, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, addressed as follows:
If to the Company:
Kellwood Company
600 Kellwood Parkway
St. Louis County, MO 63017
Attention: General Counsel
If to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.
Any notice or communication to the Company shall be deemed to have been duly given or made at the time delivered by hand if personally delivered; five calendar days after mailing if sent by registered or certified mail; when answered back, if telexed; when receipt is acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).
Any notice or communication to the Trustee shall be deemed to have been duly given or made upon receipt.
Any notice or communication to a Holder of a Registered Security shall be mailed by first-class mail to such Securityholder’s address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.
Any notice to be given to a Holder of Bearer Securities shall be given by publication in an Authorized Newspaper on two separate days within the time prescribed.
 
66

SECTION 13.3.	COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.	
Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).
 
SECTION 13.4.	CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.	
Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers’ Certificate, in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
 
SECTION 13.5.	STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.	
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each party making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such party, such party has made such examination or investigation as is necessary to enable such party to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such party, such condition or covenant has been complied with;
provided, however, that with respect to matters of law, an Officers’ Certificate may be based upon an Opinion of Counsel, unless the signers know, or in the exercise of reasonable care should know, that such Opinion of Counsel is erroneous, and provided, further, that with respect to matters of fact, an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials, unless the signer knows, or in the exercise of reasonable care should know, that any such document is erroneous.
 
67

SECTION 13.6.	RULES BY TRUSTEE AND AGENTS.	
The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions.
 
SECTION 13.7.	LEGAL HOLIDAYS.	
If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding Business Day, and no interest on the amount payable on such payment date shall accrue for the intervening period.
 
SECTION 13.8.	NO RECOURSE AGAINST OTHERS.	
A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of Securities.
 
SECTION 13.9.	GOVERNING LAW.	
This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York.
 
SECTION 13.10.	NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.	
This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
 
SECTION 13.11	SUCCESSORS.	
All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
 
SECTION 13.12.	SEVERABILITY.	
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
68

SECTION 13.13.	MULTIPLE ORIGINALS.	
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.
 
SECTION 13.14	TABLE OF CONTENTS; HEADINGS.	
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
 
SECTION 13.15.	SECURITIES IN FOREIGN CURRENCIES.	
Wherever this Indenture provides for any action by, or the determination of any of the rights of, Holders of Securities of any series in which not all of such Securities are denominated in the same currency, or any distribution to Holders of Securities, in the absence of any provision to the contrary in the form of Security of any particular series, any amount in respect of any Security denominated in a currency other than United States dollars shall be treated for any such action, determination or distribution as that amount of United States dollars that could be obtained for such amount on such reasonable basis of exchange and as of such date as the Company may specify in a written notice to the Trustee, or in the absence of such notice, as the Trustee may determine.
 
69

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be affixed hereto and attested, all as of the date first above written.

KELLWOOD COMPANY	
		
By:	 	/s/ illegible	
	 	Name:	
	 	Title:	

[Seal]	 		
		
Attest:	 	/s/ illegible	
	 	Name:	
	 	Title:	

THE CHASE MANHATTAN BANK	
		
By:	 	/s/ illegible	
	 	Name:	
	 	Title:	

[Seal]	
		
Attest:	 	/s/ illegible	
	 	Name:	
	 	Title:	
 
70

Exhibit 10.42
EXECUTION COPY

KELLWOOD COMPANY
TO
UNION BANK OF CALIFORNIA, N.A.
as Trustee

INDENTURE
Dated as of
June 22, 2004

3.50% Convertible Senior Debentures due 2034

CROSS-REFERENCE TABLE*

Trust Indenture Act Section	  	Indenture Section	
		
§310(a)(1)	  	8.09	
        (a)(2)	  	8.09	
        (a)(3)	  	N.A.	
        (a)(4)	  	N.A.	
        (a)(5)	  	N.A.	
        (b)	  	8.08	
        (c)	  	N.A.	
§311(a)	  	8.13	
        (b)	  	8.13	
        (c)	  	N.A.	
§312(a)	  	6.01; 6.02	
        (b)	  	N.A.	
        (c)	  	N.A.	
§313(a)	  	6.03	
        (b)	  	N.A.	
        (c)	  	6.03	
        (d)	  	6.03	
§314(a)	  	6.04	
        (b)	  	N.A.	
        (c)(1)	  	16.05	
        (c)(2)	  	16.05	
        (c)(3)	  	N.A.	
        (d)	  	N.A.	
        (e)	  	16.05	
        (f)	  	N.A.	
§315(a)	  	8.01; 8.02	
        (b)	  	7.08	
        (c)	  	7.06	
        (d)	  	8.01; 806	
        (e)	  	7.09	
§316(a)(1)	  	7.07	
        (a)(2)	  	11.02	
        (b)	  	N.A.	
        (c)	  	9.01	
§317(a)(1)	  	7.02	
        (a)(2)	  	7.02	
        (b)	  	5.04	
§318(a)	  	16.08	
N.A. means not applicable.
 
*	This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.	

TABLE OF CONTENTS

							
 	 	 	  	P AGE	 	
	
ARTICLE 1	  	
D EFINITIONS	  	
			
Section 1.01.	 	Definitions	  	 	2	  	
	
ARTICLE 2	  	
I SSUE , D ESCRIPTION , E XECUTION , R EGISTRATION
AND E XCHANGE OF D EBENTURES	  

Section 2.01.	 	Designation Amount and Issue of Debentures	  	 	13	  	
Section 2.02.	 	Form of Debentures	  	 	13	  	
Section 2.03.	 	Date and Denomination of Debentures; Payments of Interest	  	 	14	  	
Section 2.04.	 	Execution of Debentures	  	 	16	  	
Section 2.05.	 	Exchange and Registration of Transfer of Debentures; Restrictions on Transfer	  	 	16	  	
Section 2.06.	 	Mutilated, Destroyed, Lost or Stolen Debentures	  	 	25	  	
Section 2.07.	 	Temporary Debentures	  	 	26	  	
Section 2.08.	 	Cancellation of Debentures	  	 	26	  	
Section 2.09.	 	CUSIP Numbers	  	 	27	  	
Section 2.10.	 	Ranking	  	 	27	  	
	
ARTICLE 3	  	
R EDEMPTION AND R EPURCHASE OF D EBENTURES	  	
			
Section 3.01.	 	Company’s Right to Redeem	  	 	27	  	
Section 3.02.	 	Notice of Optional Redemption; Selection of Debentures	  	 	28	  	
Section 3.03.	 	Payment of Debentures Called for Redemption by the Company	  	 	30	  	
Section 3.04.	 	[Reserved]	  	 	31	  	
Section 3.05.	 	Repurchase of Debentures by the Company at Option of Holders upon a Fundamental Change	  	 	31	  	
Section 3.06.	 	Repurchase of Debentures by the Company at Option of Holders on Specified Dates	  	 	33	  	
Section 3.07.	 	[Reserved]	  	 	36	  	
Section 3.08.	 	Conditions and Procedures for Repurchase at Option of Holders	  	 	36	  	

							
ARTICLE 4	  	
C ONTINGENT I NTEREST	  	
			
Section 4.01.	 	Contingent Interest	  	 	39	  	
Section 4.02.	 	Payment of Contingent Interest	  	 	40	  	
Section 4.03.	 	Contingent Interest Notification	  	 	40	  	
	
ARTICLE 5	  	
P ARTICULAR C OVENANTS OF THE C OMPANY	  	
			
Section 5.01.	 	Payment of Principal and Interest	  	 	40	  	
Section 5.02.	 	Maintenance of Office or Agency	  	 	40	  	
Section 5.03.	 	Appointments to Fill Vacancies in Trustee’s Office	  	 	41	  	
Section 5.04.	 	Provisions as to Paying Agent	  	 	41	  	
Section 5.05.	 	Existence	  	 	42	  	
Section 5.06.	 	Rule 144A Information Requirement	  	 	42	  	
Section 5.07.	 	Stay, Extension and Usury Laws	  	 	43	  	
Section 5.08.	 	Compliance Certificate	  	 	43	  	
Section 5.09.	 	Additional Amounts Notice	  	 	44	  	
Section 5.10.	 	Contingent Debt Tax Treatment	  	 	44	  	
Section 5.11.	 	Calculation of Original Issue Discount	  	 	44	  	
	
ARTICLE 6	  	
D EBENTUREHOLDERS ’ L ISTS AND R EPORTS BY THE C OMPANY AND THE T RUSTEE	  	
			
Section 6.01.	 	Debentureholders’ Lists	  	 	45	  	
Section 6.02.	 	Preservation and Disclosure of Lists	  	 	45	  	
Section 6.03.	 	Reports by Trustee	  	 	45	  	
Section 6.04.	 	Reports by Company	  	 	46	  	
	
ARTICLE 7	  	
R EMEDIES OF THE T RUSTEE AND D EBENTUREHOLDERS ON AN E VENT OF D EFAULT	  	
			
Section 7.01.	 	Events of Default	  	 	46	  	
Section 7.02.	 	Payments of Debentures on Default; Suit Therefor	  	 	49	  	
Section 7.03.	 	Application of Monies Collected by Trustee	  	 	51	  	
Section 7.04.	 	Proceedings by Debentureholder	  	 	52	  	
Section 7.05.	 	Proceedings by Trustee	  	 	53	  	
Section 7.06.	 	Remedies Cumulative and Continuing	  	 	53	  	
Section 7.07.	 	Direction of Proceedings and Waiver of Defaults by Majority of Debentureholders	  	 	53	  	
Section 7.08.	 	Notice of Defaults	  	 	54	  	
Section 7.09.	 	Undertaking to Pay Costs	  	 	54	  	
 
ii

							
ARTICLE 8	  	
T HE T RUSTEE	  	
			
Section 8.01.	 	Duties and Responsibilities of Trustee	  	 	55	  	
Section 8.02.	 	Reliance on Documents, Opinions, Etc.	  	 	56	  	
Section 8.03.	 	No Responsibility for Recitals, Etc.	  	 	58	  	
Section 8.04.	 	Trustee, Paying Agents, Bid Solicitation Agents, Conversion Agents or Registrar May Own Debentures	  	 	58	  	
Section 8.05.	 	Monies to Be Held in Trust	  	 	58	  	
Section 8.06.	 	Compensation and Expenses of Trustee	  	 	58	  	
Section 8.07.	 	Officers’ Certificate as Evidence	  	 	59	  	
Section 8.08.	 	Conflicting Interests of Trustee	  	 	59	  	
Section 8.09.	 	Eligibility of Trustee	  	 	59	  	
Section 8.10.	 	Resignation or Removal of Trustee	  	 	60	  	
Section 8.11.	 	Acceptance by Successor Trustee	  	 	61	  	
Section 8.12.	 	Succession by Merger	  	 	62	  	
Section 8.13.	 	Preferential Collection of Claims	  	 	63	  	
	
ARTICLE 9	  	
T HE D EBENTUREHOLDERS	  	
			
Section 9.01.	 	Action by Debentureholders	  	 	63	  	
Section 9.02.	 	Proof of Execution by Debentureholders	  	 	63	  	
Section 9.03.	 	Who Are Deemed Absolute Owners	  	 	63	  	
Section 9.04.	 	Company-owned Debentures Disregarded	  	 	64	  	
Section 9.05.	 	Revocation of Consents, Future Holders Bound	  	 	64	  	
	
ARTICLE 10	  	
M EETINGS OF D EBENTUREHOLDERS	  	
			
Section 10.01.	 	Purpose of Meetings	  	 	65	  	
Section 10.02.	 	Call of Meetings by Trustee	  	 	65	  	
Section 10.03.	 	Call of Meetings by Company or Debentureholders	  	 	66	  	
Section 10.04.	 	Qualifications for Voting	  	 	66	  	
Section 10.05.	 	Regulations	  	 	66	  	
Section 10.06.	 	Voting	  	 	67	  	
Section 10.07.	 	No Delay of Rights by Meeting	  	 	67	  	
	
ARTICLE 11	  	
S UPPLEMENTAL I NDENTURES	  	
			
Section 11.01.	 	Supplemental Indentures Without Consent of Debentureholders	  	 	67	  	
Section 11.02.	 	Supplemental Indenture with Consent of Debentureholders	  	 	69	  	
Section 11.03.	 	Effect of Supplemental Indenture	  	 	70	  	
 
iii

							
Section 11.04.	 	Notation on Debentures	  	 	71	  	
Section 11.05.	 	Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustee	  	 	71	  	
	
ARTICLE 12	  	
C ONSOLIDATION , M ERGER , S ALE , C ONVEYANCE AND L EASE	  	
			
Section 12.01.	 	Company May Consolidate on Certain Terms	  	 	71	  	
Section 12.02.	 	Successor to Be Substituted	  	 	72	  	
Section 12.03.	 	Opinion of Counsel to Be Given Trustee	  	 	72	  	
	
ARTICLE 13	  	
S ATISFACTION AND D ISCHARGE OF I NDENTURE	  	
			
Section 13.01.	 	Discharge of Indenture	  	 	73	  	
Section 13.02.	 	Paying Agent to Repay Monies Held	  	 	73	  	
Section 13.03.	 	Return of Unclaimed Monies	  	 	73	  	
	
ARTICLE 14	  	
I MMUNITY OF I NCORPORATORS , S HAREHOLDERS , O FFICERS AND D IRECTORS	  	
			
Section 14.01.	 	Indenture and Debentures Solely Corporate Obligations	  	 	74	  	
	
ARTICLE 15	  	
C ONVERSION OF D EBENTURES	  	
			
Section 15.01.	 	Right to Convert	  	 	74	  	
Section 15.02.	 	Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends	  	 	78	  	
Section 15.03.	 	Payment Upon Conversion; Cash Payments in Lieu of Fractional Shares	  	 	80	  	
Section 15.04.	 	Conversion Rate	  	 	83	  	
Section 15.05.	 	Adjustment of Conversion Rate	  	 	84	  	
Section 15.06.	 	Effect of Reclassification, Consolidation, Merger or Sale	  	 	91	  	
Section 15.07.	 	Taxes on Shares Issued	  	 	92	  	
Section 15.08.	 	Reservation of Shares, Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock	  	 	92	  	
Section 15.09.	 	Responsibility of Trustee	  	 	93	  	
Section 15.10.	 	Notice to Holders Prior to Certain Actions	  	 	94	  	
Section 15.11.	 	Shareholder Rights Plan	  	 	95	  	
	
ARTICLE 16	  	
M ISCELLANEOUS P ROVISIONS	  	
			
Section 16.01.	 	Provisions Binding On Company’s Successors	  	 	95	  	
Section 16.02.	 	Official Acts By Successor Corporation	  	 	95	  	
 
iv

							
Section 16.03.	 	Addresses for Notices, Etc.	  	 	95	  	
Section 16.04.	 	Governing Law	  	 	96	  	
Section 16.05.	 	Evidence of Compliance with Conditions Precedent, Certificates to Trustee	  	 	96	  	
Section 16.06.	 	Legal Holidays	  	 	97	  	
Section 16.07.	 	Company Responsible for Making Calculations	  	 	97	  	
Section 16.08.	 	Trust Indenture Act	  	 	97	  	
Section 16.09.	 	No Security Interest Created	  	 	98	  	
Section 16.10.	 	Benefits of Indenture	  	 	98	  	
Section 16.11.	 	Table of Contents, Headings, Etc.	  	 	98	  	
Section 16.12.	 	Authenticating Agent	  	 	98	  	
Section 16.13.	 	Execution in Counterparts	  	 	99	  	
Section 16.14.	 	Severability	  	 	99	  	
		
Exhibit A Form of Debenture	  	 	A-1	  	
 
v

INDENTURE
INDENTURE dated as of June 22, 2004 between Kellwood Company, a Delaware corporation (hereinafter called the “ Company ”), having its principal office at 600 Kellwood Parkway, Chesterfield, Missouri 63017, and Union Bank of California, N.A., as trustee hereunder (hereinafter called the “ Trustee ”).
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of its 3.50% Convertible Senior Debentures due 2034 (hereinafter called the “ Debentures ”), in an aggregate Original Principal Amount not to exceed $180,000,000 (or up to $200,000,000 if the Initial Purchasers’ option set forth in the Purchase Agreement is exercised in full), and, to provide the terms and conditions upon which the Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Debentures, the certificate of authentication to be borne by the Debentures, a form of assignment, a form of fundamental change repurchase election, a form of Company repurchase election and a form of conversion notice to be borne by the Debentures are to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute this Indenture a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Debentures have in all respects been duly authorized,

NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Debentures are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Debentures by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Debentures (except as otherwise provided below), as follows:
ARTICLE 1
D EFINITIONS
Section 1.01 . Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. All other terms used in this Indenture that are defined in the Trust Indenture Act or which are by reference therein defined in the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires) shall have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act as in force at the date of the execution of this Indenture. The words “ herein ”, “ hereof ”, “ hereunder ” and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other Subdivision. The terms defined in this Article include the plural as well as the singular.
“ Accreted Principal Amount ” means for any Debenture as of any date of determination, the sum of (i) the Original Principal Amount of such Debenture and (ii) the portion of the excess of the Accreted Principal Amount at Stated Maturity of such Debenture over such Original Principal Amount which shall have been accreted thereon through such date, such amount to be accreted on a daily basis at the Applicable Yield for such Debenture, compounded semiannually on each Interest Payment Date through the date of determination and computed on the basis of a 360-day year of twelve 30-day months.
“ Accreted Principal Amount at Stated Maturity ” means $2,221.18 per $1,000 Original Principal Amount of Debentures unless, the Debentures are earlier redeemed, purchased or converted.
“ Additional Amounts ” has the meaning specified for “ Additional Amounts ” in Section 2(e) of the Registration Rights Agreement.
“ Additional Amounts Notice ” has the meaning specified in Section 5.09.
“ Additional Shares ” has the meaning specified in Section 15.01(d).
“ Adjustment Event ” has the meaning specified in Section 15.05(l).
“ Agent Members ” has the meaning specified in Section 2.05(b).
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “ control ”, when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly,
 
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whether through the ownership of voting securities, by contract or otherwise, and the terms “ controlling ” and “ controlled ” have meanings correlative to the foregoing.
“ Applicable Five-Day Trading Period ” means, with respect to any Contingent Interest Period as to which Contingent Interest may be payable, the five Trading Days immediately preceding the first day of such Contingent Interest Period.
“ Applicable Yield ” means (1) prior to June 15, 2011, 0% per annum, and (2) from and after June 15, 2011 and until June 14, 2034, a rate per annum equal to 3.50%.
“ Bid Solicitation Agent ” means such Person (other than any Affiliate of the Company) as the Company may designate as Bid Solicitation Agent from time to time, and shall initially mean the Trustee.
“ Board of Directors ” means the Board of Directors of the Company or a committee of such Board duly authorized to act for it hereunder.
“ Business Day ” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New York or the city in which the Corporate Trust Office of the Trustee is located.
“ capital stock ” of any Person means any and all shares (including ordinary shares or American Depositary Shares), interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.
“ Cash Amount ” has the meaning specified in Section 15.03(a).
“ Cash Settlement Averaging Period ” has the meaning specified in Section 15.03(a).
“ Cash Settlement Notice Period ” has the meaning specified in Section 15.03(a).
“ Commission ” means the Securities and Exchange Commission, as from time to time constituted under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
 
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“ Common Stock ” means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. Subject to the provisions of Section 15.06, however, shares issuable on conversion of Debentures shall include only shares of the class designated as common stock of the Company at the date of this Indenture (namely, the Common Stock, par value of $0.01 per share) or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.
“ Company ” means the corporation named as the “ Company ” in the first paragraph of this Indenture, and, subject to the provisions of Article 12 and Section 15.06, shall include its successors and assigns.
“ Company Repurchase Date ” has the meaning specified in Section 3.06(a).
“ Company Repurchase Election ” has the meaning specified in Section 3.06(c).
“ Company Repurchase Notice ” has the meaning specified in Section 3.06(b).
“ Company Repurchase Price ” has the meaning specified in Section 3.06(a).
“ Contingent Interest ” has the meaning specified in Section 4.01.
“ Contingent Interest Period ” means the period commencing on June 20, 2011 and ending December 14, 2011 and thereafter any six-month period from December 15 to June 14 or from June 15 to December 14, commencing on or after December 15, 2011 and ending before June 15, 2034.
“ Continuing Director ” means a director who was a member of the Board of Directors on the date of this Indenture or who becomes a director subsequent to such date and whose election, appointment or nomination for election by the shareholders of the Company is duly approved by a majority of the continuing
 
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directors on the Board of Directors at the time of such approval, either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the entire Board of Directors in which such individual is named as nominee for director.
“ Conversion Agent ” means the Trustee or such other office or agency designated by the Company where Debentures may be presented for conversion.
“ Conversion Date ” has the meaning specified in Section 15.02.
“ Conversion Obligation ” has the meaning specified in Section 15.03(a).
“ Conversion Price ” as of any day means the Accreted Principal Amount divided by the Conversion Rate as of such date and rounded to the nearest cent. The initial Conversion Price shall initially be $53.35 per share of Common Stock.
“ Conversion Rate ” has the meaning specified in Section 15.04.
“ Conversion Retraction Period ” has the meaning specified in Section 15.03(a).
“ Corporate Trust Office ” or other similar term, means the designated office of the Trustee at which at any particular time its corporate trust business as it relates to this Indenture shall be principally administered, which office is, at the date as of which this Indenture is dated, located at 120 S. San Pedro St., Suite 400, Los Angeles, California, 90012 or at any other address as the Trustee may designate from time to time by notice to the holders.
“ Custodian ” means Union Bank of California, N.A., as custodian with respect to the Debentures in global form, or any successor entity thereto.
“ Debenture ” or “ Debentures ” means any Debenture or Debentures, as the case may be, authenticated and delivered under this Indenture, including any Global Debenture.
“ Debenture Register ” has the meaning specified in Section 2.05.
“ Debenture Registrar ” has the meaning specified in Section 2.05.
“ Debentureholder ” or “ holder ” as applied to any Debenture, or other similar terms (but excluding the term “beneficial holder”), means any Person in whose name at the time a particular Debenture is registered on the Debenture Registrar’s books.
“ Default ” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.
 
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“ Defaulted Interest ” has the meaning specified in Section 2.03.
“ Depositary ” means the clearing agency registered under the Exchange Act that is designated to act as the Depositary for the Global Debentures. The Depository Trust Company shall be the initial Depositary, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “ Depositary ” shall mean or include such successor.
“ Determination Date ” has the meaning specified in Section 15.05(l).
“ Effective Date ” has the meaning specified in Section 15.01(b).
“ Event of Default ” means any event specified in Section 7.01 as an Event of Default.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.
“ Ex-Dividend Date ” means, with respect to any issuance or distribution on shares of Common Stock, the first date upon which a sale of the Common Stock does not automatically transfer the right to receive such issuance or distribution from the seller of the Common Stock to the buyer.
“ Expiration Time ” has the meaning specified in Section 15.05(e).
“ Final Notice Date ” has the meaning specified in Section 15.03(a).
“ Fundamental Change ” means the occurrence of any of the following:
(i) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than the Company, its subsidiaries or its or their employee benefit plans, files a Schedule TO or any other schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of more than 50% of the total voting power of all shares of the Company’s capital stock that are entitled to vote generally in the election of directors;
(ii) consummation of any share exchange, consolidation or merger of the Company or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any person other than the Company or one or more of its subsidiaries pursuant to which the Common Stock will be converted into cash, securities or other property; provided, however, that a transaction where the holders of the Company’s voting capital stock immediately prior to such transaction have, directly or indirectly, more than 50% of the
 
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aggregate voting power of all shares of capital stock of the continuing or surviving corporation or transferee entitled to vote generally in the election of directors immediately after such event shall not be a Fundamental Change;
(iii) Continuing Directors cease to constitute at least a majority of the Board of Directors;
(iv) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or
(v) the Common Stock or other common stock into which the Debentures are convertible is neither listed for trading on a U.S. national securities exchange nor approved for trading on the Nasdaq National Market or another established automated over the-counter trading market in the United States.
A Fundamental Change will not be deemed to have occurred in respect of any of the foregoing, however, if at least 90% of the consideration, excluding cash payments for fractional shares, in the transaction or transactions constituting the Fundamental Change consists of shares of capital stock traded on a national securities exchange or quoted on the Nasdaq National Market or which will be so traded or quoted when issued or exchanged in connection with a Fundamental Change (these securities being referred to as “publicly traded securities”) and as a result of this transaction or transactions the Debentures become convertible into such publicly traded securities, excluding cash payments for fractional shares.
“ Fundamental Change Repurchase Date ” has the meaning specified in Section 3.05(a).
“ Fundamental Change Repurchase Election ” has the meaning specified in Section 3.05(c)(i).
“ Fundamental Change Repurchase Notice ” has the meaning specified in Section 3.05(b).
“ Fundamental Change Repurchase Price ” has the meaning provided in Section 3.05(a).
“ Global Debenture ” has the meaning specified in Section 2.02.
“ Indenture ” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.
“ Initial Purchasers ” means each of J.P. Morgan Securities Inc., Banc of America Securities LLC, Scotia Capital (USA) Inc., Piper Jaffray & Co., Lazard Frères & Co. LLC, and UBS Securities LLC (each an “ Initial Purchaser ”).
 
