AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 24, 2009

Exhibit 10.1

AMENDED AND RESTATED
CREDIT AGREEMENT

dated as of
June 24, 2009

TOYS “R” US-DELAWARE, INC.

The Lead Borrower
For
THE BORROWERS PARTY HERETO

The FACILITY GUARANTORS PARTY HERETO

BANK OF AMERICA, N.A.
as Administrative Agent

BANK OF AMERICA, N.A. (acting through its Canada branch)
as Canadian Agent

BANK OF AMERICA, N.A.
WELLS FARGO RETAIL FINANCE, LLC
as Co-Collateral Agents

THE LENDERS
NAMED HEREIN

WELLS FARGO RETAIL FINANCE, LLC
as Syndication Agent,

DEUTSCHE BANK AG NEW YORK BRANCH
GMAC COMMERCIAL FINANCE LLC
as Co-Documentation Agents,

BANC OF AMERICA SECURITIES LLC
WELLS FARGO RETAIL FINANCE, LLC
as Joint Lead Arrangers

and

BANC OF AMERICA SECURITIES LLC
WELLS FARGO RETAIL FINANCE, LLC
DEUTSCHE BANK AG NEW YORK BRANCH
as Joint Bookrunners

TABLE OF CONTENTS

EXHIBITS

SCHEDULES

      AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 24, 2009 among:

      TOYS “R” US-DELAWARE, INC. , a corporation organized under the laws of the State of Delaware, with its principal executive offices at One Geoffrey Way, Wayne, New Jersey, for itself and as agent (in such capacity, the “ Lead Borrower ”) for the other Domestic Borrowers now or hereafter party hereto;

     The DOMESTIC BORROWERS ;

      TOYS “R” US (CANADA) LTD. TOYS “R” US (CANADA) LTEE (the “ Canadian Borrower ”), a corporation organized under the laws of the Province of Ontario with its principal executive offices at 2777 Langstaff Road, Concord, Ontario L4K 4M5;

     The FACILITY GUARANTORS ;

      BANK OF AMERICA, N.A. , a national banking association, having a place of business at 100 Federal Street, Boston, Massachusetts 02110, as administrative agent (in such capacity, together with any replacement thereof pursuant to SECTION 8.13 hereof, the “ Administrative Agent ”) for its own benefit and the benefit of the other Secured Parties;

      BANK OF AMERICA, N.A. (acting through its Canada branch), a banking corporation carrying on business under the Bank Act (Canada), having a place of business at 200 Front Street West, Toronto, Ontario, Canada M5V 3L2, as Canadian Administrative Agent (in such capacity, together with any replacement thereof pursuant to SECTION 8.13 hereof, the “ Canadian Agent ”) for its own benefit and the benefit of the other Secured Parties;

      BANK OF AMERICA, N.A. , a national banking association, having a place of business at 100 Federal Street, Boston, Massachusetts 02110, and WELLS FARGO RETAIL FINANCE, LLC , a Delaware limited liability company, having a place of business at One Boston Place, 19th Floor, Boston, Massachusetts 02108, as co-collateral agents (collectively, in such capacity, together with any replacement thereof pursuant to SECTION 8.13 hereof, the “ Co-Collateral Agents ”) for their own benefit and the benefit of the other Secured Parties;

     The LENDERS ;

      WELLS FARGO RETAIL FINANCE, LLC , as Syndication Agent; and

      DEUTSCHE BANK AG NEW YORK BRANCH and GMAC COMMERCIAL FINANCE, LLC , as Co-Documentation Agents;

in consideration of the mutual covenants herein contained and benefits to be derived herefrom, the parties hereto agree as follows:

W I T N E S S E T H :

     WHEREAS, the Borrowers have entered into a Credit Agreement, dated as of July 21, 2005 (as amended and in effect, the “ Existing Credit Agreement ”), among such Borrowers, the “Lenders” as defined therein, Bank of America, N.A. as “Administrative Agent”, Bank of America, N.A. (acting through its Canada branch) as “Canadian Agent”, Deutsche Bank Trust Company Americas as “Collateral Agent”, Deutsche Bank Securities Inc. and Citicorp USA, Inc. as “Co-Syndication Agents”, Credit Suisse, Cayman Islands Branch and General Electric Capital Corporation as “Co-Documentation Agents”, The CIT Group/Business Credit, Inc., Wachovia Bank, National Association, GMAC Commercial Finance LLC, Wells Fargo Retail Finance, LLC and RBS Citizens, N.A. (f/k/a Citizens Bank of Massachusetts) as “Managing Agents”, and LaSalle Retail Finance, a Division of LaSalle Business Credit, LLC, as Agent for Standard Federal Bank, N.A., ING Capital LLC and Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services Inc., as “Co-Agents”; and

     WHEREAS, in accordance with SECTION 8.12 of the Existing Credit Agreement, (i) Deutsche Bank Trust Company Americas (the “ Original Collateral Agent ”) has agreed to resign as Collateral Agent under the Existing Credit Agreement and the other Loan Documents (as defined in the Existing Credit Agreement), and (ii) the Required Lenders (as defined in the Existing Credit Agreement), with the approval of the Lead Borrower, desire to appoint Bank of America, N.A. and Wells Fargo Retail Finance, LLC as successor Co-Collateral Agents; and

     WHEREAS, in accordance with SECTION 9.02 of the Existing Credit Agreement, the Borrowers, the Required Lenders, the Agents and the Canadian Agent desire to amend and restate the Existing Credit Agreement as provided herein.