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“ Interest ” means, when used with reference to the Debentures, any regular interest payable under the terms of the Debentures, including Contingent Interest, if any, and Additional Amounts, if any, payable under the terms of the Registration Rights Agreement.
“ Interest Payment Date ” means June 15 and December 15 of each year, commencing December 15, 2004.
“ Last Reported Sale Price ” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on that date as reported in composite transactions for the principal U.S. securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a U.S. national or regional securities exchange, as reported by the Nasdaq National Market. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange and not reported by the Nasdaq National Market on the relevant date, the “Last Reported Sale Price” will be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau Incorporated or similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” will be the average of the mid-point of the last bid and asked prices for the Common Stock on the relevant date quoted by each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.
“ non-electing share ” has the meaning specified in Section 15.06.
“ Officers’ Certificate ”, when used with respect to the Company, means a certificate signed by any two of the Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer, the President, the Chief Financial Officer, any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”), the Treasurer or the Secretary of the Company; provided that the Officers’ Certificate delivered on the date hereof pursuant to Section 16.05 may be signed by any one of the foregoing.
“ Opinion of Counsel ” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or other counsel reasonably acceptable to the Trustee.
“ Original Principal Amount ” of a Debenture means the stated Original Principal Amount as set forth on the face of such Debenture.
“ Outstanding ”, when used with reference to Debentures and subject to the provisions of Section 9.04, means, as of any particular time, all Debentures authenticated and delivered by the Trustee under this Indenture, except:
(a) Debentures theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
 
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(b) Debentures, or portions thereof, (i) for the redemption of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or (ii) which shall have been otherwise defeased in accordance with Article 13;
(c) Debentures in lieu of which, or in substitution for which, other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.06; and
(d) Debentures converted into Common Stock, cash or a combination of cash and Common Stock pursuant to Article 15 and Debentures deemed not outstanding pursuant to Article 3.
“ Paying Agent ” means the Trustee or such other office or agency designated by the Company where Debentures may be presented for payment.
“ Person ” means a corporation, an association, a partnership, a limited liability company, an individual, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.
“ Portal Market ” means The Portal Market operated by the National Association of Securities Dealers, Inc. or any successor thereto.
“ Predecessor Debenture ” of any particular Debenture means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture, and, for the purposes of this definition, any Debenture authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture that it replaces.
“ Principal Value Conversion ” has the meaning specified in Section 15.01(a)(iii).
“ Purchase Agreement ” means the Purchase Agreement, dated as of June 16, 2004 among the Company and the Initial Purchasers.
“ Purchased Shares ” has the meaning specified in Section 15.05(e).
“ QIB ” means a “ qualified institutional buyer ” as defined in Rule 144A.
“ Redemption Date ” has the meaning specified in Section 3.02(a).
 
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“ Redemption Notice ” has the meaning specified in Section 3.02(a).
“ Redemption Price ” has the meaning specified in Section 3.01.
“ Registration Rights Agreement ” means the Registration Rights Agreement, dated as of June 22, 2004, among the Company and the Initial Purchasers, as amended from time to time in accordance with its terms.
“ Regular Record Date ” means, with respect to each Interest Payment Date, the close of business on the June 1 or December 1 next preceding such Interest Payment Date (whether or not a Business Day).
“ Repurchase Date ” means the Fundamental Change Repurchase Date or the Company Repurchase Date, as applicable.
“ Repurchase Election ” means the Fundamental Change Repurchase Election or the Company Repurchase Election, as applicable.
“Repurchase Price ” means the Fundamental Change Repurchase Price or the Company Repurchase Price, as applicable.
“Responsible Officer ” means, when used with respect to the Trustee, any officer of the Trustee within the Corporate Trust Department (or any successor unit, department or division of the Trustee) located at the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and, for the purposes of Sections 7.08 and 8.01(b), also means any other officer or person performing similar functions to whom any corporate trust matter is referred because of such person’s knowledge of any familiarity with the particular subject.
“ Restricted Securities ” has the meaning specified in Section 2.05(c).
“ Rule 144A ” means Rule 144A as promulgated under the Securities Act.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.
“ Special Record Date ” has the meaning specified in Section 2.03.
“ Spin-Off ” has the meaning specified in Section 15.05(c).
“ Spin-Off Market Price ” per share of Common Stock of the Company or the capital stock of, or similar equity interests in, a subsidiary or other business unit of the Company on any day means the average of the daily Last Reported Sale Price for the ten (10) consecutive Trading Days commencing on and including the fifth Trading Day after the Ex-Dividend Date with respect to the issuance or distribution requiring such computation.
 
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“ Stated Maturity ” means June 15, 2034.
“ Stock Price ” means the price per share of Common Stock paid in connection with a corporate transaction described in Section 15.01(b) hereof, which shall be equal to (i) if holders of Common Stock receive only cash in such corporate transaction, the cash amount paid per share of Common Stock and (ii) in all other cases, the average of the Last Reported Sale Prices of Common Stock on the five Trading Days up to but not including the Effective Date.
“ Stock Record Date ” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of shareholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).
“ Subsidiary ” means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital stock or other equity interest entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or managing general partner of which is such Person or a subsidiary of such Person or (b) the only general partners of which are such Person or of one or more subsidiaries of such Person (or any combination thereof).
“ Tax Original Issue Discount ” means the amount of ordinary interest income on a Debenture that must be accrued as original issue discount for United States Federal income tax purposes pursuant to U.S. Treasury Regulation section 1.1275-4.
“ Trading Day ” means a day during which trading in the Common Stock generally occurs and a closing price for the Common Stock is provided on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded.
 
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“ Trading Price ” means, as of any date of determination, the average of the secondary market bid quotations per $1,000 Original Principal Amount of Debentures obtained by the Bid Solicitation Agent for $1 million aggregate Original Principal Amount of Debentures at approximately 4:00 p.m., New York City time, on such determination date from three nationally recognized securities dealers (none of which shall be an Affiliate of the Company) in The City of New York (or such other place that may be determined from time to time by the Company) selected by the Company; provided, however, if (a) at least one such bid is not obtained by the Bid Solicitation Agent or (b) in the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market value of the Debentures as of such determination date, then the Trading Price per $1,000 Original Principal Amount of the Debentures for such determination date shall equal (1) the Conversion Rate as of such determination date, appropriately adjusted to take into account the occurrence, during the period commencing on the first of such Trading Days during such five (5) Trading Day period and ending on such determination date, of any event described in Section 15.05 or Section 15.06, multiplied by (2) the average Last Reported Sale Price of the Common Stock on the five (5) Trading Days ending on such determination date; provided however that for purposes of Section 15.01(a)(iii), if the Bid Solicitation Agent cannot reasonably obtain at least one bid for $1 million aggregate Original Principal Amount of the Debentures from a nationally recognized securities dealer, or in the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market value of the Debentures, then the Trading Price per Debenture will be deemed to be less than 98% of the product of the Last Reported Sale Price of Common Stock and the Conversion Rate. The Bid Solicitation Agent shall solicit bids from securities dealers that the Company believes to be willing to bid for Debentures. The Trading Price shall be determined by the Company.
“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended, as it was in force at the date of this Indenture, except as provided in Sections 11.03 and 15.06; provided that if the Trust Indenture Act of 1939 is amended after the date hereof, the term “ Trust Indenture Act ” shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939 as so amended.
“ Trustee ” means Union Bank of California, N.A. and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at the time serving as successor trustee hereunder.
 
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ARTICLE 2
I SSUE , D ESCRIPTION , E XECUTION , R EGISTRATION
AND E XCHANGE OF D EBENTURES
Section 2.01 . Designation Amount and Issue of Debentures. The Debentures shall be designated as “ 3.50% Convertible Senior Debentures due 2034 ”. Debentures not to exceed the aggregate Original Principal Amount of $180,000,000 (or up to $200,000,000 if the Initial Purchasers’ option set forth in the Purchase Agreement is exercised in full) (except pursuant to Sections 2.05, 2.06, 3.05, 3.06 and 15.02 hereof) upon the execution of this Indenture, or from time to time thereafter, may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures to or upon the written order of the Company, signed by its Chief Executive Officer, its President, its Chief Operating Officer or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”), without any further action by the Company hereunder.
Section 2.02 . Form of Debentures. The Debentures and the Trustee’s certificate of authentication to be borne by such Debentures shall be substantially in the form set forth in Exhibit A. The terms and provisions contained in the form of Debenture attached as Exhibit A hereto shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.
Any of the Debentures may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required by the Custodian, the Depositary or by the National Association of Securities Dealers, Inc. in order for the Debentures to be tradable on The Portal Market or as may be required for the Debentures to be tradable on any other market developed for trading of securities pursuant to Rule 144A or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Debentures may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Debentures are subject.
So long as the Debentures are eligible for book-entry settlement with the Depositary, or unless otherwise required by law, or otherwise contemplated by Section 2.05(a), all of the Debentures will be represented by one or more Debentures in global form registered in the name of the Depositary or the nominee of the Depositary (a “ Global Debenture ”). The transfer and exchange
 
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of beneficial interests in any such Global Debenture shall be effected through the Depositary in accordance with this Indenture and the applicable procedures of the Depositary. Except as provided in Section 2.05(a), beneficial holders of a Global Debenture will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered holders of such Global Debenture.
Any Global Debenture shall represent such of the outstanding Debentures as shall be specified therein and shall provide that it shall represent the aggregate Original Principal Amount of outstanding Debentures from time to time endorsed thereon and that the aggregate Original Principal Amount of outstanding Debentures represented thereby may from time to time be increased or reduced to reflect redemptions, repurchases, conversions, transfers or exchanges permitted hereby. Any endorsement of a Global Debenture to reflect the amount of any increase or decrease in the Original Principal Amount of outstanding Debentures represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the holder of such Debentures in accordance with this Indenture. Payment of the Accreted Principal Amount of and Interest on any Global Debenture shall be made to the holder of such Debenture.
Section 2.03 . Date and Denomination of Debentures ; Payments of Interest. The Debentures shall be issuable in fully registered form without interest coupons in denominations of $1,000 Original Principal Amount and integral multiples thereof. Each Debenture shall be dated the date of its authentication and shall bear Interest from the date specified on the face of the form of Debenture attached as Exhibit A hereto. Interest on the Debentures shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
The Person in whose name any Debenture (or its Predecessor Debenture) is registered on the Debenture Register at the close of business on the Regular Record Date with respect to an Interest Payment Date (whether or not such day is a Business Day) shall be entitled to receive the Interest payable on such Interest Payment Date, except that the Interest payable upon redemption or repurchase will be payable to the Person to whom the Accreted Principal Amount is payable pursuant to such redemption or repurchase (unless the Redemption Date or the Repurchase Date, as the case may be, is an Interest Payment Date, in which case the semi-annual payment of interest becoming due on such date shall be payable to the holders of such Debentures registered as such on the applicable Regular Record Date). Notwithstanding the foregoing, if any Debenture (or portion thereof) is converted into Common Stock, cash or a combination of cash and Common Stock during the period after a Regular Record Date to, but excluding, the next succeeding Interest Payment Date and such Debenture (or portion thereof) has been called or tendered for redemption on a Redemption Date which occurs during such period, the Company shall not be required to pay interest on
 
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such Interest Payment Date in respect of any such Debenture (or portion thereof), except as provided in Section 15.02. Interest shall be payable at the office of the Company maintained by the Company for such purposes, which shall initially be an office or agency of the Trustee. The Company shall pay Interest (i) on any Debentures in certificated form by check mailed to the address of the Person entitled thereto as it appears in the Debenture Register (or upon written notice, by wire transfer in immediately available funds, if such Person is entitled to Interest on Debentures with an aggregate Original Principal Amount in excess of $2,000,000) or (ii) on any Global Debenture by wire transfer of immediately available funds to the account of the Depositary or its nominee.
Any Interest on any Debenture which is payable, but is not punctually paid or duly provided for, on any June 15 or December 15 (herein called “ Defaulted Interest ”) shall forthwith cease to be payable to the Debentureholder on the relevant Regular Record Date by virtue of its having been such Debentureholder, and such Defaulted Interest shall be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Debentures (or their respective Predecessor Debentures) are registered at the close of business on a “ Special Record Date ” for the payment of such Defaulted Interest, which shall be the date fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Debenture and the date of the proposed payment (which shall be not less than twenty-five (25) days after the receipt by the Trustee of such notice, unless the Trustee shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment, and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each holder at his address as it appears in the Debenture Register, not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Debentures (or their respective Predecessor Debentures) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2) of this Section 2.03.
(2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Debentures may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
 
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Section 2.04 . Execution of Debentures. The Debentures shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chief Executive Officer, President, Chief Operating Officer or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”). Only such Debentures as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Debenture attached as Exhibit A hereto, manually executed by the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 16.12), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such an authenticating agent) upon any Debenture executed by the Company shall be conclusive evidence that the Debenture so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Debentures shall cease to be such officer before the Debentures so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Debentures nevertheless may be authenticated and delivered or disposed of as though the person who signed such Debentures had not ceased to be such officer of the Company, and any Debenture may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Debenture, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer.
Section 2.05 . Exchange and Registration of Transfer of Debentures ; Restrictions on Transfer. (a) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office and in any other office or agency of the Company designated pursuant to Section 5.02 being herein sometimes collectively referred to as the “ Debenture Register ”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Debentures and of transfers of Debentures. The Debenture Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt period of time. The
 
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Trustee is hereby appointed “ Debenture Registrar ” for the purpose of registering Debentures and transfers of Debentures as herein provided. The Company may appoint one or more co-registrars in accordance with Section 5.02.
Upon surrender for registration of transfer of any Debenture to the Debenture Registrar or any co-registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Debentures of any authorized denominations and of a like aggregate Original Principal Amount and bearing such restrictive legends as may be required by this Indenture.
Debentures may be exchanged for other Debentures of any authorized denominations and of a like aggregate Original Principal Amount, upon surrender of the Debentures to be exchanged at any such office or agency maintained by the Company pursuant to Section 5.02. Whenever any Debentures are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Debentures which the Debentureholder making the exchange is entitled to receive bearing registration numbers not contemporaneously outstanding.
All Debentures issued upon any registration of transfer or exchange of Debentures shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debentures surrendered upon such registration of transfer or exchange.
All Debentures presented or surrendered for registration of transfer or for exchange, redemption, repurchase or conversion shall (if so required by the Company or the Debenture Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by the Debentureholder thereof or his attorney duly authorized in writing.
No service charge shall be made to any holder for any registration of, transfer or exchange of Debentures, but the Company may require payment by the holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Debentures.
Neither the Company nor the Trustee nor any Debenture Registrar shall be required to exchange or register a transfer of (a) any Debentures for a period of fifteen (15) days next preceding any selection of Debentures to be redeemed, (b) any Debentures or portions thereof called for redemption pursuant to Section 3.01 (c) any Debentures or portions thereof surrendered for conversion pursuant to Article 15, (d) any Debentures or portions thereof tendered for repurchase (and not withdrawn) pursuant to Section 3.05 or (e) any Debentures or portions thereof tendered for repurchase (and not withdrawn) pursuant to Section 3.06.
 
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(b) The following provisions shall apply only to Global Debentures:
(i) Each Global Debenture authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to such Depositary or a nominee thereof or Custodian therefor, and each such Global Debenture shall constitute a single Debenture for all purposes of this Indenture.
(ii) Notwithstanding any other provision in this Indenture, no Global Debenture may be exchanged in whole or in part for Debentures registered, and no transfer of a Global Debenture in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless (A) the Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Debenture and a successor depositary has not been appointed by the Company within ninety (90) days or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) an Event of Default has occurred and is continuing, (C) the Company, in its sole discretion, notifies the Trustee in writing that it no longer wishes to have all the Debentures represented by Global Debentures or (D) any beneficial holder reasonably requests such exchange on terms acceptable to the Company, the Trustee and the Depositary, which in the case of the Trustee may include, in the Trustee’s sole discretion, among other things, the requirement that (i) the Trustee and any Debenture Registrar receive (a) from the Company or the Depositary, a written order, in either case requesting such exchange, and an Opinion of Counsel (which upon receipt thereof the Trustee and such Debenture Registrar shall be fully protected in relying) to the effect that (x) all securities laws in connection with such exchange have been complied with and (y) such exchange is otherwise authorized or permitted by this Indenture; and (b) from such beneficial holder (x) an affidavit as to its beneficial ownership interest in such Global Debenture and/or (y) an indemnity, reasonably satisfactory to the Trustee and such Debenture Registrar, against any loss, liability or expense to the Trustee and such Debenture Registrar to the extent that the Trustee or Debenture Registrar acts upon such order, affidavit and/or indemnity; and (ii) such exchange can be accomplished in a manner that is practicable and not inconsistent with the rules of any applicable Depositary or securities exchange upon which the Debentures may be listed for trading. Any Global Debenture exchanged pursuant to clause (A) or (B) above shall be so exchanged in whole and not in part and any Global Debenture exchanged pursuant to clause (C) or (D) above may be exchanged in whole or from time to time in part as directed by the Company. Any Debenture issued in exchange
 
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for a Global Debenture or any portion thereof shall be a Global Debenture; provided that any such Debenture so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Debenture.
(iii) Debentures issued in exchange for a Global Debenture or any portion thereof pursuant to clause (ii) above shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate Original Principal Amount equal to that of such Global Debenture or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any legends required hereunder. Any Global Debenture to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Debenture Registrar. With regard to any Global Debenture to be exchanged in part, either such Global Debenture shall be so surrendered for exchange or, if the Trustee is acting as Custodian for the Depositary or its nominee with respect to such Global Debenture, the Original Principal Amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery the Debenture issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof.
(iv) In the event of the occurrence of any of the events specified in clause (ii) above, the Company will promptly make available to the Trustee a reasonable supply of certificated Debentures in definitive, fully registered form, without interest coupons.
(v) Neither any members of, or participants in, the Depositary (“ Agent Members ”) nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Debenture registered in the name of the Depositary or any nominee thereof, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Debenture for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a beneficial holder of any Debenture.
(vi) At such time as all interests in a Global Debenture have been redeemed, repurchased, converted, canceled or exchanged for Debentures in certificated form, such Global Debenture shall, upon receipt thereof, be canceled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a Global Debenture is redeemed, repurchased, converted, canceled or exchanged for Debentures in certificated form, the Original Principal Amount of such Global Debenture shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced, and an endorsement shall be made on such Global Debenture, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction.
 
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(c) Every Debenture that bears or is required under this Section 2.05(c) to bear the legend set forth in this Section 2.05(c) (together with any Common Stock issued upon conversion of the Debentures and required to bear the legend set forth in Section 2.05(d), collectively, the “ Restricted Securities ”) shall be subject to the restrictions on transfer set forth in this Section 2.05(c) (including those set forth in the legend below) unless such restrictions on transfer shall be waived by written consent of the Company, and the holder of each such Restricted Security, by such holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in Section 2.05(c) and 2.05(d), the term “ transfer ” encompasses any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security or any interest therein.
Until the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), any certificate evidencing such Debenture (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.05(d), if applicable) shall bear a legend in substantially the following form, unless such Debenture has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or pursuant to Rule 144 under the Securities Act or any similar provision then in force, or unless otherwise agreed by the Company in writing, with written notice thereof to the Trustee:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
 
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IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)); (2) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THIS SECURITY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), ONLY (A) TO KELLWOOD COMPANY (THE “ISSUER”), (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, IN COMPLIANCE WITH RULE 144A TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE 2(B) ABOVE OR UPON ANY TRANSFER OF THIS SECURITY UNDER RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS DEBENTURE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE ISSUE PRICE OF EACH DEBENTURE IS $1,000 PER $1,000 OF ORIGINAL PRINCIPAL AMOUNT, AND THE ISSUE DATE IS JUNE 22, 2004. IN ADDITION, THIS DEBENTURE IS SUBJECT TO UNITED STATES FEDERAL INCOME TAX REGULATIONS GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE COMPARABLE YIELD OF THIS
 
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DEBENTURE IS 7.65%, COMPOUNDED SEMI-ANNUALLY (WHICH WILL BE TREATED AS THE YIELD TO MATURITY FOR UNITED STATES FEDERAL INCOME TAX PURPOSES).
THE ISSUER AGREES, AND BY ACCEPTING A BENEFICIAL OWNERSHIP INTEREST IN THIS DEBENTURE EACH HOLDER AND ANY BENEFICIAL OWNER OF THIS DEBENTURE WILL BE DEEMED TO HAVE AGREED, FOR UNITED STATES FEDERAL INCOME TAX PURPOSES (1) TO TREAT THIS DEBENTURE AS A DEBT INSTRUMENT THAT IS SUBJECT TO TREAS. REG. SEC. 1.1275-4 (THE “CONTINGENT PAYMENT REGULATIONS”), (2) TO TREAT THE FAIR MARKET VALUE OF ANY COMMON STOCK RECEIVED UPON ANY CONVERSION OF THIS DEBENTURE OR UPON A PURCHASE OF THIS DEBENTURE AT THE HOLDER’S OPTION AS A CONTINGENT PAYMENT FOR PURPOSES OF THE CONTINGENT PAYMENT REGULATIONS, AND (3) TO ACCRUE INTEREST WITH RESPECT TO THE DEBENTURE AS ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES ACCORDING TO THE “NONCONTINGENT BOND METHOD,” SET FORTH IN THE CONTINGENT PAYMENT REGULATIONS, AND TO BE BOUND BY THE ISSUER’S DETERMINATION OF THE “COMPARABLE YIELD” AND “PROJECTED PAYMENT SCHEDULE,” WITHIN THE MEANING OF THE CONTINGENT PAYMENT REGULATIONS, WITH RESPECT TO THIS DEBENTURE. THE ISSUER AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS DEBENTURE, UPON WRITTEN REQUEST, THE ISSUE PRICE, AMOUNT OF TAX ORIGINAL ISSUE DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE ISSUER AT THE FOLLOWING ADDRESS: KELLWOOD COMPANY, 600 KELLWOOD PARKWAY, CHESTERFIELD, MISSOURI 63917, ATTN: TREASURER.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT DATED JUNE 22, 2004 AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
Any Debenture (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms or as to conditions for removal of the foregoing legend set forth therein have been satisfied may, upon surrender of such Debenture for exchange to the Debenture Registrar in accordance with the provisions of this Section 2.05, be exchanged for a new Debenture or Debentures, of like tenor and aggregate Original Principal Amount, which shall not bear the restrictive legend required by this Section 2.05(c). If the Restricted Security surrendered for exchange is
 
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represented by a Global Debenture bearing the legend set forth in this Section 2.05(c), the Original Principal Amount of the legended Global Debenture shall be reduced by the appropriate Original Principal Amount and the Original Principal Amount of a Global Debenture without the legend set forth in this Section 2.05(c) shall be increased by an equal Original Principal Amount. If a Global Debenture without the legend set forth in this Section 2.05(c) is not then outstanding, the Company shall execute and the Trustee shall authenticate and deliver an unlegended Global Debenture to the Depositary.
(d) Until the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), any stock certificate representing Common Stock issued upon conversion of any Debenture shall bear a legend in substantially the following form, unless such Common Stock has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or pursuant to Rule 144 under the Securities Act or any similar provision then in force, or such Common Stock has been issued upon conversion of Debentures that have been transferred pursuant to a registration statement that has been declared effective under the Securities Act or pursuant to Rule 144 under the Securities Act or any similar provision then in force, or unless otherwise agreed by the Company in writing with written notice thereof to the transfer agent:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”)); (2) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THIS SECURITY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), ONLY (A) TO KELLWOOD COMPANY (THE “ISSUER”), (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, IN COMPLIANCE WITH RULE 144A
 
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TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE 2(B) ABOVE OR UPON ANY TRANSFER OF THIS SECURITY UNDER RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT DATED JUNE 22, 2004 AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the foregoing legend set forth therein have been satisfied may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.05(d).
(e) Any Debenture or Common Stock issued upon the conversion of a Debenture that, prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), is purchased or owned by the Company or any Affiliate thereof may not be resold by the Company or such Affiliate unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction which results in such Debentures or Common Stock, as the case may be, no longer being “restricted securities” (as defined under Rule 144).
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this
 
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Indenture or under applicable law with respect to any transfer of any interest in any Debenture (including any transfers between or among Agent Members or beneficial holders of interests in any Global Debenture) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
Section 2.06 . Mutilated, Destroyed, Lost or Stolen Debentures. In case any Debenture shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its written request the Trustee or an authenticating agent appointed by the Trustee shall authenticate and make available for delivery, a new Debenture, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost or stolen. In every case, the applicant for a substituted Debenture shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Debenture and of the ownership thereof.
Following receipt by the Trustee or such authenticating agent, as the case may be, of satisfactory security or indemnity and evidence, as described in the preceding paragraph, the Trustee or such authenticating agent may authenticate any such substituted Debenture and make available for delivery such Debenture. Upon the issuance of any substituted Debenture, the Company may require the payment by the holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Debenture which has matured or is about to mature or has been called for redemption or has been tendered for repurchase upon a Fundamental Change (and not withdrawn) or has been surrendered for repurchase on a Repurchase Date (and not withdrawn) or is to be converted into Common Stock, cash or combination of cash and Common Stock shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debenture, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Debenture), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or in connection with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence to their satisfaction of the destruction, loss or theft of such Debenture and of the ownership thereof.
 
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Every substitute Debenture issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any Debenture is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debenture shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. To the extent permitted by law, all Debentures shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment or conversion or redemption or repurchase of mutilated, destroyed, lost or stolen Debentures and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment or conversion or redemption or repurchase of negotiable instruments or other securities without their surrender.
Section 2.07 . Temporary Debentures. Pending the preparation of Debentures in certificated form, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon the written request of the Company, authenticate and deliver temporary Debentures (printed or lithographed). Temporary Debentures shall be issuable in any authorized denomination, and substantially in the form of the Debentures in certificated form, but with such omissions, insertions and variations as may be appropriate for temporary Debentures, all as may be determined by the Company. Every such temporary Debenture shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Debentures in certificated form. Without unreasonable delay, the Company will execute and deliver to the Trustee or such authenticating agent Debentures in certificated form and thereupon any or all temporary Debentures may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 5.02 and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Debentures an equal aggregate Original Principal Amount of Debentures in certificated form. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Debentures in certificated form authenticated and delivered hereunder.
Section 2.08 . Cancellation of Debentures. All Debentures surrendered for the purpose of payment, redemption, repurchase, conversion, exchange or registration of transfer shall, if surrendered to the Company or any Paying Agent or any Debenture Registrar or any Conversion Agent, be surrendered to the
 
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Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by it, and no Debentures shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of such canceled Debentures in accordance with its customary procedures. If the Company shall acquire any of the Debentures, such acquisition shall not operate as a redemption, repurchase or satisfaction of the indebtedness represented by such Debentures unless and until the same are delivered to the Trustee for cancellation.
Section 2.09 . CUSIP Numbers. The Company in issuing the Debentures may use “ CUSIP ” or “ ISIN ” numbers and/or similar numbers (if then generally in use), and, if so, the Trustee shall use “ CUSIP ” and/or “ ISIN ” numbers in notices of redemption as a convenience to Debentureholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Debentures or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debentures, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the “ CUSIP ” and/or similar numbers.
Section 2.10 . Ranking. The indebtedness of the Company arising under or in connection with this Indenture and every outstanding Debenture issued under this Indenture from time to time constitutes and will constitute a direct, unsecured and unsubordinated general obligation of the Company, ranking equally with other existing and future unsecured and unsubordinated Indebtedness of the Company and ranking senior in right of payment to any future Indebtedness of the Company that is expressly made subordinate to the Debentures by the terms of such Indebtedness. For purposes of this Section 2.10 only, “ Indebtedness ” means, without duplication, the principal or face amount of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments (or reimbursement obligations with respect thereto), (iv) all obligations to pay the deferred purchase price of property or services, (v) all obligations as lessee which are capitalized in accordance with generally accepted accounting principles, and (vi) all Indebtedness of others guaranteed by the Company or for which the Company is legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).
ARTICLE 3
R EDEMPTION AND R EPURCHASE OF D EBENTURES
Section 3.01 . Company’s Right to Redeem. Prior to June 20, 2011, the Debentures will not be redeemable at the Company’s option. At any time on or
 
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after June 20, 2011 and prior to Stated Maturity, the Company, at its option, may redeem the Debentures, in whole or in part, in accordance with the provisions of Section 3.02, Section 3.03 and Section 3.04 on the Redemption Date for a redemption price (the “ Redemption Price ”) in cash equal to 100% of the Accreted Principal Amount of the Debentures to be redeemed together in each case with accrued and unpaid Interest on the Debentures redeemed to but excluding the Redemption Date.
Section 3.02 . Notice of Optional Redemption ; Selection of Debentures.
(a) In case the Company shall desire to exercise the right to redeem all or, as the case may be, any part of the Debentures pursuant to Section 3.01, it shall fix a date for redemption (the “ Redemption Date ”) and it or, at its written request received by the Trustee not fewer than forty-five (45) days prior (or such shorter period of time as may be acceptable to the Trustee) to the Redemption Date, the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed a notice of such redemption (a “ Redemption Notice ”) not fewer than thirty (30) nor more than sixty (60) days prior to the Redemption Date to each holder of Debentures so to be redeemed as a whole or in part at its last address as the same appears on the Debenture Register; provided that if the Company shall give such notice, it shall also give written notice of the Redemption Date to the Trustee. Such mailing shall be by first class mail. The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debenture designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debenture. Concurrently with the mailing of any such Redemption Notice, the Company shall issue a press release announcing such redemption, the form and content of which press release shall be determined by the Company in its sole discretion. The failure to issue any such press release or any defect therein shall not affect the validity of the Redemption Notice or any of the proceedings for the redemption of any Debenture called for redemption.
(b) Each such Redemption Notice shall specify the aggregate Original Principal Amount of Debentures to be redeemed, the CUSIP, ISIN or similar number or numbers of the Debentures being redeemed, the Redemption Date (which shall be a Business Day), the Redemption Price at which Debentures are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender of such Debentures, that Interest accrued to the Redemption Date will be paid as specified in said notice, and that on and after said date Interest thereon or on the portion thereof to be redeemed will cease to accrue and the principal amount will cease to accrete. Such notice shall also state the current Conversion Rate and the date on which the right to convert such Debentures or portions thereof into Common Stock will expire. If fewer than all
 
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the Debentures are to be redeemed, the Redemption Notice shall identify the Debentures to be redeemed (including CUSIP, ISIN or similar numbers, if any). In case any Debenture is to be redeemed in part only, the Redemption Notice shall state the portion of the Original Principal Amount thereof to be redeemed and shall state that, on and after the Redemption Date, upon surrender of such Debenture, a new Debenture or Debentures in Original Principal Amount equal to the unredeemed portion thereof will be issued.
(c) On or prior to the Redemption Date specified in the Redemption Notice given as provided in this Section 3.02, the Company will deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 5.04) an amount of money in immediately available funds sufficient to redeem on the Redemption Date all the Debentures (or portions thereof) so called for redemption (other than those theretofore surrendered for conversion into Common Stock) at the appropriate Redemption Price; provided that if such payment is made on the Redemption Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m., New York City time, on such date. The Company shall be entitled to retain any interest, yield or gain on amounts deposited with the Trustee or any Paying Agent pursuant to this Section 3.02(c) in excess of amounts required hereunder to pay the Redemption Price. Subject to the last sentence of Section 8.05, if any Debenture called for redemption is converted pursuant hereto prior to such Redemption Date, any money deposited with the Trustee or any Paying Agent or so segregated and held in trust for the redemption of such Debenture shall be paid to the Company upon its written request, or, if then held by the Company, shall be discharged from such trust. Whenever any Debentures are to be redeemed, the Company will give the Trustee written notice in the form of an Officers’ Certificate not fewer than forty-five (45) days (or such shorter period of time as may be acceptable to the Trustee) prior to the Redemption Date as to the aggregate Original Principal Amount of Debentures to be redeemed.
(d) If less than all of the outstanding Debentures are to be redeemed, the Trustee shall select the Debentures or portions thereof of the Global Debenture or the Debentures in certificated form to be redeemed (in Original Principal Amounts of $1,000 or integral multiples thereof) by lot, on a pro rata basis or by another method the Trustee deems fair and appropriate. If any Debenture selected for partial redemption is submitted for conversion in part after such selection, the portion of such Debenture submitted for conversion shall be deemed (so far as may be possible) to be from the portion selected for redemption. The Debentures (or portions thereof) so selected shall be deemed duly selected for redemption for all purposes hereof, notwithstanding that any such Debenture is submitted for conversion in part before the mailing of the Redemption Notice.
 
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Upon any redemption of less than all of the outstanding Debentures, the Company and the Trustee may (but need not), solely for purposes of determining the pro rata allocation among such Debentures as are unconverted and outstanding at the time of redemption, treat as outstanding any Debentures surrendered for conversion during the period of fifteen (15) days next preceding the mailing of a Redemption Notice and may (but need not) treat as outstanding any Debenture authenticated and delivered during such period in exchange for the unconverted portion of any Debenture converted in part during such period.
Section 3.03 . Payment of Debentures Called for Redemption by the Company. If notice of redemption has been given as provided in Section 3.02, the Debentures or portion of Debentures with respect to which such notice has been given shall, unless converted into Common Stock pursuant to the terms hereof, become due and payable on the Redemption Date and at the place or places stated in such notice at the applicable Redemption Price, and on and after the Redemption Date (unless the Company shall default in the payment of the Redemption Price). Interest on the Debentures or portion of Debentures so called for redemption shall cease to accrue and the principal amount of the Debentures will cease to accrete on and after the Redemption Date (unless the Company shall default in the payment of the Redemption Price) and after the close of business on the second Business Day immediately preceding the Redemption Date, such Debentures shall cease to be convertible into Common Stock and, except as provided in Section 8.05, to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such Debentures except the right to receive the Redemption Price thereof. On presentation and surrender of such Debentures at a place of payment in said notice specified, the said Debentures or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price; provided that if the applicable Redemption Date is an Interest Payment Date, the Interest payable on such Interest Payment Date shall be paid on such Interest Payment Date to the holders of record of such Debentures on the applicable record date instead of the holders surrendering such Debentures for redemption on such date.
Upon presentation of any Debenture redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debenture or Debentures, of authorized denominations, in Original Principal Amount equal to the unredeemed portion of the Debentures so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Debentures or mail any Redemption Notice during the continuance of a default in payment of Interest on the Debentures. If any Debenture called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, continue to bear interest at the rate borne by the Debenture, compounded semi-annually, and such Debenture shall remain
 
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convertible into Common Stock, cash or a combination of cash and Common Stock until the Accreted Principal Amount and Interest shall have been paid or duly provided for. The Company will notify all of the holders if the Company redeems any of the Debentures.
Section 3.04 . [Reserved].
Section 3.05 . Repurchase of Debentures by the Company at Option of Holders upon a Fundamental Change.
(a) If a Fundamental Change shall occur at any time prior to Stated Maturity, each holder shall have the right, at such holder’s option, to require the Company to repurchase for cash any or all of such holder’s Debentures, or any portion of the Original Principal Amount thereof that is equal to $1,000 or an integral multiple of $1,000, on the date specified in the Fundamental Change Repurchase Notice, which date shall be no more than thirty (30) days after the date of the Fundamental Change Repurchase Notice (subject to extension to comply with applicable law) (the “ Fundamental Change Repurchase Date ”). The Company shall repurchase such Debentures at a price (the “ Fundamental Change Repurchase Price ”) equal to 100% of the Accreted Principal Amount thereof plus any accrued and unpaid Interest to but excluding the Fundamental Change Repurchase Date; provided that if the applicable Fundamental Change Repurchase Date is an Interest Payment Date, the Interest payable on such Interest Payment Date shall be paid on such Interest Payment Date to the holders of record of such Debentures on the applicable record date instead of the holders surrendering such Debentures for repurchase on such date.
(b) On or before the thirtieth (30 th ) day after the occurrence of a Fundamental Change, the Company, or at its written request the Trustee in the name of and at the expense of the Company (which request must be received by the Trustee at least five (5) Business Days prior to the date the Trustee is requested to give notice as described below, unless the Trustee shall agree to a shorter period), shall mail or cause to be mailed, by first class mail, to all holders of record on such date a notice (the “ Fundamental Change Repurchase Notice ”) of the occurrence of such Fundamental Change and of the repurchase right at the option of the holders arising as a result thereof to each holder of Debentures at its last address as the same appears on the Debenture Register; provided that if the Company shall give such notice, it shall also give written notice of the Fundamental Change to the Trustee and Paying Agent, if other than the Trustee, at such time as it is mailed to Debentureholders. Such notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. Each Fundamental Change Repurchase Notice shall state, among other things:
(i) the events causing the Fundamental Change;
 
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(ii) the date of the Fundamental Change;
(iii) the last date on which a holder may exercise the repurchase right;
(iv) the Fundamental Change Repurchase Price, excluding accrued and unpaid Interest, the applicable Conversion Rate at the time of such notice (and any applicable adjustments to the Conversion Rate) and, to the extent known at the time of such notice, the amount of Interest that will be payable with respect to the Debentures on the Fundamental Change Repurchase Date;
(v) the Fundamental Change Repurchase Date;
(vi) the name and address of the Paying Agent and the Conversion Agent;
(vii) that Debentures as to which a Fundamental Change Repurchase Election has been given by the holder may be converted only if the election has been withdrawn by the holder in accordance with the terms of this Indenture; provided that the Debentures are otherwise convertible in accordance with Section 15.01;
(viii) that the holder shall have the right to withdraw any Debentures surrendered prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date (or any such later time as may be required by applicable law);
(ix) a description of the procedures which a Debentureholder must follow to exercise such repurchase right or to withdraw any surrendered Debentures;
(x) the CUSIP, ISIN or similar number or numbers of the Debentures (if then generally in use); and
(xi) briefly, the conversion rights of the Debentures.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Debentureholders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Debentures pursuant to this Section 3.05.
(c) Debentures shall be repurchased pursuant to this Section 3.05 at the option of the holder upon:
(i) delivery to the Trustee (or other Paying Agent appointed by the Company) by a holder of a duly completed notice (a “ Fundamental Change Repurchase Election ”) in the form set forth on the reverse of the Debenture at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date (subject to extension to comply with applicable law) stating:
(A) if certificated, the certificate numbers of the Debentures which the holder shall deliver to be repurchased;
 
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(B) the portion of the Original Principal Amount of the Debentures that the holder shall deliver to be repurchased, which portion must be $1,000 or an integral multiple thereof; and
(C) that such Debentures shall be repurchased as of the Fundamental Change Repurchase Date pursuant to the terms and conditions specified in the Debentures and in the Indenture; and
(ii) delivery or book-entry transfer of the Debentures to the Trustee (or other Paying Agent appointed by the Company) simultaneously with or at any time after delivery of the Fundamental Change Repurchase Election (together with all necessary endorsements) at the Corporate Trust Office of the Trustee (or other Paying Agent appointed by the Company), such delivery or transfer being a condition to receipt by the holder of the Fundamental Change Repurchase Price therefor; provided that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 3.05 only if the Debentures so delivered or transferred to the Trustee (or other Paying Agent appointed by the Company) shall conform in all respects to the description thereof in the related Fundamental Change Repurchase Election. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Debenture for repurchase shall be determined by the Company, whose determination shall be final and binding absent manifest error.
If the Debentures are not in certificated form, holders must provide notice of their election in accordance with the appropriate procedures of the Depositary.
Section 3.06 . Repurchase of Debentures by the Company at Option of Holders on Specified Dates.
(a) On each of June 15, 2011, December 15, 2014, June 15, 2019, December 15, 2024 and June 15, 2029 (each, a “ Company Repurchase Date ”), each holder shall have the right, at such holder’s option, to require the Company to repurchase for cash all of such holder’s Debentures, or any portion of the
 
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Original Principal Amount thereof that is an integral multiple of $1,000. The Company shall repurchase such Debentures at a price (the “ Company Repurchase Price ”) equal to 100% of the Accreted Principal Amount thereof plus any accrued and unpaid Interest to but excluding the Company Repurchase Date; provided that if the applicable Company Repurchase Date is an Interest Payment Date, the Interest payable on such Interest Payment Date shall be paid on such Interest Payment Date to the holders of record of such Debentures on the applicable record date instead of the holders surrendering such Debentures for repurchase on such date.
(b) On or before the twentieth (20 th ) Business Day prior to each Company Repurchase Date, the Company, or at its written request the Trustee in the name of and at the expense of the Company (which request must be received by the Trustee at least five (5) Business Days prior to the date the Trustee is requested to give notice as described below, unless the Trustee shall agree to a shorter period), shall mail or cause to be mailed, by first class mail, to all holders of record on such date a notice (the “ Company Repurchase Notice ”) to each holder of Debentures at its last address as the same appears on the Debenture Register, and to beneficial owners as required by applicable law; provided that if the Company shall give such notice, it shall also give written notice to the Trustee and Paying Agent, if other than the Trustee, at such time as it is mailed to Debentureholders. Such notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. Each Company Repurchase Notice shall state, among other things:
(i) the Company Repurchase Price, excluding accrued and unpaid Interest, the applicable Conversion Rate at the time of such notice (and any applicable adjustments to the Conversion Rate) and, to the extent known at the time of such notice, the amount of Interest that will be payable with respect to the Debentures on the Company Repurchase Date;
(ii) the Company Repurchase Date;
(iii) the last date on which a holder may exercise the repurchase right;
(iv) the name and address of the Paying Agent and the Conversion Agent;
(v) that Debentures as to which a Company Repurchase Election has been given by the holder may be converted only if the election has been withdrawn by the holder in accordance with the terms of this Indenture; provided that the Debentures are otherwise convertible in accordance with Section 15.01;
 
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(vi) that the holder shall have the right to withdraw any Debentures surrendered prior to the close of business on the Business Day immediately preceding the Company Repurchase Date (or any such later time as may be required by applicable law);
(vii) a description of the procedures which a Debentureholder must follow to exercise such repurchase right or to withdraw any surrendered Debentures;
(viii) the CUSIP, ISIN or similar number or numbers of the Debentures (if then generally in use); and
(ix) briefly, the conversion rights of the Debentures.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Debentureholders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Debentures pursuant to this Section 3.06.
(c) Debentures shall be repurchased pursuant to this Section 3.06 at the option of the holder upon:
(i) delivery to the Trustee (or other Paying Agent appointed by the Company) by a holder of a duly completed notice (a “ Company Repurchase Election ”) in the form set forth on the reverse of the Debenture at any time from the opening of business on the 20 th Business Day preceding the Company Repurchase Date until the close of business on the Business Day immediately preceding the Company Repurchase Date stating:
(A) if certificated, the certificate numbers of the Debentures which the holder shall deliver to be repurchased;
(B) the portion of the Original Principal Amount of the Debentures that the holder shall deliver to be repurchased, which portion must be $1,000 or an integral multiple thereof; and
(C) that such Debentures shall be repurchased as of the Company Repurchase Date pursuant to the terms and conditions specified in the Debentures and in the Indenture; and
(ii) delivery or book-entry transfer of the Debentures to the Trustee (or other Paying Agent appointed by the Company) simultaneously with or at any time after delivery of the Company Repurchase Election (together with all necessary endorsements) at the Corporate Trust Office of the Trustee (or other Paying Agent appointed by
 
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the Company), such delivery or transfer being a condition to receipt by the holder of the Company Repurchase Price therefor; provided that such Company Repurchase Price shall be so paid pursuant to this Section 3.06 only if the Debentures so delivered or transferred to the Trustee (or other Paying Agent appointed by the Company) shall conform in all respects to the description thereof in the related Company Repurchase Election. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Debenture for repurchase shall be determined by the Company, whose determination shall be final and binding absent manifest error.
If the Debentures are not in certificated form, holders must provide notice of their election in accordance with the appropriate procedures of the Depositary.
Section 3.07 . [Reserved].
Section 3.08 . Conditions and Procedures for Repurchase at Option of Holders.
(a) The Company shall repurchase from the holder thereof, pursuant to Section 3.05 or Section 3.06, a portion of a Debenture, if the Original Principal Amount of such portion is $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to the repurchase of all of a Debenture also apply to the repurchase of such portion of such Debenture. Upon presentation of any Debenture repurchased in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debenture or Debentures, of any authorized denomination, in aggregate Original Principal Amount equal to the portion of the Debentures presented not repurchased.
(b) On or prior to a Repurchase Date, the Company will deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 5.04) an amount of money sufficient to repurchase on the Repurchase Date all the Debentures or portions thereof to be repurchased on such date at the Repurchase Price; provided that if such deposit is made on the Repurchase Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m., New York City time, on such date.
If the Trustee or other Paying Agent appointed by the Company, or the Company or an Affiliate of the Company, if it or such Affiliate is acting as the Paying Agent, holds money sufficient to pay the aggregate Repurchase Price of all the Debentures or portions thereof that are to be repurchased on the day immediately preceding the Repurchase Date, then, on and after such Repurchase Date (i) such Debentures will cease to be outstanding, (ii) Interest on such
 
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Debentures will cease to accrue, (iii) the principal will cease to accrete (whether or not book-entry transfer of the Debentures has been made or the Debentures have been delivered to the Trustee or Paying Agent) and (iv) all other rights of the holders of such Debentures will terminate (other than the right to receive the Repurchase Price upon transfer or delivery of the Debentures).
(c) Upon receipt by the Trustee (or other Paying Agent appointed by the Company) of a Repurchase Election, the holder of the Debenture in respect of which such Repurchase Election was given shall (unless such notice is validly withdrawn) thereafter be entitled to receive solely the Repurchase Price with respect to such Debenture. Such Repurchase Price shall be paid to such holder, subject to receipt of funds and/or Debentures by the Trustee (or other Paying Agent appointed by the Company), promptly (but in no event more than five (5) Business Days) following the later of (x) the Repurchase Date with respect to such Debenture (provided the holder has satisfied the conditions in Section 3.05(c) or Section 3.06(c), as applicable) and (y) the time of book-entry transfer or delivery of such Debenture to the Trustee (or other Paying Agent appointed by the Company) by the holder thereof in the manner required by Section 3.05(c) or Section 3.06(c), as applicable. Debentures in respect of which a Repurchase Election has been given by the holder thereof may not be converted pursuant to Article 15 hereof on or after the date of the delivery of such Repurchase Election unless such notice has first been validly withdrawn.
(d) Notwithstanding anything herein to the contrary, any holder delivering to the office of the Trustee (or other Paying Agent appointed by the Company) a Repurchase Election shall have the right to withdraw such election, in whole or in part, at any time prior to the close of business on the Business Day preceding the Repurchase Date (or any such later time as may be required by applicable law) by delivery of a written notice of withdrawal to the Trustee (or other Paying Agent appointed by the Company) specifying:
(i) the Original Principal Amount of the Debenture with respect to which such notice of withdrawal is being submitted, and
(ii) the certificate number, if any, of the Debenture in respect of which such notice of withdrawal is being submitted, or the appropriate Depositary information if the Debenture in respect of which such notice of withdrawal is being submitted is represented by a Global Debenture,
(iii) the Original Principal Amount, if any, of such Debenture which remains subject to the original Repurchase Election and which has been or will be delivered for repurchase by the Company.
 
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If the Debentures are not in certificated form, holders must provide notice of their withdrawal in accordance with the appropriate procedures of the Depositary.
The Trustee (or other Paying Agent appointed by the Company) shall promptly notify the Company of the receipt by it of any Repurchase Election or written notice of withdrawal thereof.
(e) The Company will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act to the extent then applicable in connection with the repurchase rights of the holders of Debentures in the event of a Fundamental Change or on any Company Repurchase Date. If then required by applicable rules, the Company will file a Schedule TO or any other schedule required in connection with any offer by the Company to repurchase Debentures.
(f) There shall be no repurchase of any Debentures pursuant to Section 3.05 or Section 3.06 if there has occurred at any time prior to, and is continuing on, the Repurchase Date an Event of Default (other than an Event of Default that is cured by the payment of the Repurchase Price with respect to such Debentures). The Paying Agent will promptly return to the respective holders thereof any Debentures (x) with respect to which a Repurchase Election has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Repurchase Price with respect to such Debentures) in which case, upon such return, the Repurchase Election with respect thereto shall be deemed to have been withdrawn.
(g) The Trustee (or other Paying Agent appointed by the Company) shall return to the Company any cash that remains unclaimed as provided in Section 13.03, together with interest, if any, thereon, held by them for the payment of the Repurchase Price; provided that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.08(b) exceeds the aggregate Repurchase Price of the Debentures or portions thereof which the Company is obligated to purchase as of the Repurchase Date then, unless otherwise agreed in writing with the Company, promptly after the Business Day following the Repurchase Date, the Trustee shall return any such excess to the Company together with interest, if any, thereon.
(h) In the case of a reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance to which Section 15.06 applies, in which the Common Stock of the Company is changed or exchanged as a result into the right to receive cash, securities or other property, which includes shares of Common Stock of the Company or shares of common stock of another Person that are, or upon issuance will be, traded on a United States national securities exchange or approved for trading on an established automated over-the-counter trading market in the United States and such shares constitute at the time
 
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such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such cash, securities or other property (as determined by the Company, which determination shall be conclusive and binding), then the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (accompanied by an Opinion of Counsel that such supplemental indenture complies with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) modifying the provisions of this Indenture relating to the right of holders of the Debentures to cause the Company to repurchase the Debentures following a Fundamental Change, including without limitation the applicable provisions of this Article 3 and the definition of Fundamental Change, as appropriate, as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions apply to such other Person if different from the Company (in lieu of the Company).
ARTICLE 4
C ONTINGENT I NTEREST
Section 4.01 . Contingent Interest. Additional interest (“ Contingent Interest ”) will accrue on each Debenture during a Contingent Interest Period, beginning with the Contingent Interest Period commencing on June 20, 2011, if the average Trading Price of the Debentures during the Applicable Five-Day Trading Period immediately preceding the first day of the applicable Contingent Interest Period equals or exceeds 130% of the Accreted Principal Amount of the Debentures. On any Interest Payment Date when Contingent Interest shall be payable, the amount of Contingent Interest payable with respect to the Contingent Interest Period per $1,000 Original Principal Amount of Debentures shall equal 0.125% of the average Trading Price during the Applicable Five-Day Trading Period with respect to such Contingent Interest Period.
The Trustee’s sole responsibility pursuant to this Section 4.01 shall be to obtain the bids for determining the Trading Price of the Debentures for each Trading Day during the Applicable Five-Day Trading Period and to provide such information to the Company, to the extent that the Trustee is then the Bid Solicitation Agent. The Company shall determine the Trading Price and whether holders are entitled to receive Contingent Interest, and if so, provide notice pursuant to Section 4.03. Notwithstanding any term contained in this Indenture or any other document to the contrary, the Trustee shall have no responsibilities, duties or obligations for or with respect to (i) determining whether the Company must pay Contingent Interest or (ii) determining the amount of Contingent Interest, if any, payable by the Company.
 
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Section 4.02 . Payment of Contingent Interest. Contingent Interest for any Contingent Interest Period shall be paid on the immediately succeeding Interest Payment Date to the Person in whose name any Debenture (or its Predecessor Debenture) is registered on the Debenture Register at the close of business on the corresponding Regular Record Date. Contingent Interest due under this Article 4 shall be treated for all purposes of this Indenture like any other interest accruing on the Debentures.
Section 4.03 . Contingent Interest Notification.
(a) As soon as practicable following the first Business Day of a Contingent Interest Period for which Contingent Interest will be payable pursuant to Section 4.01, the Company shall issue a press release stating that Contingent Interest will be paid on the Debentures and identifying such Contingent Interest Period and publish the information on its website on the World Wide Web.
(b) On any Interest Payment Date on which Contingent Interest is payable pursuant to this Article 4, the Company shall deliver notice to the Trustee, issue a press release stating the amount of such Contingent Interest and setting the forth the manner in which such amount was calculated and publish such information on its website on the World Wide Web.
ARTICLE 5
P ARTICULAR C OVENANTS OF THE C OMPANY
Section 5.01 . Payment of Principal and Interest. The Company covenants and agrees that it will duly and punctually pay or cause to be paid the Accreted Principal Amount of (including any Redemption Price or Repurchase Price pursuant to Article 3) and Interest on each of the Debentures at the places, at the respective times and in the manner provided herein and in the Debentures.
Section 5.02 . Maintenance of Office or Agency. The Company will maintain an office or agency in such cities as it shall determine, the Debentures may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion, redemption or repurchase and where notices and demands to or upon the Company in respect of the Debentures and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency not designated or appointed by the Trustee. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.
 
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The Company may also from time to time designate co-registrars and one or more offices or agencies where the Debentures may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee as Paying Agent, Debenture Registrar, Custodian, Bid Solicitation Agent and Conversion Agent, and each of the Corporate Trust Office and the office of agency of the Trustee shall be considered as one such office or agency of the Company for each of the aforesaid purposes.
So long as the Trustee is the Debenture Registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the third paragraph of Section 8.11. If co-registrars have been appointed in accordance with this Section, the Trustee shall mail such notices only to the Company and the holders of Debentures it can identify from its records.
Section 5.03 . Appointments to Fill Vacancies in Trustee’s Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder.
Section 5.04 . Provisions as to Paying Agent. (a) If the Company shall appoint a Paying Agent other than the Trustee, or if the Trustee shall appoint such a Paying Agent, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 5.04:
(1) that it will hold all sums held by it as such agent for the payment of the Accreted Principal Amount of or Interest on the Debentures (whether such sums have been paid to it by the Company or by any other obligor on the Debentures) in trust for the benefit of the holders of the Debentures;
(2) that it will give the Trustee notice of any failure by the Company (or by any other obligor on the Debentures) to make any payment of the Accreted Principal Amount of or Interest on the Debentures when the same shall be due and payable; and
(3) that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.
 
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The Company shall, on or before each due date of the Accreted Principal Amount of or Interest on the Debentures, deposit with the Paying Agent a sum (in funds which are immediately available on the due date for such payment) sufficient to pay such Accreted Principal Amount or Interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action; provided that if such deposit is made on the due date, such deposit shall be received by the Paying Agent by 10:00 a.m., New York City time, on such date.
(b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the Accreted Principal Amount of or Interest on the Debentures, set aside, segregate and hold in trust for the benefit of the holders of the Debentures a sum sufficient to pay such Accreted Principal Amount or Interest so becoming due and will promptly notify the Trustee of any failure to take such action and of any failure by the Company (or any other obligor under the Debentures) to make any payment of the Accreted Principal Amount of or Interest on the Debentures when the same shall become due and payable.
(c) Anything in this Section 5.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by the Company or any Paying Agent hereunder as required by this Section 5.04, such sums to be held by the Trustee upon the trusts herein contained and upon such payment by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability with respect to such sums.
(d) Anything in this Section 5.04 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 5.04 is subject to Sections 13.02 and 13.03.
The Trustee shall not be responsible for the actions of any other Paying Agents (including the Company if acting as its own Paying Agent) and shall have no control of any funds held by such other Paying Agents.
Section 5.05 . Existence. Subject to Article 12, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights (charter and statutory); provided that the Company shall not be required to preserve any such right if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Debentureholders.
Section 5.06 . Rule 144A Information Requirement. Within the period prior to the expiration of the holding period applicable to sales thereof under Rule
 
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144(k) under the Securities Act (or any successor provision), the Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to any holder or beneficial holder of Debentures or any Common Stock issued upon conversion thereof which continue to be Restricted Securities in connection with any sale thereof and any prospective purchaser of Debentures or such Common Stock designated by such holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any holder or beneficial holder of the Debentures or such Common Stock and it will take such further action as any holder or beneficial holder of such Debentures or such Common Stock may reasonably request, all to the extent required from time to time to enable such holder or beneficial holder to sell its Debentures or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the request of any holder or any beneficial holder of the Debentures or such Common Stock, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.
Section 5.07 . Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Accreted Principal Amount of or Interest on the Debentures as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
Section 5.08 . Compliance Certificate. The Company shall deliver to the Trustee, within one hundred twenty (120) days after the end of each fiscal year of the Company (which fiscal year of the Company is presently the twelve calendar months ending December 31), a certificate signed by either the principal executive officer, principal financial officer or principal accounting officer of the Company, stating whether or not to the best knowledge of the signer thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and the status thereof of which the signer may have knowledge.
The Company will deliver to the Trustee, promptly upon becoming aware of (i) any default in the performance or observance of any covenant, agreement or
 
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condition contained in this Indenture, or (ii) any Event of Default, an Officers’ Certificate specifying with particularity such default or Event of Default and further stating what action the Company has taken, is taking or proposes to take with respect thereto.
Any notice required to be given under this Section 5.08 shall be delivered to a Responsible Officer of the Trustee at its Corporate Trust Office.
Section 5.09 . Additional Amounts Notice. In the event that the Company is required to pay Additional Amounts to holders of Debentures pursuant to the Registration Rights Agreement, the Company will provide written notice (“ Additional Amounts Notice ”) to the Trustee of its obligation to pay Additional Amounts no later than fifteen (15) days prior to the proposed payment date for the Additional Amounts, and the Additional Amounts Notice shall set forth the amount of Additional Amounts to be paid by the Company on such payment date. The Trustee shall not at any time be under any duty or responsibility to any holder of Debentures to determine the Additional Amounts, or with respect to the nature, extent or calculation of the amount of Additional Amounts when made, or with respect to the method employed in such calculation of the Additional Amounts.
Section 5.10 . Contingent Debt Tax Treatment. The Company agrees and, by acceptance of a Debenture, each beneficial holder of a Debenture will be deemed to have agreed to treat the Debentures as indebtedness of the Company for U.S. federal income tax purposes that are subject to the regulations governing contingent payment debt instruments and to be bound (in the absence of an administrative determination or judicial ruling to the contrary) by the Company’s determination of the comparable yield and projected payment schedule within the meaning of the regulations governing contingent payment debt instruments. A holder of Debentures may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule for the Debentures, determined by the Company pursuant to Treas. Reg. Sec. 1.1275-4, by submitting a written request for it to the Company at the following address: Kellwood Company, 600 Kellwood Parkway, Chesterfield, Missouri 63017, Attention: Treasurer.
Section 5.11. Calculation of Original Issue Discount . The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of Tax Original Issue Discount (including daily rates and accrual periods) accrued on outstanding Debentures as of the end of such year and (ii) such other specific information relating to such Tax Original Issue Discount as may then be required under the Internal Revenue Code of 1986, as amended from time to time, or the Treasury regulations promulgated thereunder.
 
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ARTICLE 6
D EBENTUREHOLDERS ’ L ISTS AND R EPORTS BY THE C OMPANY AND THE T RUSTEE
Section 6.01 . Debentureholders’ Lists. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semiannually, not more than fifteen (15) days after each June 1 and December 1 in each year beginning with December 1, 2004, and at such other times as the Trustee may request in writing, within thirty (30) days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the holders of Debentures as of a date not more than fifteen (15) days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no such list need be furnished by the Company to the Trustee so long as the Trustee is acting as the sole Debenture Registrar.
Section 6.02 . Preservation and Disclosure of Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Debentures contained in the most recent list furnished to it as provided in Section 6.01 or maintained by the Trustee in its capacity as Debenture Registrar or co-registrar in respect of the Debentures, if so acting. The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished.
(b) The rights of Debentureholders to communicate with other holders of Debentures with respect to their rights under this Indenture or under the Debentures, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Debentureholder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of holders of Debentures made pursuant to the Trust Indenture Act.
Section 6.03 . Reports by Trustee. (a) Within sixty (60) days after December 15 of each year commencing with the year 2004, the Trustee shall transmit to holders of Debentures such reports dated as of December 15 of the year in which such reports are made concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. In the event that no events have occurred under the applicable sections of the Trust Indenture Act, the Trustee shall be under no duty or obligation to provide such reports.
(b) A copy of such report shall, at the time of such transmission to holders of Debentures, be filed by the Trustee with each stock exchange and automated quotation system upon which the Debentures are listed and with the Company. The Company will promptly notify the Trustee in writing when the Debentures are listed on any stock exchange or automated quotation system or delisted therefrom.
 
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Section 6.04 . Reports by Company. The Company shall file with the Trustee (and the Commission if at any time after the Indenture becomes qualified under the Trust Indenture Act), and transmit to holders of Debentures, such information, documents and other reports and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act, whether or not the Debentures are governed by such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within fifteen (15) days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).
ARTICLE 7
R EMEDIES OF THE T RUSTEE AND D EBENTUREHOLDERS ON AN E VENT OF D EFAULT
Section 7.01 . Events of Default. In case one or more of the following events (each, an “ Event of Default ”) (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of the Accreted Principal Amount of any of the Debentures as and when the same shall become due and payable either at Stated Maturity or in connection with any redemption or repurchase, in each case pursuant to Article 3, or otherwise; or
(b) default in the payment of any installment of Interest upon any of the Debentures as and when the same shall become due and payable, and continuance of such default for a period of thirty (30) days; or
(c) failure to provide notice of the occurrence of a Fundamental Change on a timely basis as required by Section 3.05; or
 
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(d) default in the Company’s obligation to convert the Debentures into Common Stock, cash or a combination of cash and Common Stock upon the exercise of a holder’s rights pursuant to Article 15 and continuation of such default for a period of ten (10) days; or
(e) default in the Company’s obligation to repurchase the Debentures at the option of a holder upon a Fundamental Change pursuant to Section 3.05 or on specified dates pursuant to Section 3.06; or
(f) default in the Company’s obligation to redeem the Debentures after it has exercised its option to redeem; or
(g) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Debentures or in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section 7.01 specifically dealt with) continued for a period of sixty (60) days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee, or to the Company and a Responsible Officer of the Trustee by the holders of at least twenty-five percent (25%) in aggregate Original Principal Amount of the Debentures at the time outstanding determined in accordance with Section 9.04; or
(h) default with respect to the Company’s or any of its Subsidiaries’ indebtedness having a principal amount then outstanding, individually or in the aggregate, of at least $25.0 million, whether such indebtedness now exists or is hereafter incurred, which default or defaults:
(i) shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; or
(ii) shall constitute the failure to pay such indebtedness at the final stated maturity thereof (after expiration of any applicable grace period); or
(i) rendering of any final judgment or judgments for the payment of money in excess of $25.0 million against the Company (to the extent not coverted by insurance as to which the insurer does not dispute coverage) that is not discharged for any period of sixty (60) consecutive days during which a stay of enforcement shall not be in effect; or
(j) commencement by the Company of a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now
 
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or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of the property of the Company, or consent by the Company to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against the Company, or general assignment by the Company for the benefit of creditors, or failure of the Company generally to pay its debts as they become due; or
(k) commencement of an involuntary case or other proceeding against the Company seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of the property of the Company, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) consecutive days;
then, and in each and every such case (other than an Event of Default specified in Section 7.01(j) or 7.01(k)), unless the Accreted Principal Amount of all of the Debentures shall have already become due and payable, either the Trustee or the holders of not less than twenty-five percent (25%) in aggregate Original Principal Amount of the Debentures then outstanding hereunder determined in accordance with Section 9.04, by notice in writing to the Company (and to the Trustee if given by Debentureholders), may declare the Accreted Principal Amount of all the Debentures and the Interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Debentures contained to the contrary notwithstanding. If an Event of Default specified in Section 7.01(j) or 7.01(k) occurs, the Accreted Principal Amount of all the Debentures and the Interest accrued thereon shall be immediately and automatically due and payable without necessity of further action. This provision, however, is subject to the conditions that if, at any time after the Accreted Principal Amount of the Debentures shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of Interest upon all Debentures and the Accreted Principal Amount of any and all Debentures which shall have become due otherwise than by acceleration (with interest on overdue installments of Interest (to the extent that payment of such interest is enforceable under applicable law) and on such Accreted Principal Amount at the rate borne by the Debentures, to the date of such payment or deposit) and amounts due to the Trustee pursuant to Section 8.06, and if any and all defaults under this Indenture, other than the nonpayment of Accreted Principal Amount of and accrued Interest on Debentures which shall have become due by acceleration, shall have been cured or waived pursuant to Section 7.07, then and in every such case the holders of a majority in aggregate Original Principal
 
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Amount of the Debentures then outstanding, by written notice to the Company and to the Trustee, may waive all defaults or Events of Default and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or Event of Default, or shall impair any right consequent thereon. The Company shall notify in writing a Responsible Officer of the Trustee, promptly upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such waiver or rescission and annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the holders of Debentures, and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the holders of Debentures, and the Trustee shall continue as though no such proceeding had been taken.
Section 7.02 . Payments of Debentures on Default ; Suit Therefor. The Company covenants that (a) in case default shall be made in the payment of any installment of Interest upon any of the Debentures as and when the same shall become due and payable, and such default shall have continued for a period of thirty (30) days, or (b) in case default shall be made in the payment of the Accreted Principal Amount of any of the Debentures as and when the same shall have become due and payable, whether at maturity of the Debentures or in connection with any redemption, repurchase, acceleration, declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Debentures, the whole amount that then shall have become due and payable on all such Debentures for Accreted Principal Amount or Interest, as the case may be, with interest upon the overdue Accreted Principal Amount and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of Interest at the rate borne by the Debentures, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other amounts due the Trustee under Section 8.06. Until such demand by the Trustee, the Company may pay the Accreted Principal Amount of and Interest on the Debentures to the registered holders, whether or not the Debentures are overdue.
In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on the
 
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Debentures and collect in the manner provided by law out of the property of the Company or any other obligor on the Debentures wherever situated the monies adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Debentures under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the case of any other judicial proceedings relative to the Company or such other obligor upon the Debentures, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the Accreted Principal Amount of the Debentures shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 7.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of the Accreted Principal Amount and Interest owing and unpaid in respect of the Debentures, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Debentureholders allowed in such judicial proceedings relative to the Company or any other obligor on the Debentures, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due the Trustee under Section 8.06, and to take any other action with respect to such claims, including participating as a member of any official committee of creditors, as it reasonably deems necessary or advisable, and, unless prohibited by law or applicable regulations, and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Debentureholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Debentureholders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances and disbursements, including counsel fees and expenses incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses, advances and disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property which the holders of the Debentures may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or under any of the Debentures, may be enforced by the Trustee without the possession of
 
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any of the Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the holders of the Debentures.
In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceedings.
Section 7.03 . Application of Monies Collected by Trustee. Any monies or other property collected by the Trustee pursuant to this Article 7, or any monies or other property otherwise distributable in respect of the Company’s obligations under this Indenture, shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Debentures, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee (including any predecessor Trustee) under Section 8.06;
SECOND: In case the Accreted Principal Amount of the outstanding Debentures shall not have become due and be unpaid, to the payment of Interest on the Debentures in default in the order of the maturity of the installments of such Interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of Interest at the rate borne by the Debentures, such payments to be made ratably to the Persons entitled thereto;
THIRD: In case the Accreted Principal Amount of the outstanding Debentures shall have become due, by declaration or otherwise, and be unpaid, to the payment of the whole amount then owing and unpaid upon the Debentures for Accreted Principal Amount and Interest, with interest on the overdue Accreted Principal Amount and (to the extent that such interest has been collected by the Trustee) upon overdue installments of Interest at the rate borne by the Debentures, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Debentures, then to the payment of such Accreted Principal Amount and Interest without preference or priority of the Accreted Principal Amount over Interest, or of Interest over the Accreted Principal Amount, or of any installment of Interest over any other installment of Interest, or of any Debenture over any other Debenture, ratably to the aggregate of such Accreted Principal Amount and accrued and unpaid Interest; and
FOURTH: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto.
 
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Section 7.04 . Proceedings by Debentureholder. No holder of any Debenture shall have any right by virtue of or by reference to any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as hereinbefore provided, and unless also the holders of not less than twenty-five percent (25%) in aggregate Original Principal Amount of the Debentures then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable security or indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 7.07; it being understood and intended, and being expressly covenanted by the taker and holder of every Debenture with every other taker and holder and the Trustee, that no one or more holders of Debentures shall have any right in any manner whatever by virtue of or by reference to any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of Debentures, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Debentures (except as otherwise provided herein). For the protection and enforcement of this Section 7.04, each and every Debentureholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of any Debenture, the right of any holder of any Debenture to receive payment of the Accreted Principal Amount of (including any Redemption Price or Repurchase Price pursuant to Article 3) and accrued Interest on such Debenture on or after the respective due dates expressed in such Debenture, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company, shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Debentures to the contrary notwithstanding, the holder of any Debenture, without the consent of either the Trustee or the holder of any other Debenture, in its own behalf and for its own benefit, may enforce, and may institute and maintain any proceeding suitable to enforce, its rights of conversion as provided herein.
 
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Section 7.05 . Proceedings by Trustee. In case of an Event of Default, the Trustee may, in its discretion, proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
Section 7.06 . Remedies Cumulative and Continuing. Except as provided in Section 2.06, all powers and remedies given by this Article 7 to the Trustee or to the Debentureholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the holders of the Debentures, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right or power accruing upon any default or Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or any acquiescence therein, and, subject to the provisions of Section 7.04, every power and remedy given by this Article 7 or by law to the Trustee or to the Debentureholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Debentureholders.
Section 7.07 . Direction of Proceedings and Waiver of Defaults by Majority of Debentureholders. Upon provision of indemnity reasonably satisfactory to the Trustee, the holders of a majority in aggregate Original Principal Amount of the Debentures at the time outstanding determined in accordance with Section 9.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture, (b) the Trustee may take any other action which is not inconsistent with such direction and (c) the Trustee may decline to take any action that would benefit some Debentureholders to the detriment of other Debentureholders. The holders of a majority in aggregate Original Principal Amount of the Debentures at the time outstanding determined in accordance with Section 9.04 may, on behalf of the holders of all of the Debentures, waive any past default or Event of Default hereunder and its consequences except (i) a default in the payment of Interest on, or the Accreted Principal Amount of, the Debentures, (ii) a failure by the Company to convert any Debentures into Common Stock, cash or a combination of cash and Common Stock of the Company, (iii) a default in the payment of the Redemption Price pursuant to Section 3.03, (iv) a default in the payment of the Fundamental Change Repurchase Price pursuant to Section 3.05 or Company Repurchase Price pursuant to Section 3.06 or (v) a default in respect of a covenant
 
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or provision hereof which under Article 11 cannot be modified or amended without the consent of the holders of each or all Debentures then outstanding or affected thereby. Upon any such waiver, the Company, the Trustee and the holders of the Debentures shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section 7.07, said default or Event of Default shall for all purposes of the Debentures and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.
Section 7.08 . Notice of Defaults. The Trustee shall, within ninety (90) days after a Responsible Officer of the Trustee has knowledge of the occurrence of a default, mail to all Debentureholders, as the names and addresses of such holders appear upon the Debenture Register, notice of all defaults known to a Responsible Officer, unless such defaults shall have been cured or waived before the giving of such notice; provided that except in the case of default in the payment of the Accreted Principal Amount of or Interest on any of the Debentures, the Trustee shall be protected in withholding such notice if and so long as a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Debentureholders. For the purpose of this Section 7.08, the term “ default ” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
Section 7.09 . Undertaking to Pay Costs. All parties to this Indenture agree, and each holder of any Debenture by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 7.09 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any suit instituted by any Debentureholder, or group of Debentureholders, holding in the aggregate more than ten percent in Original Principal Amount of the Debentures at the time outstanding determined in accordance with Section 9.04, or to any suit instituted by any Debentureholder for the enforcement of the payment of the Accreted Principal Amount of or Interest on any Debenture on or after the due date expressed in such Debenture or to any suit for the enforcement of the right to convert any Debenture in accordance with the provisions of Article 15.
 
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ARTICLE 8
T HE T RUSTEE
Section 8.01 . Duties and Responsibilities of Trustee. The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture and the Trust Indenture Act, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture and the Trust Indenture Act against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the holders of not less than a majority in Original Principal Amount of the Debentures at the time outstanding determined as provided in Section 9.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;
 
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(d) the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-registrar with respect to the Debentures; and
(e) if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively rely on its failure to receive such notice as reason to act as if no such event occurred.
The Trustee shall not be deemed to have knowledge or notice of any default (as defined in Section 7.08) or Event of Default hereunder unless a Responsible Officer of the Trustee shall have received at the Corporate Trust Office written notice of such default or Event of Default from the Company or the holders of at least 10% in aggregate Original Principal Amount of the Debentures and such notice refers to such default or Event of Default, the Debentures and the Indenture.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section 8.01.
Section 8.02 . Reliance on Documents, Opinions, Etc. Except as otherwise provided in Section 8.01:
(a) the Trustee may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon or other paper or document (whether in its original or facsimile form) believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;
 
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(c) the Trustee may consult with counsel of its own selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Debentureholders pursuant to the provisions of this Indenture, unless such Debentureholders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and
(f) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care hereunder.
(g) the Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;
(h) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder;
(i) the Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded; and
(j) before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action which it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.
 
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Section 8.03 . No Responsibility for Recitals, Etc. The recitals contained herein and in the Debentures (except in the Trustee’s certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of any Debentures or the proceeds of any Debentures authenticated and delivered by the Trustee in conformity with the provisions of this Indenture.
Section 8.04 . Trustee, Paying Agents, Bid Solicitation Agents, Conversion Agents or Registrar May Own Debentures. The Trustee, any Paying Agent, any Bid Solicitation Agent, any Conversion Agent or Debenture Registrar, in its individual or any other capacity, may become the owner or pledgee of Debentures with the same rights it would have if it were not Trustee, Paying Agent, Bid Solicitation Agent, Conversion Agent or Debenture Registrar.
Section 8.05 . Monies to Be Held in Trust. Subject to the provisions of Section 13.03, all monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as may be agreed in writing from time to time by the Company and the Trustee.
Section 8.06 . Compensation and Expenses of Trustee. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to from time to time in writing between the Company and the Trustee, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, willful misconduct or bad faith. The Company also covenants to indemnify the Trustee and any predecessor Trustee (or any officer, director or employee of the Trustee), in any capacity under this Indenture and its agents and any authenticating agent for, and to hold them harmless against, any and all loss, liability, damage, claim or expense including
 
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taxes (other than taxes based on the income of the Trustee) incurred without negligence, willful misconduct or bad faith on the part of the Trustee or such officers, directors, employees and agent or authenticating agent, as the case may be, and arising out of or in connection with the acceptance or administration of this trust or in any other capacity hereunder, including the costs and expenses (including reasonable attorneys’ fees and expenses) of defending themselves against any claim (whether asserted by the Company, any holder or any other Person) of liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Company under this Section 8.06 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses (including reasonable attorneys’ fees and expenses), disbursements and advances shall be secured by a lien prior to that of the Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debentures. The obligation of the Company under this Section shall survive the resignation or removal of the Trustee and the satisfaction and discharge or termination of this Indenture.
When the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in Section 7.01(j) or Section 7.01(k) with respect to the Company occurs, the expenses (including reasonable attorneys’ fees and expenses) and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws.
Section 8.07 . Officers’ Certificate as Evidence. Except as otherwise provided in Section 8.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee.
Section 8.08 . Conflicting Interests of Trustee. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
Section 8.09 . Eligibility of Trustee. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000 (or if such Person is a member of a bank holding company system, its bank holding company shall have a combined capital and surplus of at least $50,000,000). If such Person publishes reports of condition at least annually,
 
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pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 8.10 . Resignation or Removal of Trustee.
(a) The Trustee may at any time resign by giving written notice of such resignation to the Company and to the holders of Debentures. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment sixty (60) days after the mailing of such notice of resignation to the Debentureholders, the resigning Trustee may, upon ten (10) Business Days’ notice to the Company and the Debentureholders, appoint a successor identified in such notice or may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor trustee, or, if any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six (6) months may, subject to the provisions of Section 7.09, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six (6) months; or
(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.09 and shall fail to resign after written request therefor by the Company or by any such Debentureholder; or
(iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
 
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then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.09, any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee; provided that if no successor Trustee shall have been appointed and have accepted appointment sixty (60) days after either the Company or the Debentureholders has removed the Trustee, or the Trustee resigns, the Trustee so removed may petition, at the expense of the Company, any court of competent jurisdiction for an appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate Original Principal Amount of the Debentures at the time outstanding may at any time remove the Trustee and nominate a successor trustee which shall be deemed appointed as successor trustee unless, within ten (10) days after notice to the Company of such nomination, the Company objects thereto, in which case the Trustee so removed or any Debentureholder, or if such Trustee so removed or any Debentureholder fails to act, the Company, upon the terms and conditions and otherwise as in Section 8.10(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 8.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 8.11.
Section 8.11 . Acceptance by Successor Trustee. Any successor trustee appointed as provided in Section 8.10 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amount then due it pursuant to the provisions of Section 8.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and
 
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powers. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property and funds held or collected by such trustee as such, except for funds held in trust for the benefit of holders of particular Debentures, to secure any amounts then due it pursuant to the provisions of Section 8.06.
No successor trustee shall accept appointment as provided in this Section 8.11 unless, at the time of such acceptance, such successor trustee shall be qualified under the provisions of Section 8.08 and be eligible under the provisions of Section 8.09.
Upon acceptance of appointment by a successor trustee as provided in this Section 8.11, the Company (or the former trustee, at the written direction and the expense of the Company) shall mail or cause to be mailed notice of the succession of such trustee hereunder to the holders of Debentures at their addresses as they shall appear on the Debenture Register. If the Company fails to mail such notice within ten (10) days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company.
Section 8.12 . Succession by Merger. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee (including any trust created by this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that in the case of any Person succeeding to all or substantially all of the corporate trust business of the Trustee, such Person shall be qualified under the provisions of Section 8.08 and eligible under the provisions of Section 8.09.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Debentures shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee or authenticating agent appointed by such predecessor trustee, and deliver such Debentures so authenticated; and in case at that time any of the Debentures shall not have been authenticated, any successor to the Trustee or any authenticating agent appointed by such successor trustee may authenticate such Debentures in the name of the successor trustee; and in all such cases such certificates shall have the full force that is provided in the Debentures or in this Indenture; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Debentures in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
 
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Section 8.13 . Preferential Collection of Claims. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Debentures), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of the claims against the Company (or any such other obligor).
ARTICLE 9
T HE D EBENTUREHOLDERS
Section 9.01 . Action by Debentureholders. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate Original Principal Amount of the Debentures may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Debentureholders in person or by agent or proxy appointed in writing, or (b) by the record of the holders of Debentures voting in favor thereof at any meeting of Debentureholders duly called and held in accordance with the provisions of Article 10, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Debentureholders. Whenever the Company or the Trustee solicits the taking of any action by the holders of the Debentures, the Company or the Trustee may fix in advance of such solicitation, a date as the record date for determining holders entitled to take such action. The record date shall be not more than fifteen (15) days prior to the date of commencement of solicitation of such action.
Section 9.02 . Proof of Execution by Debentureholders. Subject to the provisions of Sections 8.01, 8.02 and 10.05, proof of the execution of any instrument by a Debentureholder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Debentures shall be proved by the registry of such Debentures or by a certificate of the Debenture Registrar.
The record of any Debentureholders’ meeting shall be proved in the manner provided in Section 10.06.
Section 9.03 . Who Are Deemed Absolute Owners. The Company, the Trustee, any Paying Agent, any Conversion Agent and any Debenture Registrar may deem the Person in whose name such Debenture shall be registered upon the Debenture Register to be, and may treat it as, the absolute owner of such Debenture (whether or not such Debenture shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than
 
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the Company or any Debenture Registrar) for the purpose of receiving payment of or on account of the Accreted Principal Amount of and Interest on such Debenture, for conversion of such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Debenture Registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for monies payable upon any such Debenture.
Section 9.04 . Company-owned Debentures Disregarded. In determining whether the holders of the requisite aggregate Original Principal Amount of Debentures have concurred in any direction, consent, waiver or other action under this Indenture, Debentures which are owned by the Company or any other obligor on the Debentures or any Affiliate of the Company or any other obligor on the Debentures shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action, only Debentures which a Responsible Officer knows are so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 9.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Debentures and that the pledgee is not the Company, any other obligor on the Debentures or any Affiliate of the Company or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers’ Certificate listing and identifying all Debentures, if any, known by the Company to be owned or held by or for the account of any of the above described Persons, and, subject to Section 8.01, the Trustee shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts therein set forth and of the fact that all Debentures not listed therein are outstanding for the purpose of any such determination.
Section 9.05 . Revocation of Consents, Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 9.01, of the taking of any action by the holders of the percentage in aggregate Original Principal Amount of the Debentures specified in this Indenture in connection with such action, any holder of a Debenture which is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 9.02, revoke such action so far as concerns such Debenture. Except as aforesaid, any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture and of any Debentures issued in exchange or substitution therefor, irrespective of whether any notation in regard thereto is made upon such Debenture or any Debenture issued in exchange or substitution therefor.
 
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ARTICLE 10
M EETINGS OF D EBENTUREHOLDERS
Section 10.01 . Purpose of Meetings. A meeting of Debentureholders may be called at any time and from time to time pursuant to the provisions of this Article 10 for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Debentureholders pursuant to any of the provisions of Article 7;
(2) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 8;
(3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.02; or
(4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate Original Principal Amount of the Debentures under any other provision of this Indenture or under applicable law.
Section 10.02 . Call of Meetings by Trustee. The Trustee may at any time call a meeting of Debentureholders to take any action specified in Section 10.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Debentureholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 9.01, shall be mailed to holders of Debentures at their addresses as they shall appear on the Debenture Register. Such notice shall also be mailed to the Company. Such notices shall be mailed not less than twenty (20) nor more than ninety (90) days prior to the date fixed for the meeting.
Any meeting of Debentureholders shall be valid without notice if the holders of all Debentures then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the holders of all Debentures outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.
 
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Section 10.03 . Call of Meetings by Company or Debentureholders. In case at any time the Company, pursuant to a resolution of its Board of Directors, or the holders of at least ten percent (10%) in aggregate Original Principal Amount of the Debentures then outstanding, shall have requested the Trustee to call a meeting of Debentureholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within twenty (20) days after receipt of such request, then the Company or such Debentureholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 10.01, by mailing notice thereof as provided in Section 10.02.
Section 10.04 . Qualifications for Voting. To be entitled to vote at any meeting of Debentureholders a person shall (a) be a holder of one or more Debentures on the record date pertaining to such meeting or (b) be a person appointed by an instrument in writing as proxy by a holder of one or more Debentures on the record date pertaining to such meeting. The only persons who shall be entitled to be present or to speak at any meeting of Debentureholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.
Section 10.05 . Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Debentureholders, in regard to proof of the holding of Debentures and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Debentureholders as provided in Section 10.03, in which case the Company or the Debentureholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in Original Principal Amount of the Debentures represented at the meeting and entitled to vote at the meeting.
Subject to the provisions of Section 9.04, at any meeting each Debentureholder or proxyholder shall be entitled to one vote for each $1,000 Original Principal Amount of Debentures held or represented by him; provided that no vote shall be cast or counted at any meeting in respect of any Debenture challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than
 
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by virtue of Debentures held by him or instruments in writing as aforesaid duly designating him as the proxy to vote on behalf of other Debentureholders. Any meeting of Debentureholders duly called pursuant to the provisions of Section 10.02 or 10.03 may be adjourned from time to time by the holders of a majority of the aggregate Original Principal Amount of Debentures represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.
Section 10.06 . Voting. The vote upon any resolution submitted to any meeting of Debentureholders shall be by written ballot on which shall be subscribed the signatures of the holders of Debentures or of their representatives by proxy and the outstanding Original Principal Amount of the Debentures held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Debentureholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 10.02. The record shall show the Original Principal Amount of the Debentures voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
Section 10.07 . No Delay of Rights by Meeting. Nothing contained in this Article 10 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Debentureholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Debentureholders under any of the provisions of this Indenture or of the Debentures.
ARTICLE 11
S UPPLEMENTAL I NDENTURES
Section 11.01 . Supplemental Indentures Without Consent of Debentureholders. The Company, when authorized by the resolutions of the
 
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Board of Directors, and the Trustee may, from time to time, and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of the holders of Debentures pursuant to the requirements of Section 15.06 or the repurchase obligations of the Company pursuant to the requirements of Section 3.08(h).
(b) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Debentures, any property or assets;
(c) to evidence the assumption by a successor Person of the obligations of the Company pursuant to Article 12;
(d) to add to the covenants of the Company such further covenants for the benefit of the holders of Debentures, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that in respect of any such additional covenant such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;
(e) to establish the forms or terms of the Debentures;
(f) to cure any ambiguity or correct any error in this Indenture, so long as such action will not adversely affect the interests of holders, provided that any such amendment made solely to conform the provisions of this Indenture to the description of the Debentures in the offering memorandum relating to the Debentures will be deemed not to adversely affect the interests of holders;
(g) to evidence the acceptance of appointment hereunder by a successor Trustee with respect to the Debentures;
(h) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to qualify or maintain the qualification of this Indenture under the Trust Indenture Act, or under any similar federal statute hereafter enacted; or
(i) make other changes to the Indenture or forms or terms of the Debentures, provided no such change individually or in the aggregate with all other such changes has or will have a material adverse effect on the interests of the Debentureholders.
 
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Upon the written request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any supplemental indenture, the Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section 11.01 may be executed by the Company and the Trustee without the consent of the holders of any of the Debentures at the time outstanding, notwithstanding any of the provisions of Section 11.02.
Notwithstanding any other provision of the Indenture or the Debentures, the Registration Rights Agreement and the obligation to pay Additional Amounts thereunder may be amended, modified or waived in accordance with the provisions of the Registration Rights Agreement.
Section 11.02 . Supplemental Indenture with Consent of Debentureholders. With the consent (evidenced as provided in Article 9) of the holders of at least a majority in aggregate Original Principal Amount of the Debentures at the time outstanding, the Company, when authorized by the resolutions of the Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or of modifying in any manner the rights of the holders of the Debentures; provided that no such supplemental indenture shall (i) extend the Stated Maturity of any Debenture, or reduce the rate or extend the time for payment of Interest thereon, or reduce the Accreted Principal Amount thereof or the accretion rate on the debentures, or reduce any amount payable on redemption or repurchase thereof, or impair the right of any Debentureholder to institute suit for the payment thereof, or make the Accreted Principal Amount thereof or Interest thereon payable in any coin or currency other than that provided in the Debentures, or affect the obligation of the Company to redeem any Debenture on a Redemption Date in a manner adverse to the holders of Debentures, or affect the obligation of the Company to repurchase any Debenture upon the happening of a Fundamental Change in a manner adverse to the holders of Debentures, or affect the obligation of the Company to repurchase any Debenture on a Company Repurchase Date in a manner adverse to the holders of Debentures, or impair the right to convert the Debentures into
 
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Common Stock, cash or a combination of cash and Common Stock subject to the terms set forth herein, including Section 15.06, or reduce the number of shares of Common Stock, the amount of cash or the amount of other property receivable upon conversion, in each case, without the consent of the holder of each Debenture so affected, or modify any of the provisions of this Section 11.02 or Section 7.07, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the holder of each Debenture so affected, or reduce the quorum or voting requirements set forth in Article 10 or (ii) reduce the aforesaid percentage in Original Principal Amount of Debentures, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all Debentures then outstanding.
Upon the written request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Debentureholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Debentureholders under this Section 11.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.
Section 11.03 . Effect of Supplemental Indenture. Any supplemental indenture executed pursuant to the provisions of this Article 11 shall comply with the Trust Indenture Act, as then in effect, provided that this Section 11.03 shall not require such supplemental indenture or the Trustee to be qualified under the Trust Indenture Act prior to the time such qualification is in fact required under the terms of the Trust Indenture Act or the Indenture has been qualified under the Trust Indenture Act, nor shall it constitute any admission or acknowledgment by any party to such supplemental indenture that any such qualification is required prior to the time such qualification is in fact required under the terms of the Trust Indenture Act or the Indenture has been qualified under the Trust Indenture Act. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 11, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
 
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Section 11.04 . Notation on Debentures. Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 11 may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Debentures so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Company’s expense, be prepared and executed by the Company, authenticated by the Trustee (or an authenticating agent duly appointed by the Trustee pursuant to Section 16.11) and delivered in exchange for the Debentures then outstanding, upon surrender of such Debentures then outstanding.
Section 11.05 . Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustee. Prior to entering into any supplemental indenture, the Trustee shall be provided with an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 11 and is otherwise authorized or permitted by this Indenture.
ARTICLE 12
C ONSOLIDATION , M ERGER , S ALE , C ONVEYANCE AND L EASE
Section 12.01 . Company May Consolidate on Certain Terms. Subject to the provisions of Section 12.02, the Company shall not consolidate with or merge with or into any other Person or Persons (whether or not affiliated with the Company), nor shall the Company or its successor or successors be a party or parties to successive consolidations or mergers, nor shall the Company sell, convey, transfer or lease the property and assets of the Company substantially as an entirety, to any other Person (whether or not affiliated with the Company), unless: (i) the Company is the surviving Person, or the resulting, surviving or transferee Person, if other than the Company, is a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; (ii) upon any such consolidation, merger, sale, conveyance, transfer or lease, the due and punctual payment of the Accreted Principal Amount of and Interest on all of the Debentures, according to their tenor and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Company, shall be expressly assumed, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee by the Person (if other than the Company) formed by such consolidation, or into which the Company shall have been merged, or by the Person that shall have acquired or leased such property, and such supplemental
 
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indenture shall provide for the applicable conversion rights set forth in Section 15.06; and (iii) immediately after giving effect to the transaction described above, no Event of Default, and no event which, after notice or passage of time or both, would become an Event of Default, shall have happened and be continuing.
Section 12.02 . Successor to Be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the Accreted Principal Amount of and Interest on all of the Debentures and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of this first part. Such successor Person thereupon may cause to be signed, and may issue either in its own name or in the name of Kellwood Company any or all of the Debentures, issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Debentures that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Debentures that such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Debentures so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debentures theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debentures had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance, transfer or lease, the Person named as the “ Company ” in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 12 may be dissolved, wound up and liquidated at any time thereafter and such Person shall be released from its liabilities as obligor and maker of the Debentures and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Debentures thereafter to be issued as may be appropriate.
Section 12.03 . Opinion of Counsel to Be Given Trustee. The Trustee shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption complies with the provisions of this Article 12.
 
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ARTICLE 13
S ATISFACTION AND D ISCHARGE OF I NDENTURE
Section 13.01 . Discharge of Indenture. When (a) the Company shall deliver to the Trustee for cancellation all Debentures theretofore authenticated (other than any Debentures that have been destroyed, lost or stolen and in lieu of or in substitution for which other Debentures shall have been authenticated and delivered) and not theretofore canceled, or (b) all the Debentures not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable and the Company shall deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 5.04), in trust, funds sufficient to pay all amounts due and owing on Debentures (other than any Debentures that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Debentures shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, and if in either case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i) remaining rights of registration of transfer, substitution and exchange and conversion of Debentures, (ii) rights hereunder of Debentureholders to receive payments of Accreted Principal Amount of and Interest on the Debentures and the other rights, duties and obligations of Debentureholders, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and (iii) the rights, obligations and immunities of the Trustee hereunder, including those pursuant to Section 8.06), and the Trustee, on written demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel as required by Section 16.05 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture; the Company, however, hereby agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Debentures.
Section 13.02 . Paying Agent to Repay Monies Held. Upon the satisfaction and discharge of this Indenture, all monies then held by any Paying Agent of the Debentures (other than the Trustee) shall, upon written request of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such monies.
Section 13.03 . Return of Unclaimed Monies. Subject to the requirements of applicable law, any monies deposited with or paid to the Trustee for payment of the Accreted Principal Amount of or Interest on Debentures and not applied but remaining unclaimed by the holders of Debentures for two years after the date upon which the Accreted Principal Amount of or Interest on such Debentures, as the case may be, shall have become due and payable, shall be repaid to the
 
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Company by the Trustee on demand and all liability of the Trustee shall thereupon cease with respect to such monies; and the holder of any of the Debentures shall thereafter look only to the Company for any payment that such holder may be entitled to collect unless an applicable abandoned property law designates another Person.
ARTICLE 14
I MMUNITY OF I NCORPORATORS , S HAREHOLDERS , O FFICERS AND D IRECTORS
Section 14.01 . Indenture and Debentures Solely Corporate Obligations. No recourse for the payment of the Accreted Principal Amount of or Interest on any Debenture, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, employee, agent, officer, director or subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debentures.
ARTICLE 15
C ONVERSION OF D EBENTURES
Section 15.01 . Right to Convert. (a) Subject to and upon compliance with the provisions of this Indenture, at any time prior to the close of business on June 15, 2034, the holder of any Debenture shall have the right, at such holder’s option, to convert each $1,000 Original Principal Amount of the Debentures and integral multiples thereof, into fully paid and non-assessable shares of Common Stock (as such shares shall then be constituted) at the Conversion Rate in effect at such time, subject to Section 15.01(d) and subject to the Company’s ability to elect to deliver cash or a combination of cash and Common Stock in lieu of Common Stock pursuant to Section 15.03, by surrender of the Debenture so to be converted in whole or in part, together with any required funds, under the circumstances described in this Section 15.01 and in the manner provided in Section 15.02. The Debentures shall be convertible only during the following periods upon the occurrence of one of the following events:
(i) (A) during any fiscal quarter commencing after July 31, 2004, if the Last Reported Sale Price for the Common Stock for at least
 
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twenty (20) Trading Days during the period of thirty (30) consecutive Trading Days ending on the last Trading Day of the preceding fiscal quarter is greater than or equal to 131.30% of the Conversion Price on such last Trading Day; provided that once such threshold is met, the Debenture will thereafter be convertible at any time at the option of the holder, through the Stated Maturity;
(ii) in the event that the Company calls any or all of the Debentures for redemption, at any time prior to the close of business on the second Business Day immediately preceding the Redemption Date after which time the right to convert such Debentures will expire, unless the Company fails to pay the Redemption Price; provided that only those Debentures that are called for redemption may be converted following such an event;
(iii) during the five (5) Business Day period after any five (5) consecutive Trading Day period in which the Trading Price per Debenture, as determined following a request by a holder in accordance with the procedures described below, for each day of that period is less than 98% of the product of the Conversion Rate and the Last Reported Sale Price of the Common Stock for each day during such period; provided that if, on the date of any conversion pursuant to this Section 15.01(a)(iii), that is on or after June 15, 2029, the Last Reported Sale Price of the Common Stock is greater than the Conversion Price but less than 131.30% thereof, then the holders of Debentures surrendered for conversion will receive, in lieu of Common Stock based on the Conversion Rate, an amount in cash, shares of Common Stock, or a combination thereof, equal to the Accreted Principal Amount of the Debentures converted, plus accrued and unpaid Interest, to but excluding the Conversion Date (a “ Principal Value Conversion ”). Any Common Stock delivered upon a Principal Value Conversion will be valued at the average of the Last Reported Sale Prices of Common Stock for a five Trading Day period starting on the third Trading Day following the Conversion Date; or
(iv) as provided in Section (b) of this Section 15.01.
In connection with any conversion pursuant to Section 15.01(a)(iii), the Trustee shall have no obligation to obtain the bids necessary for the Company to determine the Trading Price of the Debentures unless the Company has requested it to do so, and the Company shall have no obligation to make such request unless a holder provides the Company with reasonable evidence that the Trading Price per Debenture is less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate. At such time, the Company will instruct the Trustee to obtain the bids (in the manner described in the definition of Trading Price) beginning on the next Trading Day and on each successive Trading
 
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Day until the Trading Price per Debenture is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.
The Company or its designated agent shall determine on a daily basis during the time period specified in Section 15.01(a)(i) and 15.01(a)(iii) whether the Debentures shall be convertible as a result of the occurrence of an event specified in clause (i) or (iii) above and, if the Debentures shall be so convertible, the Company shall promptly deliver to the Trustee (or other Conversion Agent appointed by the Company) written notice thereof. Whenever the Debentures shall become convertible pursuant to this Section 15.01, the Company or, at the Company’s request, the Trustee in the name and at the expense of the Company, shall notify the holders of the event triggering such convertibility in the manner provided in Section 16.02, and the Company shall also publicly announce such information by publication on the Company’s Web site or through such other public medium as it may use at such time. Any notice so given shall be conclusively presumed to have been duly given, whether or not the holder receives such notice.
The Trustee shall be entitled at its sole discretion to consult with the Company and to request the assistance of the Company in connection with the Trustee’s duties and obligations pursuant to Section 15.01(a) hereof, and the Company agrees, if requested by the Trustee, to cooperate with, and provide assistance to, the Trustee in carrying out its duties under this Section 15.01; provided, however, that nothing herein shall be construed to relieve the Trustee of its duties pursuant to Section 15.01(a) hereof.
(b) In addition, if:
(i) (A) the Company distributes to all holders of Common Stock rights or warrants entitling them to subscribe for or purchase (for a period expiring within 45 days of the date of the distribution) shares of Common Stock at less than the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the declaration date of the distribution, or (B) the Company distributes to all holders of Common Stock, assets, debt securities or rights to purchase securities of the Company, which distribution has a per share value as determined by the Board of Directors and set forth in a Board Resolution exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the declaration date for such distribution, then, in either case, the Debentures may be surrendered for conversion at any time on and after the date that the Company gives notice to the holders of such distribution, which shall be not less than 20 Business Days prior to the Ex-Dividend Date for such distribution, until the earlier of the close of business on the Business Day immediately preceding, but not including,
 
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the Ex-Dividend Date or the date the Company publicly announces that such distribution will not take place; provided that no holder may exercise this right to convert if the holder will otherwise participate in such distribution without conversion;
(ii) the Company consolidates with or merges with or into another Person, is a party to a binding share exchange or transfers all or substantially all of its assets, in each case pursuant to which the Common Stock is converted into (A) cash or property other than securities, or (B) cash, securities or other property, provided that in the case of clause (B), such transaction also constitutes a Fundamental Change, then the Debentures may be surrendered for conversion at any time from and after the date which is fifteen (15) days prior to the anticipated effective date of the transaction until and including the date which is fifteen (15) days after the actual effective date (“ Effective Date ”) of the transaction (or if such consolidation, merger, share exchange or transfer also constitutes a Fundamental Change, until the Fundamental Change Repurchase Date corresponding to such Fundamental Change). The Board of Directors shall determine the anticipated Effective Date of the transaction, and such determination shall be conclusive and binding on the holders and shall be publicly announced by the Company by publication on its Web site or through such other public medium as it may use at that time not later than two (2) Business Days prior to such 15th day;
(c) A Debenture in respect of which a holder is electing to exercise its option to require repurchase upon a Fundamental Change pursuant to Section 3.05 or repurchase pursuant to Section 3.06 may be converted only if such holder withdraws its election in accordance with Section 3.08(d). A holder of Debentures is not entitled to any rights of a holder of Common Stock until such holder has converted his Debentures into Common Stock, and only to the extent such Debentures are deemed to have been converted to Common Stock under this Article 15.
(d) If a Debentureholder elects to convert its debentures in connection with a specified corporate transaction pursuant to Section 15.01(b) that occurs prior to June 15, 2011, and the corporate transaction also constitutes a Fundamental Change, such Debentureholder will be entitled to receive, in addition to a number of shares of Common Stock equal to the Conversion Rate per $1,000 Original Principal Amount of Debentures, an additional number of shares of Common Stock (the “ Additional Shares ”) as described below, subject in each case to the Company’s payment elections as described in Section 15.03; provided that if the Stock Price is equal to or greater than $125.00 or less than $41.04 (subject in each case to adjustment as described below), the number of Additional Shares shall be zero.
 
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The number of Additional Shares will be determined by reference to the table attached as Schedule A hereto, based on the Effective Date and the Stock Price; provided that if the Stock Price is between two Stock Price amounts in the table or the Effective Date is between two Effective Dates in the table, the number of Additional Shares will be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year.
The Stock Prices set forth in the first row of the table in Schedule A hereto and set forth in the paragraph (d) above will be adjusted as of any date on which the Conversion Rate of the Debentures is adjusted. The adjusted Stock Prices will equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares will be adjusted in the same manner as the Conversion Rate as set forth Section 15.05.
Notwithstanding the foregoing, in no event will the total number of shares of Common Stock issuable upon conversion exceed 24.3665 per $1,000 Original Principal Amount of Debentures, subject to adjustments in the same manner as the Conversion Rate as set forth in Section 15.05.
Section 15.02 . Exercise of Conversion Privilege ; Issuance of Common Stock on Conversion ; No Adjustment for Interest or Dividends. In order to exercise the conversion privilege with respect to any Debenture in certificated form, the Company must receive at the office or agency of the Company maintained for that purpose or, at the option of such holder, the Corporate Trust Office, such Debenture with the original or facsimile of the form entitled “ Form of Conversion Notice ” on the reverse thereof, duly completed and manually signed, together with such Debentures duly endorsed for transfer, accompanied by the funds, if any, required by this Section 15.02. Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued, and to whom the cash payable on such conversion shall be delivered, and shall be accompanied by transfer or similar taxes, if required pursuant to Section 15.07.
In order to exercise the conversion privilege with respect to any interest in a Global Debenture, the beneficial holder must complete, or cause to be completed, the appropriate instruction form for conversion pursuant to the Depositary’s book-entry conversion program, deliver, or cause to be delivered, by book-entry delivery an interest in such Global Debenture, furnish appropriate endorsements and transfer documents if required by the Company or the Trustee or Conversion Agent, and pay the funds, if any, required by this Section 15.02 and any transfer taxes if required pursuant to Section 15.07.
 
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As promptly as practicable after satisfaction of the requirements for conversion set forth above, but no later than the fifth Business Day after the Conversion Date (as defined below), subject to Section 15.03 hereof and subject to compliance with any restrictions on transfer if shares issuable on conversion are to be issued in a name other than that of the Debentureholder (as if such transfer were a transfer of the Debenture or Debentures (or portion thereof) so converted), the Company shall issue and shall deliver through the Conversion Agent to such Debentureholder at the office or agency maintained by the Company for such purpose pursuant to Section 5.02, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Debenture or portion thereof as determined by the Company in accordance with the provisions of this Article 15, or if the Common Stock is eligible for transfer through The Depository Trust Company, the Company shall make a book-entry transfer of such number of shares of Common Stock through The Depository Trust Company, and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion, calculated by the Company as provided in Section 15.03. In case any Debenture of a denomination greater than $1,000 shall be surrendered for partial conversion, and subject to Section 2.03, the Company shall execute and the Trustee shall authenticate and deliver to the holder of the Debenture so surrendered, without charge to him, a new Debenture or Debentures in authorized denominations in an aggregate Original Principal Amount equal to the unconverted portion of the surrendered Debenture.
Each conversion shall be deemed to have been effected as to any such Debenture (or portion thereof) on the date on which the requirements set forth above in this Section 15.02 have been satisfied as to such Debenture (or portion thereof) (such date, the “ Conversion Date ”), and the Person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the Person in whose name the certificates are to be issued as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Rate in effect on the date upon which such Debenture shall be surrendered.
Any Debenture or portion thereof surrendered for conversion during the period from the close of business on any Regular Record Date to the opening of business on the immediately following Interest Payment Date shall be accompanied by payment, in immediately available funds or other funds acceptable to the Company, of an amount equal to the Interest otherwise payable
 
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on such Interest Payment Date on the Original Principal Amount being converted; provided that no such payment need be made (1) if the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the Business Day immediately following the next Interest Payment Date, (2) if the Company has specified a Repurchase Date following a Fundamental Change that is after a Regular Record Date and prior to the next Interest Payment Date or (3) to the extent of any overdue Interest, if any overdue Interest exists at the time of conversion with respect to such Debenture. Except as provided above in this Section 15.02, no payment or other adjustment shall be made for Interest accrued on any Debenture converted (other than the payment of Additional Amounts, if any) or for dividends on any shares issued upon the conversion of such Debenture as provided in this Article 15.
Upon the conversion of an interest in a Global Debenture, the Trustee (or other Conversion Agent appointed by the Company), or the Custodian at the direction of the Trustee (or other Conversion Agent appointed by the Company), shall make a notation on such Global Debenture as to the reduction in the Original Principal Amount represented thereby. The Company shall notify the Trustee in writing of any conversions of Debentures effected through any Conversion Agent other than the Trustee.
Upon the conversion of a Debenture, that portion of the accrued but unpaid Interest with respect to the converted Debenture shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the holder thereof through delivery of the Common Stock (together with the cash payment, if any in lieu of fractional shares) in exchange for the Debenture being converted pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for and in satisfaction of the Company’s obligation to pay the Accreted Principal Amount of the converted Debenture and the accrued but unpaid Interest, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for and in satisfaction of the right to convert the Debenture being converted pursuant to the provisions hereof.
Section 15.03 . Payment Upon Conversion; Cash Payments in Lieu of Fractional Shares. (a) In the event that the Company receives notice of conversion on or prior to the day that is twenty (20) days prior to Stated Maturity or, with respect to Debentures being redeemed, the applicable Redemption Date (the “ Final Notice Date ”), the following procedures will apply:
If the Company chooses to satisfy all or any portion of the Company’s obligation (the “ Conversion Obligation ”) in cash, the Company will notify the holder through the Trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the Conversion Obligation or as a fixed
 
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dollar amount) at any time on or before the date that is two Business Days following receipt of the notice of conversion (“ Cash Settlement Notice Period ”). If the Company timely elects to pay cash for any portion of the shares otherwise issuable to such holder, the conversion notice may be retracted by the holder at any time during the two Business Day period beginning on the day after the final day of the Cash Settlement Notice Period (“ Conversion Retraction Period ”); no such retraction can be made (and a conversion notice shall be irrevocable) if the Company does not elect to deliver cash in lieu of shares (other than cash in lieu of fractional shares). If the conversion notice has not been retracted, then settlement (in cash and/or shares) will occur on the Business Day following the final day of the ten (10) Trading Day period beginning on the day after the final day of the Conversion Retraction Period. Settlement amounts will be computed as follows:
(i) If the Company elects to satisfy the entire Conversion Obligation in shares, the Company will deliver to holders surrendering Debentures for conversion a number of shares equal to (1) the aggregate Original Principal Amount of Debentures to be converted divided by 1,000 multiplied by (2) the sum of the Conversion Rate and the applicable number of Additional Shares issuable upon conversion of $1,000 Original Principal Amount of Debentures, if any, as described in Section 15.01(d).
(ii) If the Company elects to satisfy the entire Conversion Obligation in cash, the Company will deliver to holders surrendering Debentures for conversion cash in an amount equal to the product of:
(A) a number equal to (1) the aggregate Original Principal Amount of Debentures to be converted divided by 1,000 multiplied by (2) the sum of the Conversion Rate and the applicable number of Additional Shares issuable upon conversion of $1,000 Original Principal Amount of Debentures, if any, as described in Section 15.01(d), and
(B) the average of the Last Reported Sale Prices of the Common Stock for the ten (10) consecutive Trading Days immediately following the date of the Company’s notice of its election to deliver cash (the “ Cash Settlement Averaging Period ”).
(iii) If the Company elects to satisfy in cash a fixed portion of the Conversion Obligation other than the entire obligation, or a percentage of the Conversion Obligation other than 100%, the Company will deliver to holders surrendering Debentures for conversion such cash amount (“ Cash Amount ”) and a number of shares equal to the excess, if any, of the number of shares equal to (i) the aggregate Original Principal Amount of Debentures to be converted divided by 1,000, multiplied by (ii) the sum
 
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of the Conversion Rate and the applicable number of Additional Shares issuable upon conversion of $1,000 Original Principal Amount of Debentures, if any, as described in Section 15.01(d), over the number of shares equal to the sum, for each day of the Cash Settlement Averaging Period, of (x) 10% of the Cash Amount (other than cash for fractional shares of Common Stock), divided by (y) the Last Reported Sale Price of the Common Stock. In addition, the Company will pay cash for all fractional shares of Common Stock as described in Section 15.03(c) below.
(b) In the event that the Company receives notice of conversion after the Final Notice Date, the Company will not send individual notices of its election to satisfy all or any portion of the Conversion Obligation in cash. Instead, if the Company chooses to satisfy all or any portion of the Conversion Obligation in cash, the Company will send a single notice to the Trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the Conversion Obligation or as a fixed dollar amount) at any time on or before the Final Notice Date. Settlement amounts will be computed in the same manner as set forth under Section 15.03(a) above except that the “Cash Settlement Averaging Period” shall be the five consecutive Trading Days ending on the third Trading Day prior to the Conversion Date. For purposes of the formula set forth in Section 15.03(a)(iii), 20% shall be used instead of 10%. Settlement (in cash and/or shares) will occur on the Business Day following the final day of such Cash Settlement Averaging Period.
In addition, if a Debentureholder elects to convert its Debentures under Section 15.01(b) and it is entitled to Additional Shares, the Company will not send individual notices of its election to satisfy all or any portion of the Conversion Obligation in cash. Instead, if the Company chooses to satisfy all or any portion of the Conversion Obligation in cash, the Company will send a single notice to the Trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the Conversion Obligation or as a fixed dollar amount) in connection with the announcement of the relevant corporate transaction. Settlement amounts will be computed in the same manner as set forth above under Section 15.03(a) except that (a) the reference to the average of the Last Reported Sale Prices of the Common Stock during the Cash Settlement Averaging Period in Section 15.03(a)(ii)(B) shall mean the Stock Price used to determine the number of Additional Shares, (b) (i) the Cash Settlement Averaging Period referred to in Section 15.03(a)(iii) shall be the five consecutive Trading Days up to but not including the Effective Date of the relevant corporate transaction and (ii) if holders of Common Stock receive only cash in such corporate transaction, the “Last Reported Sale Price of Common Stock” referred to Section 15.03(a)(iii)(y) shall be deemed to be equal to such cash received per share, and (c) for purposes of the formula set forth in Section 15.03(a)(iii), 20% shall be used instead of 10%. Settlement will occur as promptly as practicable after the later of the Conversion Date and the Effective Date of the relevant corporate transaction.
 
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(c) No fractional shares of Common Stock or scrip certificates representing fractional shares shall be issued upon conversion of Debentures. If more than one Debenture shall be surrendered for conversion at one time by the same holder, the number of full shares that shall be issuable upon conversion shall be computed on the basis of the aggregate Original Principal Amount of the Debentures (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be issuable upon the conversion of any Debenture or Debentures, the Company shall make an adjustment and payment therefor in cash to the holder of Debentures at the Last Reported Sale Price on the last Trading Day immediately preceding the day on which the Debentures (or specified portions thereof) are deemed to have been converted.
(d) Notwithstanding anything to the contrary in this Indenture, at any time prior to Stated Maturity, the Company may irrevocably elect, in its sole discretion without the consent of the holders of the Debentures, by notice to the Trustee and the holders of the Debentures to satisfy in cash 100% of the Accreted Principal Amount of the Debentures converted after the date of such election. After making such an election, the Company still may satisfy the remainder of the Conversion Obligation to the extent it exceeds the Accreted Principal Amount in cash or Common Stock or a combination of cash and Common Stock. If the Company chooses to satisfy all or a portion of the remainder of the Conversion Obligation in cash, the Company will provide notice of such election in the same manner as set forth above under either clause (a) or (b), whichever is applicable. If the Company chooses to satisfy all of the remainder of the Conversion Obligation in Common Stock, notice of the election to deliver cash for the Accreted Principal Amount will be deemed to have been provided on the last date of the Cash Settlement Notice Period and the notice of conversion will not be retractable. Settlement amounts will be computed and settlement dates will be determined in the same manner as set forth above under clause (a) or (b), as applicable.
Section 15.04 . Conversion Rate. Each $1,000 Original Principal Amount of the Debentures shall be convertible into the number of shares of Common Stock specified in the form of Debenture (herein called the “ Conversion Rate ”) attached as Exhibit A hereto (initially 18.8434 shares), subject to adjustment as provided in this Article 15.
 
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Section 15.05 . Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company as follows:
(a) If the Company issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or effects a share split or share combination, the Conversion Rate will be adjusted based on the following formula:

	 	CR’=CR 0  x	 	OS’	  		
	 		 	OS 0	  		
where,

CR 0	  	=	  	the Conversion Rate in effect immediately prior to such event	
			
CR’	  	=	  	the Conversion Rate in effect immediately after such event	
			
OS 0	  	=	  	the number of shares of Common Stock outstanding immediately prior to such event	
			
OS’	  	=	  	the number of shares of Common Stock outstanding immediately after such event.	
Such adjustment shall become effective immediately after the opening of business on the Business Day following the date fixed for such determination. The Company will not pay any dividend or make any distribution on shares of Common Stock held in treasury by the Company. If any dividend or distribution of the type described in this Section 15.05(a) is declared but not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(b) If the Company issues to all or substantially all holders of its Common Stock any rights or warrants entitling them for a period of not more than 45 days to subscribe for or purchase shares of Common Stock, at a price per share less than the Last Reported Sale Price of shares of Common Stock on the Business Day immediately preceding the time of announcement of such issuance, the Conversion Rate will be adjusted based on the following formula (provided that the Conversion Rate will be readjusted to the extent that such rights or warrants are not exercised prior to their expiration):

	 	CR’=CR 0  x	 	OS 0  + X	  		
	 		 	OS 0  + Y	  		
where,

CR 0	  	=	  	the Conversion Rate in effect immediately prior to such event	
			
CR’	  	=	  	the Conversion Rate in effect immediately after such event	
 
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OS 0	  	=	  	the number of shares of Common Stock outstanding immediately prior to such event	
			
X	  	=	  	the total number of shares of Common Stock issuable pursuant to such rights	
			
Y	  	=	  	the number of shares of Common Stock equal to the aggregate price payable to exercise such rights divided by the average of the Last Reported Sale Prices of Common Stock for the ten consecutive Trading Days prior to the Business Day immediately preceding the Record Date for the issuance of such rights.	
Such adjustment shall be successively made whenever any such rights or warrants are issued and shall become effective immediately after the opening of business on the Business Day following the date fixed for such determination. The Company shall not issue any such rights, options or warrants in respect of shares of Common Stock held in treasury by the Company. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such date fixed for the determination of shareholders entitled to receive such rights or warrants had not been fixed.
In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Last Reported Sale Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.
(c) If the Company distributes shares of its capital stock, evidences of its indebtedness or other assets or property of the Company to all or substantially all holders of the Common Stock, excluding:
(i) dividends, distributions and rights or warrants referred to in clause (a) or (b) above; and
(ii) dividends or distributions paid exclusively in cash;
 
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then the Conversion Rate will be adjusted based on the following formula:

	 	CR’=CR 0  x	 	SP 0	  		
	 		 	Sp 0  – FMV	  		
where,

CR 0	  	=	  	the Conversion Rate in effect immediately prior to such distribution	
			
CR’	  	=	  	the Conversion Rate in effect immediately after such distribution	
			
SP 0	  	=	  	the average of the Last Reported Sale Prices of the Common Stock for the ten days prior to the Business Day immediately preceding the record date for such distribution	
			
FMV	  	=	  	the fair market value (as determined by the Board of Directors) of the shares of capital stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the Record Date for such distribution.	
Such adjustment shall become effective immediately prior to the opening of business on the Business Day following the date fixed for the determination of shareholders entitled to receive such distribution.
With respect to an adjustment pursuant to this clause (c) where there has been a payment of a dividend or other distribution on the Common Stock or shares of capital stock of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit (a “ Spin-Off ”) the Conversion Rate in effect immediately before the close of business on the Record Date fixed for determination of shareholders entitled to receive the distribution will be increased based on the following formula:

	 	CR’=CR 0  x	 	FMV 0  + MP 0	  		
	 		 	MP 0	  		
where,

CR 0	  	=	  	the Conversion Rate in effect immediately prior to such distribution	
			
CR’	  	=	  	the Conversion Rate in effect immediately after such distribution	
			
FMV 0	  	=	  	the average of the Last Reported Sale Prices of the capital stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the first 10 Trading Days after the effective date of the Spin-Off	
			
MP 0	  	=	  	the average of the Last Reported Sale Prices of Common Stock over the first 10 consecutive Trading Days after the effective date of the Spin-Off.	
 
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Such adjustment shall occur on the tenth Trading Day from, and including, the effective date of the Spin-Off.
(d) If the Company makes any cash dividend or distribution during any quarterly fiscal period to all or substantially all holders of Common Stock, in an aggregate amount that, together with other cash dividends or distributions made during such quarterly fiscal period, exceeds the product of $0.16 (appropriately adjusted from time to time for any share dividends on or subdivisions of the Common Stock) multiplied by the number of shares of Common Stock outstanding on the Record Date for such distribution, the Conversion Rate will be adjusted based on the following formula:

	 	CR’=CR 0  x	 	SP 0	  		
	 		 	SP 0  – C	  		
where,

CR 0	  	=	  	the Conversion Rate in effect immediately prior to the Record Date for such distribution	
			
CR’	  	=	  	the Conversion Rate in effect immediately after the Record Date for such distribution	
			
SP 0	  	=	  	the average of the Last Reported Sale Prices of the Common Stock for the ten consecutive Trading Days prior to the Business Day immediately preceding the Record Date of such distribution	
			
C	  	=	  	the amount in cash per share the Company distributes to holders of Common Stock that exceeds $0.16 (appropriately adjusted from time to time for any share dividends on, or subdivisions of, Common Stock).	
Such adjustment shall become effective immediately after the close of business on the date for such determination.
(e) If the Company or any of its Subsidiaries purchases shares of the Common Stock pursuant to a tender or exchange offer which involves an aggregate per share consideration that exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which
 
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tenders or exchanges may be made pursuant to such tender or exchange offer (such last date, the “ Expiration Time ”), the Conversion Rate will be increased based on the following formula:

	 	CR’=CR 0  x	 	AC + (SP’ x OS’)	  		
	 		 	OS 0  x SP’	  		
where,

CR 0	  	=	  	the Conversion Rate in effect on the date such tender offer expires	
			
CR’	  	=	  	the Conversion Rate in effect on the day next succeeding the date such tender offer expires	
			
AC	  	=	  	the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares purchased in such tender offer	
			
OS 0	  	=	  	the number of shares of Common Stock outstanding immediately prior to the date such tender offer expires	
			
OS’	  	=	  	the number of shares of Common Stock outstanding immediately after the date such tender offer expires	
			
SP’	  	=	  	the average of the Last Reported Sale Prices of Common Stock for the ten consecutive trading days commencing on the Trading Day next succeeding the date such tender offer expires.	
If the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made.
If, however, the application of the foregoing formula would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made.
Except as stated herein, the Company will not adjust the Conversion Rate for the issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities.
(f) [Reserved]
 
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(g) Notwithstanding the foregoing provisions of this Section 15.05, no adjustment shall be made thereunder, nor shall an adjustment be made to the ability of a Holder of a Debenture to convert, for any distribution described therein if the Holder will otherwise participate in the distribution without conversion of such Holder’s Debentures.
(h) The Company may (but is not required to) make such increases in the Conversion Rate, in addition to those required by clauses (a) through (e) of this Section 15.05 as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or any similar event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time may increase the Conversion Rate by any amount for any period of at least twenty (20) days if the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Rate is increased pursuant to the preceding sentence, the Company shall mail to holders of record of the Debentures a notice of the increase at least fifteen (15) days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.
(i) No adjustment to the Conversion Rate need be made:
(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any plan;
(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;
(iii) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security not described in (ii) above and outstanding as of the date the Debentures were first issued;
(iv) for a change in the par value of the Common Stock; or
(v) for accrued and unpaid Interest.
 
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To the extent the Debentures become convertible into cash, assets or property (other than capital stock of the Company or securities to which Section 15.06 applies), no adjustment shall be made thereafter as to the cash, assets or property. Interest shall not accrue on such cash, assets or property.
(j) All calculations under this Article 15 shall be made by the Company and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share, as the case may be.
(k) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to the holder of each Debenture at his last address appearing on the Debenture Register provided for in Section 2.05 of this Indenture, within twenty (20) days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.
(l) In any case in which this Section 15.05 provides that an adjustment shall become effective immediately after (1) a record date or Stock Record Date for an event, (2) the date fixed for the determination of shareholders entitled to receive a dividend or distribution pursuant to Section 15.05(a), (3) a date fixed for the determination of shareholders entitled to receive rights or warrants pursuant to Section 15.05(b) or (4) the Expiration Time for any tender or exchange offer pursuant to Section 15.05(e), (each a “ Determination Date ”), the Company may elect to defer until the occurrence of the applicable Adjustment Event (as hereinafter defined) (x) issuing to the holder of any Debenture converted after such Determination Date and before the occurrence of such Adjustment Event, the additional shares of Common Stock or other securities issuable upon such conversion by reason of the adjustment required by such Adjustment Event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (y) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 15.03. For purposes of this Section 15.05(l), the term “ Adjustment Event ” shall mean:
(i) in any case referred to in clause (1) hereof, the occurrence of such event,
 
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(ii) in any case referred to in clause (2) hereof, the date any such dividend or distribution is paid or made,
(iii) in any case referred to in clause (3) hereof, the date of expiration of such rights or warrants, and
(iv) in any case referred to in clause (4) hereof, the date a sale or exchange of Common Stock pursuant to such tender or exchange offer is consummated and becomes irrevocable.
(m) For purposes of this Section 15.05, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company.
Section 15.06 . Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification or change of the outstanding shares of Common Stock (other than a subdivision or combination to which Section 15.05(c) applies), (ii) any consolidation, merger, binding share exchange or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of all or substantially all of the properties and assets of the Company to any other Person as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) providing that each Debenture shall be convertible into the kind and amount of cash, securities or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Debentures (assuming, for such purposes, a sufficient number of authorized shares of Common Stock are available to convert all such Debentures) immediately prior to such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance assuming such holder of Common Stock did not exercise his rights of election, if any, as to the kind or amount of cash, securities or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance ( provided that, if the kind or amount of cash, securities or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance is not the same for each share of Common Stock
 
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in respect of which such rights of election shall not have been exercised (“ non-electing share ”), then for the purposes of this Section 15.06 the kind and amount of cash, securities or other property receivable upon such reclassification, change, consolidation, merger, binding share exchange, combination, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 15.
The Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of Debentures, at its address appearing on the Debenture Register provided for in Section 2.05 of this Indenture, within twenty (20) days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive reclassifications, changes, consolidations, mergers, binding share exchanges, combinations, sales and conveyances.
If this Section 15.06 applies to any event or occurrence, Section 15.05 shall not apply.
Section 15.07 . Taxes on Shares Issued. The issue of stock certificates on conversions of Debentures shall be made without charge to the converting Debentureholder for any documentary, stamp or similar issue or transfer tax in respect of the issue thereof. The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any Debenture converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
Section 15.08 . Reservation of Shares, Shares to Be Fully Paid ; Compliance with Governmental Requirements ; Listing of Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for the conversion of the Debentures from time to time as such Debentures are presented for conversion.
Before taking any action which would cause an adjustment increasing the Conversion Rate to an amount that would cause the Conversion Price to be reduced below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Debentures, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate.
 
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The Company covenants that all shares of Common Stock which may be issued upon conversion of Debentures will upon issue be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.
The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Debentures hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued upon conversion, the Company will in good faith and as expeditiously as possible, to the extent then permitted by the rules and interpretations of the Commission (or any successor thereto), endeavor to secure such registration or approval, as the case may be.
The Company further covenants that, if at any time the Common Stock shall be listed on the New York Stock Exchange, Nasdaq National Market or any other national securities exchange or automated quotation system, the Company will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion of the Debentures; provided that if the rules of such exchange or automated quotation system permit the Company to defer the listing of such Common Stock until the first conversion of the Debentures into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Debentures in accordance with the requirements of such exchange or automated quotation system at such time.
Section 15.09 . Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to the Company or any holder of Debentures to determine the Conversion Rate or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Debenture; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Debenture for the purpose
 
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of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 15. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 15.06 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Debentureholders upon the conversion of their Debentures after any event referred to in such Section 15.06 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 8.01, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.
Section 15.10. Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 15.05; or
(b) the Company shall authorize the granting to the holders of all or substantially all of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each holder of Debentures at his address appearing on the Debenture Register provided for in Section 2.05 of this Indenture, as promptly as possible but in any event at least ten (10) days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange
 
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their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Section 15.11 . Shareholder Rights Plan. To the extent that the Company has a rights plan in effect upon conversion of the Debentures into Common Stock, the Debentureholder will receive, in addition to the Common Stock, the rights under the rights plan, unless prior to any conversion, the rights have separated from the Common Stock, in which case the Conversion Rate will be adjusted at the time of separation as if the Company distributed to all holders of Common Stock, shares of the Company’s capital stock, evidences of indebtedness or assets as described in Section 15.04(c) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. In lieu of any such adjustment, the Company may amend such applicable shareholder rights agreement to provide that upon conversion of the debentures the holders will receive, in addition to the Common Stock issuable upon such conversion, the rights which would have attached to such Common Stock if the rights had not become separated from the Common Stock under such applicable shareholder rights agreement.
ARTICLE 16
M ISCELLANEOUS P ROVISIONS
Section 16.01 . Provisions Binding on Company’s Successors. All the covenants, stipulations, promises and agreements by the Company contained in this Indenture shall bind its successors and assigns whether so expressed or not.
Section 16.02 . Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any Person that shall at the time be the lawful sole successor of the Company.
Section 16.03 Addresses for Notices, Etc.. Any request, notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Debentures on the Company shall be deemed to have been sufficiently given or made, for all purposes, if delivered by messenger or overnight carrier, given or served by being deposited postage prepaid by registered or certified mail in a post office letter box or sent by telecopier transmission addressed as follows: to Kellwood Company, 600 Kellwood Parkway, Chesterfiled, Missouri 63017, Telecopier No.: (314) 576-3388,
 
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Attention: Treasurer. Any notice, direction, request or demand hereunder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if delivered by messenger or overnight carrier, given or served by being deposited, postage prepaid, by registered or certified mail in a post office letter box or sent by telecopier transmission addressed as follows: Union Bank of California, N.A., 120 S, San Pedro Street, 4th Floor, Los Angeles, CA 90012, Telecopier No.: (213) 972-5694, Attention: Corporate Trust Department; provided, however, that the Trustee shall not be deemed to have received notice until such notice is actually received.
The Company or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Debentureholder shall be mailed to him by first class mail, postage prepaid, at his address as it appears on the Debenture Register and shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Debentureholder or any defect in it shall not affect its sufficiency with respect to other Debentureholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
Section 16.04 . Governing Law. This Indenture and each Debenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York (including Section 5-1401 of the New York General Obligations Law or any successor to such statute).
Section 16.05 . Evidence of Compliance with Conditions Precedent, Certificates to Trustee. Upon any application, request or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in such certificate or opinion is based; (3) a statement that, in the opinion of such person, he has made such examination or
 
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investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
Section 16.06 . Legal Holidays. In any case in which the date of maturity of Interest on or principal of the Debentures or the Redemption Date of any Debenture or any Repurchase Date with respect to any Debenture will not be a Business Day, then payment of such Interest on or the Accreted Principal Amount of the Debentures need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the Redemption Date or the Repurchase Date, as the case may be, and no interest shall accrue for the period from and after such date.
Section 16.07 . Company Responsible for Making Calculations. The Company will be responsible for making all calculations called for under this Indenture. These calculations include, but are not limited to, determination of the Last Reported Sale Price, Spin-Off Market Price and Trading Price, the amount of accrued Interest (including any Contingent Interest and Additional Amounts) payable on the Debentures, the Accreted Principal Amount and the Conversion Rate of the Debentures. The Company will make these calculations in good faith and, absent manifest error, these calculations will be final and binding on the Debentureholders. Promptly after the calculation thereof, the Company will provide to each of the Trustee and the Conversion Agent an Officers’ Certificate setting forth a schedule of its calculations, and each of the Trustee and the Conversion Agent is entitled to conclusively rely upon the accuracy of such calculations without independent verification. The Trustee will forward the Company’s calculations to any Holder upon the written request of such Holder.
Section 16.08 . Trust Indenture Act. This Indenture is hereby made subject to, and shall be governed by, the provisions of the Trust Indenture Act required to be part of and to govern indentures qualified under the Trust Indenture Act; provided that unless otherwise required by law, notwithstanding the foregoing, this Indenture and the Debentures issued hereunder shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the Trust Indenture Act as now in effect or as hereafter amended or modified; provided further that this Section 16.08 shall not require this Indenture or the Trustee to be qualified under the Trust Indenture Act prior to the time such qualification is in fact required under the terms of the Trust Indenture Act, nor shall it constitute any admission or acknowledgment by any party to the Indenture that any such qualification is required prior to the time such qualification is in fact required under the terms of the Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in an indenture qualified under the Trust Indenture Act, such required provision shall control.
 
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Section 16.09 . No Security Interest Created. Except as provided in Section 8.06, nothing in this Indenture or in the Debentures, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction in which property of the Company or its subsidiaries is located.
Section 16.10 . Benefits of Indenture. Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any authenticating agent, any Debenture Registrar and their successors hereunder and the holders of Debentures, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 16.11 . Table of Contents, Headings, Etc. The table of contents and the titles and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 16.12 . Authenticating Agent. The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf, and subject to its direction, in the authentication and delivery of Debentures in connection with the original issuance thereof and transfers and exchanges of Debentures hereunder, including under Sections 2.04, 2.05, 2.06, 2.07, 3.02 and 3.08, as fully to all intents and purposes as though the authenticating agent had been expressly authorized by this Indenture and those Sections to authenticate and deliver Debentures. For all purposes of this Indenture, the authentication and delivery of Debentures by the authenticating agent shall be deemed to be authentication and delivery of such Debentures “by the Trustee” and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Debentures for the Trustee’s certificate of authentication. Such authenticating agent shall at all times be a Person eligible to serve as trustee hereunder pursuant to Section 8.09.
Any corporation into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor corporation is otherwise eligible under this Section 16.12, without the execution or filing of any paper or any further act on the part of the parties hereto or the authenticating agent or such successor corporation.
Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of
 
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termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee shall either promptly appoint a successor authenticating agent or itself assume the duties and obligations of the former authenticating agent under this Indenture and, upon such appointment of a successor authenticating agent, if made, shall give written notice of such appointment of a successor authenticating agent to the Company and shall mail notice of such appointment of a successor authenticating agent to all holders of Debentures as the names and addresses of such holders appear on the Debenture Register.
The Company agrees to pay to the authenticating agent from time to time such reasonable compensation for its services as shall be agreed upon in writing between the Company and the authenticating agent.
The provisions of Sections 8.02, 8.03, 8.04 and 9.03 and this Section 16.12 shall be applicable to any authenticating agent.
Section 16.13 . Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.
Section 16.14 . Severability. In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Union Bank of California, N.A. hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions herein above set forth.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed.

KELLWOOD COMPANY	
		
By:	 	/s/ illegible	
	 	Name:	 		
	 	Title:	 		
	
UNION BANK OF CALIFORNIA, N.A.,
as Trustee	
		
By:	 	/s/ illegible	
	 	Name:	 		
	 	Title:	 		

Exhibit 10.43
JOINDER AGREEMENT
Vince, LLC
c/o Kellwood Company
600 Kellwood Parkway
Chesterfield, Missouri 63017
September 18, 2012
Wells Fargo Bank, National Association
230 West Monroe Street, Suite 2900
Chicago, IL 60606
Attention: Greg Clarke, Corporate Trust Services
Ladies and Gentlemen:
Reference is made to the Second Lien Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of July 23, 2009, made by Kellwood Company, other Obligors party thereto and Wells Fargo Bank, National Association, as collateral agent (in such capacity and together with any successors in such capacity, the “ Collateral Agent ”).
This Joinder Agreement supplements the Security Agreement and is delivered by the undersigned, Vince, LLC, a Delaware limited liability company (the “ New Obligor ”), pursuant to Section 4.12 of the Security Agreement. The New Obligor hereby agrees to be bound as an Obligor party to the Security Agreement by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement. Without limiting the generality of the foregoing, the New Obligor hereby grants and pledges to the Collateral Agent, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Note Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Collateral and expressly assumes all obligations and liabilities of an Obligor thereunder. The New Obligor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Obligors contained in the Security Agreement.
Annexed hereto are supplements to each of the schedules to the Security Agreement with respect to the New Obligor. Such supplements shall be deemed to be part of the Security Agreement.
This Joinder Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
 
2

IN WITNESS WHEREOF, the New Obligor has caused this Joinder Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

VINCE, LLC	
		
By:	 	/s/ Adrian Kowalewski	
	 	Name:	 	Adrian Kowalewski	
	 	Title:	 	Chief Financial Officer	

AGREED TO AND ACCEPTED:	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent	
		
By:	 	/s/ Gregory S. Clarke	
	 	Name:	 	Gregory S. Clarke	
	 	Title:	 	Vice President	
 
3

Exhibit 10.44
FOURTH SUPPLEMENTAL INDENTURE
F OURTH S UPPLEMENTAL I NDENTURE (this “ Supplemental Indenture ”), dated as of September 18, 2012, among Vince, LLC, a Delaware limited liability company (the “ Guaranteeing Subsidiary ”), a subsidiary of Kellwood Company (or its permitted successor), a Delaware corporation (the “ Company ”), the Company, the other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, National Association, as trustee and as collateral agent under the indenture referred to below (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Company and the other Guarantors have heretofore executed and delivered to the Trustee an indenture (the “ Indenture ”), dated as of July 23, 2009, providing for the issuance of 12  7 ⁄ 8 % Second-Priority Senior Secured PIK Notes due 2014 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Subsidiary Guarantee ”); and
WHEREAS, the execution and delivery of this Supplemental Indenture has been authorized and approved by the Board of Directors of the Company and the Board of Managers of the Guaranteeing Subsidiary, the Company and the Guarantors have requested the Trustee join with them in the execution and delivery of this Supplemental Indenture and in accordance with Sections 7.02, 9.01, and 9.06 of the Indenture have delivered an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that the Supplemental Indenture is authorized or permitted by the Indenture and that all conditions precedent to its execution have been complied with, and pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company, the other Guarantors and the Trustee mutually covenant and agree for the benefit of each other and the equal and ratable benefit of the Holders of the Notes as follows:
1. C APITALIZED T ERMS . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. A GREEMENT TO G UARANTEE . The Guaranteeing Subsidiary hereby agrees as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the Notes or the obligations of the Company hereunder or thereunder, that:
(i) the principal of, and premium, if any, and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

(ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor.
(c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors, or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the

purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee.
(i) Pursuant to Section 11.02 of the Indenture, after giving effect to any maximum amount and all other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture, this new Subsidiary Guarantee shall be limited to the maximum amount permissible such that the obligations of such Guarantor under this Subsidiary Guarantee will not constitute a fraudulent transfer or conveyance.
3. E XECUTION AND D ELIVERY . Each Guaranteeing Subsidiary agrees that the Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. The Guaranteeing Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in that certain Second Lien Security Agreement, dated as of July 23, 2009 (as amended, amended and restated, supplemented, or otherwise modified from time to time), by and among the Company, the Guarantors and the Collateral Agent (the “ Security Agreement ”) and hereby agrees to execute a joinder to the Security Agreement in the form attached as Exhibit A thereto. The Guaranteeing Subsidiary acknowledges and confirms that it has received a copy of the Indenture, the Notes and the Security Documents and the schedules and exhibits thereto. The Guaranteeing Subsidiary agrees that at any time and from time to time, upon the written request of the Collateral Agent or the Trustee, it will execute and deliver such further documents and do such further acts as the Collateral Agent or the Trustee may reasonably request in accordance with the terms and conditions of the Security Agreement and the Indenture in order to effect the purposes of this Supplemental Indenture.
4. G UARANTEEING S UBSIDIARY M AY C ONSOLIDATE , E TC . ON C ERTAIN T ERMS .
(a) The Guaranteeing Subsidiary may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor unless:
(i) immediately after giving effect to such transaction, no Default or Event of Default exists; and

(ii) either (A) subject to Section 11.04 and Section 11.05 of the Indenture, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger unconditionally assumes all the obligations of that Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Subsidiary Guarantee on the terms set forth herein or therein; or (B) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation, Section 4.10 thereof.
(b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable under the Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 11.04 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.
5. R ELEASES .
(a) In the event of any sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, in each case to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture. Upon

request of the Company and delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture.
6. N O R ECOURSE A GAINST O THERS . No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture, the Subsidiary Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. C OUNTERPARTS . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
9. E FFECT OF H EADINGS . The Section headings herein are for convenience only and shall not affect the construction hereof.
10. T HE T RUSTEE . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. This Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto. In entering into this Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

GUARANTEEING SUBSIDIARY	
	
VINCE, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer	
	
COMPANY	
	
KELLWOOD COMPANY	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer	
	
GUARANTORS	
	
AMERICAN RECREATION PRODUCTS, LLC	
BETH’S BOUTIQUE, LLC	
KWD HOLDINGS, INC.	
MEOW, INC.	
PHAT FASHIONS LLC
PHAT LICENSING LLC
ROYAL ROBBINS, LLC	
SIERRA DESIGNS ACQUISITION COMPANY, LLC
ZOBHA, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer for each of the above listed companies	
[Signature Page to Fourth Supplemental Indenture]

							
	 		 	TRUSTEE	
			
	 		 	WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee	
				
	 		 	By:	 	/s/ Gregory S. Clarke	
	 		 	Name:	 	Gregory S. Clarke	
	 		 	Title:	 	Vice President	
[Signature Page to Fourth Supplemental Indenture]

Exhibit 10.45
Joinder to Term Loan Agreement
The undersigned, Vince, LLC, a Delaware limited liability company, hereby joins in the execution of that certain Term Loan Agreement dated as of October 19, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Term Loan Agreement ”) among Kellwood Company, certain of its Domestic Subsidiaries, and each other Domestic Subsidiary that becomes a Borrower thereunder after the date and pursuant to the terms thereof, the financial institutions party thereto from time to time as Lenders and Cerberus Business Finance, LLC, as collateral agent for the Lenders. All capitalized terms not defined herein shall have the meaning assigned to them in the Term Loan Agreement.
By executing this Joinder, the undersigned hereby agrees that it is a Borrower under the Term Loan Agreement and agrees to be bound by all of the terms and provisions thereunder. The undersigned further acknowledges and agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to the Collateral Agent and the Lenders the prompt payment and performance of all Obligations under the Loan Documents. Concurrently with the execution hereof, the undersigned shall execute and deliver a joinder to the Security Agreement and take such other actions as the Collateral Agent shall require to evidence and perfect a Lien in favor of the Collateral Agent (for the benefit of the Lenders) on the Collateral as contemplated by Section 9.1.9 of the Term Loan Agreement.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned has executed this Joinder this 1st day of September, 2012.

VINCE, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer	

Exhibit 10.46
Joinder to Loan Agreement
The undersigned, Vince, LLC, a Delaware limited liability company, hereby joins in the execution of that certain Second Amended and Restated Term A Loan Agreement dated as of April 20, 2012 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Loan Agreement ”) among Kellwood Company, certain of its Domestic Subsidiaries, and each other Domestic Subsidiary that becomes a Borrower thereunder after the date and pursuant to the terms thereof, Sun Kellwood Finance, LLC, as collateral agent for each Lender and such Lenders party thereto. All capitalized terms not defined herein shall have the meaning assigned to them in the Loan Agreement.
By executing this Joinder, the undersigned hereby agrees that it is a Borrower under the Loan Agreement and agrees to be bound by all of the terms and provisions thereunder. The undersigned further acknowledges and agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of all Obligations under the Loan Documents. Concurrently with the execution hereof, the undersigned shall execute and deliver a joinder to the Security Agreement and take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of the Lenders) on the Collateral as contemplated by Section 9.1.9 of the Loan Agreement.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned has executed this Joinder this 1st day of September, 2012.

VINCE, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer	

Exhibit 10.47
Joinder to Loan Agreement
The undersigned, Vince, LLC, a Delaware limited liability company, hereby joins in the execution of that certain Fourth Amended and Restated Term Loan Agreement dated as of April 20, 2012 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Loan Agreement ”) among Kellwood Company, certain of its Domestic Subsidiaries, and each other Domestic Subsidiary that becomes a Borrower thereunder after the date and pursuant to the terms thereof, Sun Kellwood Finance, LLC, as collateral agent for each Lender and such Lenders party thereto. All capitalized terms not defined herein shall have the meaning assigned to them in the Loan Agreement.
By executing this Joinder, the undersigned hereby agrees that it is a Borrower under the Loan Agreement and agrees to be bound by all of the terms and provisions thereunder. The undersigned further acknowledges and agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Collateral Agent and the Lenders the prompt payment and performance of all Obligations under the Loan Documents. Concurrently with the execution hereof, the undersigned shall execute and deliver a joinder to the Security Agreement and take such other actions as Collateral Agent shall require to evidence and perfect a Lien in favor of Collateral Agent (for the benefit of the Lenders) on the Collateral as contemplated by Section 9.1.9 of the Loan Agreement.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned has executed this Joinder this 1st day of September, 2012.

VINCE, LLC	
		
By:	 	/s/ Adrian Kowalewski	
Name:	 	Adrian Kowalewski	
Title:	 	Chief Financial Officer	

Exhibit 10.50
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this “ Amendment ”), is made this 23rd day of September, 2013 (the “ Effective Date ”) by and among Kellwood Company (“ Company ”) and Jill Granoff (the “ Executive ”).
WHEREAS, the Executive and the Company are a party to that certain Employment Agreement, dated as of May 4, 2012 and amended as of December 30, 2012 (the “ Employment Agreement ”);
WHEREAS, the Company and Executive desire to further amend the Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties enter into this Amendment to the Employment Agreement (this “ Amendment ”).
1. This Amendment is immediately effective as of the Effective Date.
2. The second sentence of Section 4(b)(ii) of the Employment Agreement is hereby amended by replacing the phrase “within sixty (60) days following the applicable Actual Debt Recovery” with the phrase “concurrently with the applicable Actual Debt Recovery”.
3. Section 4(b)(iii) of the Employment Agreement is hereby amended by adding the following to the end of such Section:
“(A) For the avoidance of doubt, (x) following an initial public offering registered under the Securities Act of 1933 (as amended) of equity securities of the Company, any successor to the Company, or a parent company thereof, in each case where such entity or a subsidiary thereof includes the Vince Business (such entity referred to herein as a “ Successor Entity ” and such initial public offering, a “ Vince IPO ”), and following which the Executive remains as the Chief Executive Officer of the Vince Business, the Executive’s continued employment with the Successor Entity shall constitute continued employment for purposes of Executive’s entitlement to any payment pursuant to this Section 4(b) (and in the event that any proceeds received as a result of the Vince IPO are deposited into escrow (the “Escrowed Proceeds”), Executive shall earn a Debt Recovery Bonus on any Actual Debt Recovery that is made from such Escrowed Proceeds, whenever made), (y) a portion of the Debt Recovery Bonus has been earned and will be paid in accordance with that certain Letter Agreement by and between the Executive and the Company, dated as of June 11, 2013, and (z) the obligation to pay any amounts pursuant to Section 4(b) shall remain an obligation of Kellwood Company or its successor. (B) In the event of the consummation of a merger, a sale of more than fifty percent (50%) of the shares of voting stock of the entity owning the assets of the Vince Business, or a sale of all or substantially all of the Company’s assets of the Vince Business, but excluding transactions either (x) with affiliates of the Company or Sun or its affiliates (as determined by the Board of Directors in its good faith discretion) or (y) pursuant to which more than fifty percent (50%) of the shares of voting stock of the surviving or acquiring entity is owned and/or controlled (by agreement or otherwise), directly or indirectly, by Sun or its affiliates (such transaction, a “ Vince Sale ”), and the Executive remains as the Chief Executive Officer of the Vince Business through the date of the Vince Sale, the

Executive shall earn a Debt Recovery Bonus on any Actual Debt Recovery that occurs within ninety (90) days following the Vince Sale, but no further Debt Recovery Bonus will be earned on account of any Actual Debt Recovery that occurs more than ninety (90) days following the date of the Vince Sale. In the event that the consideration received by the Company in a Vince Sale is not all cash, and such non-cash portion constitutes more than 50% of the total consideration received (the “Non-Cash Consideration”), Executive shall earn a Debt Recovery Bonus on any Actual Debt Recovery that occurs (i) within the one year period following the date of the Vince Sale to the extent that the Actual Debt Recovery is made from the proceeds of the monetization of Non-Cash Consideration, or (ii) if later, by December 31, 2014. For the avoidance of doubt, neither (i) earn-outs, escrows and other forms of contingent deferred cash consideration, (ii) consideration paid in the form of consulting services or restrictive covenants that are paid or payable to the Company or its CEO in cash in connection with the Vince Sale nor (iii) subsequent increases in the value of the Non-Cash Consideration following the date of the Vince Sale shall constitute Non-Cash Consideration. In addition, any payment of Actual Debt Recovery made in connection with a recapitalization, refinancing or other extraordinary transaction (including but not limited to a Sale or a sale of any of the Company’s assets) by the Company following a Vince Sale shall be deemed to be made from sources other than the Non-Cash Consideration. (C) For the avoidance of doubt, in the event of the consummation of a sale of less than fifty percent (50%) of the shares of voting stock of the entity owning the assets of the Vince Business, or a sale of less than substantially all of the Company’s assets of the Vince Business, and following which the Executive either remains employed by the Company or remains as the Chief Executive Officer of the Vince Business, the Executive’s continued employment with the entity directly or indirectly owning the assets of the Vince Business that were sold shall constitute continued employment for purposes of Executive’s entitlement to any payment pursuant to this Section 4(b) , which shall remain in full force and effect in accordance with its terms. Any Debt Recovery Bonus that is earned in connection with the payment of any of the debt listed in the definition of “Actual Debt Recovery” shall be paid to Executive prior to (i) the Company paying any further payments under that certain Management Services Agreement by and between the Company and Sun Capital Partners Management V, LLC, dated as of May 29, 2008 and as may be amended from time to time and (ii) the Company repaying, refinancing or repurchasing the Company’s 7.625% 1997 Debentures due 2017.
4. This Amendment represents the complete and total understanding of the parties with respect to the content thereof, and cannot be modified or altered except if done so in writing, executed by all parties.
5. This Amendment shall in no way modify, alter, change or otherwise delete any provision of the Employment Agreement, unless specifically done so by the terms of this Amendment, and all the remaining provisions of the Employment Agreement shall remain in full force and effect. This Amendment may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date written below and upon full execution by all parties, this Amendment shall be effective as set forth in Section 1 above.

EXECUTIVE	
	
/s/ Jill Granoff	
		
Date:	 	9/24/13	
	
COMPANY	
	
/s/ Keith Grypp	
	
By: Keith Grypp	
		
Its:	 	Senior Vice President, General Counsel and Secretary	
		
Date:	 	9/24/13	
Signature Page to Amendment No. 2 to Employment Agreement

Exhibit 10.55
Execution Version
OPTION EXTENSION AGREEMENT
This Option Extension Agreement (the “ Agreement ”) is made as of August 5, 2013, by and among Michael Saunders (“ Saunders ”), Kellwood Company, a Delaware corporation (the “ Company ”), Apparel Holding Corp., a Delaware corporation (the “ Parent ”), SCSF Cardinal, LLC, a Delaware limited liability company (“ SCSF Cardinal ”), and Sun Cardinal, LLC, a Delaware limited liability company (“ Sun Cardinal ”). The parties hereto are referred to collectively herein as the “ Parties ” and each as a “ Party ”. Capitalized terms not otherwise defined herein have the meaning set forth in that certain Grant Agreement by and between the Company and Saunders dated June 30, 2010 (the “ Grant Agreement ”).
WHEREAS, Saunders holds 10,000 vested options (the “ Options ”) to acquire 10,000 shares of non-voting common stock of the Company pursuant to the Grant Agreement;
WHEREAS, the Options were granted pursuant to the terms of that certain 2010 Stock Option Plan of the Company (as such Plan is later amended from time to time in accordance with its terms, the “ Plan ”);
WHEREAS, the Company and Saunders are party to that certain Extension Agreement, dated as of July 2, 2013 (the “ Extension Agreement ”) which such Extension Agreement, inter alia, extended the expiration of the Options until August 15, 2013;
WHEREAS, unless exercised in accordance with the Extension Agreement, the Options will expire on August 15, 2013;
WHEREAS, the Parties desire to further extend the expiration of the Options and otherwise set forth the terms and conditions on which the Options may be exercised;
NOW THEREFORE , in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows.
1. Termination . Notwithstanding anything to the contrary in the Grant Agreement, the Plan, the Extension Agreement or any other agreement between the Parties, the Options shall not expire on August 15, 2013, but shall instead expire on the earliest of (a) the date which is ten (10) days after the consummation of the initial public offering by the Parent or its successor of its common stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “ IPO ”), (b) the date of the consummation of a Sale (as such term is defined in the Grant Agreement) and (c) 11:59 on the tenth anniversary of the original grant date of the Option, which date the parties agree is June 30, 2020 (such earliest of (a), (b) or (c) referred to herein as, the “ Expiration Time ”). The Company shall provide Saunders with at least ten (10) days’ notice of the Expiration Time.
2. Exercise.
(a) Saunders agrees that Saunders shall not, and has no right to, exercise any of the Options (and any such exercise or attempt to exercise any of the Options prior to such period shall be void and ineffective) until the date that is ten (10) days prior to the

Expiration Time. If the Options are not exercised prior to the Expiration Time, the Options shall immediately expire upon the Expiration Time and Saunders shall have no further rights thereunder.
(b) Saunders shall notify the Company in writing of his intention to exercise his Options no less than five (5) days prior to such Expiration Time (such written notice referred to herein as an “ Exercise Notice ”). In the event that Saunders elects to exercise his Options, Saunders agrees that the Option shall be exercised only by executing a “Notice of Exercise of Stock Options” in substantially the form attached as Annex B to the Grant Agreement as may be reasonably modified to reflect the terms of this Agreement and that such exercise shall be conditioned upon the execution of the other documentation required by Section 4 hereof.
3. Sun Repurchase Rights; Settlement Rights .
(a) Repurchase of Options . Within the thirty (30) day period prior to the Expiration Time, Sun Cardinal, SCSF Cardinal or any their respective affiliates (as determined by Sun Cardinal or SCSF Cardinal) (“ Purchaser ”) shall have a right to purchase from Saunders (or any successor in interest by purchase, gift or other mode of transfer) all or any number of the Options, as determined by Purchaser in Purchaser’s sole discretion. Such purchase shall be made, in respect of each Option that the Purchaser elects to purchase, at the lower of (i) $120.78 per Option to acquire a share of non-voting common stock of the Company (a “ Share ”) (as such amount may be adjusted pursuant to Section 3(c) ) or (ii) the Fair Market Value of a Share at the time of the Repurchase Notice (as defined below) minus, in the case of clause ii only, $1.00 (such amount, the “ Purchase Price ”). This right to purchase the Options shall be exercisable by Purchaser within the thirty (30) day period prior to the Expiration Time by: (i) giving written notice of such purchase to Saunders (a “ Repurchase Notice ”), which such Repurchase Notice shall include the number of Options that are to be purchased by the Purchaser, (ii) tendering payment of the applicable purchase price of the Options to Saunders within thirty (30) days of the delivery of such Repurchase Notice and (iii) complying with such other terms and conditions established herein. The Purchase Price may be made, at the discretion of the Company, (x) entirely in cash, (y) in a combination (as determined by the Parent in its good faith sole discretion) of cash and in a number of shares of non-voting common stock of the Parent valued at the Fair Market Value of such shares (as defined below) as of the date of the Repurchase Notice (“ Parent Stock ”) or (z) entirely in Parent Stock valued at the Fair Market Value of such shares as of the date of the Repurchase Notice. For purposes of this Agreement, “ Fair Market Value ” of either Company Stock or Parent Stock shall be determined by Parent in its good faith sole discretion, it being understood that the Parent, in determining Fair Market Value, shall consider the results of at least one commonly used business valuation methodology. Saunders hereby agrees that in the event that any portion of the Purchase Price is paid in Parent Stock, Saunders will enter into an agreement containing customary representations and warranties regarding the Options and the Parent Stock substantially similar to the representations and warranties contained within the “Notice of Exercise of Stock Options” attached as Annex B to the Grant Agreement. In the event that the Purchaser elects to purchase such Options in accordance with this Section 3(a) , any Exercise Notice
 
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Saunders may have provided shall be null and void with respect to the Options repurchased by the Purchaser and Saunders shall have no further rights pursuant to the Options other than to the payment of the Purchase Price contemplated under this Section 3(a), subject to the conditions contained herein. For the avoidance of doubt, the Purchaser’s purchase right pursuant to this Section 3(a) is not contingent upon Saunders providing the Company with an Exercise Notice.
(b) Repurchase of Shares . In the event that Saunders exercises the Options in accordance with Section 2 herein, then, following such exercise, Purchaser shall have a right, exercisable by the Purchaser at any time within seven (7) months of Saunders’ exercise of Options, to purchase from Saunders (or any successor in interest by purchase, gift or other mode of transfer) all or any number of Shares issued to Saunders in settlement of the Options, as determined by Purchaser in Purchaser’s sole discretion. Such purchase shall be made, in respect of each Share, at the lower of (i) $121.78 per share (as such amount may be adjusted pursuant to Section 3(d) ) or (ii) the Fair Market Value of each such share of stock at the time of repurchase. This right to purchase shall be exercisable by: (i) giving written notice of such purchase to Saunders, which such notice shall include the number of shares that are to be purchased by Purchaser, (ii) tendering payment of the applicable purchase price in cash of the shares to Saunders within thirty (30) days of the delivery of such written notice and (iii) complying with such other terms and conditions established herein.
(c) Repurchase of Parent Stock . In the event that Purchaser repurchases all or any number of Options from Saunders pursuant to Section 3(a) and pays all or part of the Purchase Price to Saunders in Parent Stock, then, following such repurchase, Purchaser shall have a right, exercisable by the Purchaser at any time within seven (7) months of such repurchase, to purchase from Saunders (or any successor in interest by purchase, gift or other mode of transfer) all or any number of shares of Parent Stock issued to Saunders in the repurchase of the Options, as determined by Purchaser in Purchaser’s sole discretion. Such repurchase shall be made, in respect of each share of Parent Stock at the Fair Market Value of each such share of Parent Stock at the time of repurchase. This right to repurchase shall be exercisable by: (i) giving written notice of such repurchase to Saunders, which such notice shall include the number of shares of Parent Stock that are to be repurchased by Purchaser, (ii) tendering payment of the applicable purchase price in cash of the shares of Parent Stock to Saunders within thirty (30) days of the delivery of such written notice and (iii) complying with such other terms and conditions established herein.
(d) In the event of a dividend, recapitalization, or spin-off, split-up, combination or exchange of shares of the non-voting common stock of the Company or Parent or the like, any of which results in a change in the number or kind of shares of stock of the Company or Parent outstanding immediately prior to such event, the amounts that may be paid by Purchaser pursuant to this Section 3 shall be appropriately adjusted in order that the rights of Purchaser and Saunders are neither enlarged nor diminished as a result of such event. The Parties acknowledge that the proposed structure, including capital structure, of the Parent at the time of a potential IPO, if any, has not been finally determined, but such capital structure may involve (i) a stock split of the issued and outstanding capital stock of the Parent in anticipation of such an IPO and (ii) prior to an IPO, only a single class of voting common stock of the Parent being issued and
 
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outstanding, and that the provisions of this Section 3(d) shall be applied, if applicable, such that the rights of Purchaser and Saunders are neither enlarged nor diminished as a result of such event.
(e) SAUNDERS HEREBY ACKNOWLEDGES THAT ANYTIME AFTER THE DATE HEREOF ANY OF SCSF CARDINAL OR SUN CARDINAL OR THEIR RESPECTIVE AFFILIATES MAY SELL THE SHARES PURCHASED HEREUNDER OR OBTAINED BY EXERCISE OF OPTIONS PURCHASED HEREUNDER OR SIMILAR EQUITY SECURITIES OF THE PARENT OR THE COMPANY FOR CONSIDERATION SIGNIFICANTLY HIGHER THAN THE CONSIDERATION BEING PAID TO SAUNDERS FOR SUCH SHARES OR SUCH OPTIONS AND AGREES THAT SAUNDERS SHALL HAVE NO “LOOK BACK” OR SIMILAR RIGHTS.
4. Additional Agreements; Full Force and Effect . Saunders shall, in the Company’s reasonable discretion, be required to execute a stockholders’ agreement of the Parent or the Company, as applicable, a registration agreement of the Parent of the Company, as applicable and a limited liability company agreement of the Company (if applicable), or joinders thereto, as a condition to exercising any of the Options or as a condition of receiving the Parent Stock to which he may entitled pursuant to Section 3 , as applicable, as well as an Underwriters Lock-Up Agreement substantially similar to any Underwriters Lock-Up Agreement entered into by any other holder of equity in Parent. Saunders acknowledges and agrees that in the event Saunders receives Parent Stock pursuant to Section 3 , the provisions of the Plan and Grant Agreement shall be modified, in the Company’s reasonable discretion, for any conforming changes made necessary by his ownership of shares in Parent rather than the Company. All sections, provisions and clauses in the Grant Agreement and Plan, as modified, shall remain in full force and effect. All other sections, provisions, and clauses in the Extension Agreement, the Grant Agreement and the Plan not expressly modified by this Agreement shall remain in full force and effect.
5. No Assignments; Binding Effect . Except as provided in this Section 5 , no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other parties hereto. SCSF Cardinal, Sun Cardinal, the Company and the Parent may assign this Agreement to any affiliate and any successor to all or substantially all of the business and/or assets of SCSF Cardinal, Sun Cardinal, the Company or the Parent, respectively, provided that the assigning party shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the assigning party would be required to perform it if no such succession had taken place. As used in this Agreement, the term “ Company ” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise and the term “ Parent ” shall mean the Parent and any successor to its business and/or assets, which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise. This Agreement is binding upon, and shall inure to the benefit of, the parties and their respective heirs, executors and administrators (including Saunders’s estate, in the event of Saunders’s death), and their respective permitted successors and assigns.
 
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6. Saunders Acknowledgements . Saunders acknowledges that Saunders: (a) has carefully read this Agreement in its entirety; (b) is hereby advised by the other Parties in writing to consult with an attorney of Saunders’s choice prior to signing this Agreement; (c) fully understands the significance of all of the terms and conditions of this Agreement and has discussed them with Saunders’s independent legal counsel, or has had a reasonable opportunity to do so; (d) has had answered to Saunders’s satisfaction by Saunders’s independent legal counsel all questions that Saunders has asked with regard to the meaning and significance of any of the provisions of this Agreement; and (e) is signing this Agreement voluntarily and of Saunders’s own free will and agrees to abide by all of the terms and conditions contained herein.
7. Information . Saunders acknowledges that (i) SCSF Cardinal and Sun Cardinal control the Parent, (ii) the Parent controls the Company, (iii) the Company’s board of directors is composed of officers, directors, employees and affiliates of the Parent, SCSF Cardinal and Sun Cardinal (iv) Sun Cardinal, SCSF Cardinal, the Parent and the Company may have, and later may come into possession of, information with respect to the Company’s or the Parent’s common stock, the Company, the Parent or their respective affiliates that is not known to Saunders and that may be material to a decision to accept or sell stock in either the Company or the Parent (the “ Information ”), (v) Saunders has decided to enter into the transactions contemplated by this Agreement notwithstanding his lack of knowledge of the Information and (vi) none of Sun Cardinal, SCSF Cardinal, the Company nor the Parent shall have any liability to Saunders and Saunders waives and releases any claims that he might have against Sun Cardinal, SCSF Cardinal, the Parent or the Company or any of their respective officers, directors, representatives or affiliates, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Information in connection with the transactions contemplated hereby.
8. Authority . Each of the Parties represents and warrants to the other Parties that (i) such Party has full legal capacity, power and authority to enter in to this Agreement and consummate the transactions contemplated hereby and by the exhibits hereto and (ii) the consummation of the transactions contemplated by this Agreement and the exhibits hereto and the performance of such Party’s obligations hereunder will not conflict with, or result in any violation of or default under, any provision of any agreement or other instrument to which such Party is a party or by which such Party or any of its properties is bound, or any judgment, decree, order, statute, rule or regulation applicable to such Party’s properties. Saunders represents and warrants to each of the other Parties that Saunders has legal, beneficial and marketable title to the Options, and upon their exercise, the shares issued to settle the Options, free and clear of any lien, liability or encumbrance, and Saunders has not transferred nor taken any action which could be interpreted to transfer or intend to transfer the Options to any other person or third party.
9. Restrictive Covenants . Saunders hereby (a) reaffirms Saunders’ obligations under Annex A of the Grant Agreement and (b) understands, acknowledges and agrees that such obligations survived Saunders’ termination of employment with the Company and execution of the Options and remain in full force and effect and be binding on Saunders in accordance with all of the terms and conditions thereof.
10. Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal Law of the State of New York without giving effect to any choice of law or conflict of law provision or rule (whether of
 
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the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR IN CONNECTION WITH (I) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (II) THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
11. Entire Agreement . Saunders understands that this Agreement and the documents referenced herein constitute the complete understanding between the Company and Saunders, and, except as specifically provided herein, supersedes any and all agreements, understandings, and discussions, whether written or oral, between Saunders and the Company. No other promises or agreements shall be binding unless in writing and signed by both the Company and Saunders after the date of this Agreement.
12. Notices . All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by first-class registered or certified mails, return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by facsimile transmission addressed as follows:
 
 	(i)	If to the Company, to:	
Kellwood Company
600 Kellwood Parkway
Chesterfield, MO 63017
Attention: General Counsel
Facsimile Number: (314) 576-3388
 
 	(ii)	If to the Parent, to:	
Apparel Holding Corp.
c/o Kellwood Company
600 Kellwood Parkway
Chesterfield, MO 63017
Attention: General Counsel
Facsimile Number: (314) 576-3388
 
 	(iii)	If to SCSF Cardinal, to:	
SCSF Cardinal, LLC
c/o Sun Capital Advisors V, L.P.
5200 Town Center Circle, Suite 600
Boca Raton, Florida 33486
Attention: C. Deryl Couch, Jason H. Neimark and Brian McGee
Facsimile No.: (561) 394-0540
 
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 	(iv)	If to Sun Cardinal, to:	
Sun Cardinal, LLC
c/o Sun Capital Advisors V, L.P.
5200 Town Center Circle, Suite 600
Boca Raton, Florida 33486
Attention: C. Deryl Couch, Jason H. Neimark and Brian McGee
Facsimile No.: (561) 394-0540
 
 	(v)	If to Saunders, to the address last shown on the Company’s records.	
13. Further Assurances . Saunders shall execute and deliver such further agreements and take such additional action as may be necessary in the reasonable discretion of either the Parent or the Company to effect or consummate the IPO, the corporate restructuring undertaken in anticipation of the IPO (the “ Restructuring ”), the Sale or such other similar transactions as are contemplated by the IPO, the Restructuring or the Sale.
14. Miscellaneous . This Agreement is not intended, and shall not be construed, as an admission that the Company has violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever against Saunders. Should any provision of this Agreement require interpretation or construction, it is agreed by the parties that the entity interpreting or constructing this Agreement shall not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
15. Section 409A Compliance . The intent of the parties hereto is that payments and benefits under this Agreement that are subject to Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “ Code Section 409A ”) comply with or be exempt from Code Section 409A, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Saunders acknowledges and agrees that the Parent and the Company make no warranty or representations with respect to the application of Code Section 409A and other tax consequences to any payments contemplated hereunder.
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IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.

KELLWOOD COMPANY	
		
By:	 	/s/ Jill Granoff	
	 	Jill Granoff	
	 	Chief Executive Officer & President	
	
SCSF CARDINAL, LLC	
		
By:	 	/s/ Michael J. McConvery	
	 	Michael J. McConvery	
	 	Vice President & Assistant Secretary	
	
SUN CARDINAL, LLC	
		
By:	 	/s/ Michael J. McConvery	
	 	Michael J. McConvery	
	 	Vice President & Assistant Secretary	
	
APPAREL HOLDING CORP.	
		
By:	 	/s/ Jill Granoff	
	 	Jill Granoff	
	 	Chief Executive Officer & President	
	
MICHAEL SAUNDERS	
	
/s/ Michael Saunders	
Michael Saunders	
Signature Page to Option Extension Agreement

Exhibit 21.1
SUBSIDIARIES OF VINCE HOLDING CORP.
Effective after giving effect to the IPO Restructuring Transactions

Subsidiary	 	State of Incorporation or Organization	
Vince Intermediate Holding, LLC	 	Delaware	
Vince, LLC	 	Delaware	

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of Apparel Holding Corporation of our report dated July 11, 2013 relating to the consolidated financial statements and financial statement schedules of Apparel Holding Corporation, which appears in such Registration Statement. We also consent to the reference to us under the headings “Experts” in such Registration Statement.

St. Louis, Missouri
September 24, 2013

Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of Apparel Holding Corporation of our report dated July 11, 2013 relating to the financial statements of Vince LLC, which appears in such Registration Statement. We also consent to the reference to us under the headings “Experts” in such Registration Statement.

St. Louis, Missouri
September 24, 2013