     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned hereby agree that the Existing Credit Agreement shall be amended and restated in its entirety to read as follows (it being agreed that this Agreement shall not be deemed to evidence or result in a novation or repayment and reborrowing of the Obligations under the Existing Credit Agreement):

ARTICLE I

     SECTION 1.01 Definitions.

     As used in this Agreement, the following terms have the meanings specified below:

     “ ABL Collateral ” has the meaning set forth in the Intercreditor Agreement.

     “ ACH ” means automated clearing house transfers.

     “ Accelerated Borrowing Base Delivery Event ” means the occurrence of any of the following: (a) the occurrence and continuance of any Specified Default; or (b) except during any Holiday Season, the failure of the Borrowers to maintain Capped Availability at all times of not less than the greater of (i) $250,000,000 or (ii) twenty percent (20%) of the Line Cap; or (c) during any Holiday Season, (i) the failure of the Borrowers to maintain Uncapped Availability at all times of at least twenty percent (20%) of the Combined Borrowing Base or (ii) the failure of the Borrowers to maintain Capped Availability at all times of at least fifteen percent (15%) of the

Line Cap; provided that the Lead Borrower may elect that the provisions of clause (b) hereof apply during the Holiday Season of any year in lieu of the provisions of clause (c), such election to be made by the Lead Borrower in writing on or before October 31 ^st of each such year; provided further that, unless and until such election is made, the provisions of clause (c) shall apply during each Holiday Season.

     “ Access Agreement ” means (a) that certain Intercreditor Agreement (Pool A), dated as of July 21, 2005, between the Administrative Agent and Giraffe Properties, LLC and (b) that certain Intercreditor Agreement (Pool B), dated as of July 21, 2005, between the Administrative Agent and MPO Properties, LLC.

     “ Accommodation Payment ” has the meaning provided in SECTION 9.14.

     “ Account(s) ” means “accounts” as defined in the UCC, and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) arising out of the use of a credit or charge card or information contained on or for use with the card. The term “Account” does not include (a) rights to payment evidenced by chattel paper or an instrument, (b) commercial tort claims, (c) deposit accounts, (d) investment property, (e) letter-of-credit rights or letters of credit, or (f) rights to payment for money or funds advanced other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.

     “ Acquisition ” means, with respect to a specified Person, (a) an Investment in or a purchase of a 50% or greater interest in the Capital Stock of any other Person, (b) a purchase or acquisition of all or substantially all of the assets of any other Person, or (c) any merger or consolidation of such Person with any other Person, in each case in any transaction or group of transactions which are part of a common plan.

     “ Additional Commitment Lender ” shall have the meaning provided in SECTION 2.02.

     “ Adjusted LIBO Rate ” means, with respect to any LIBO Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (a) the greater of (i) the LIBO Rate for such Interest Period, or (ii) 1.50% per annum, multiplied by (b) the Statutory Reserve Rate.

     “ Administrative Agent ” has the meaning provided in the preamble to this Agreement.

     “ Advisory Fees ” means annual advisory fees, closing fees and transaction fees payable by the Loan Parties pursuant to the Advisory Agreement, but not to exceed the amounts payable thereunder as in effect on the Closing Date.

     “ Advisory Agreement ” means the Advisory Agreement dated as of July 21, 2005 by and among the Parent, Bain Capital Partners, LLC, Bain Capital, Ltd., Toybox Holdings, LLC and Vornado Truck LLC, as amended and in effect from time to time in a manner not prohibited hereunder.

     “ Affiliate ” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified.

     “ Agents ” means collectively, the Administrative Agent and the Co-Collateral Agents.

     “ Agreement ” means this Amended and Restated Credit Agreement, as modified, amended, supplemented or restated, and in effect from time to time.

     “ Agreement Value ” means for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent in its reasonable discretion equal to:

     (a) In the case of a Hedge Agreement documented pursuant to an ISDA Master Agreement, the amount, if any, that would be payable by any Loan Party to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party was the sole “Affected Party” (as therein defined) and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of ISDA Master Agreement);

     (b) In the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party which is party to such Hedge Agreement, determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or

     (c) In all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party that is party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party exceeds (ii) the present value of the future cash flows to be received by such Loan Party, in each case pursuant to such Hedge Agreement.

     “ Applicable Law ” means, as to any Person: (a) all laws, statutes, rules, regulations, orders, codes, ordinances or other requirements having the force of law; and (b) all court orders, decrees, judgments, injunctions, notices, binding agreements and/or rulings, in each case of or by any Governmental Authority which has jurisdiction over such Person, or any property of such Person.

     “ Applicable Lenders ” means the Required Lenders, the Supermajority Lenders, or all Lenders, as applicable.

     “ Applicable Margin ” means:

     (a) From and after the Effective Date until the first Adjustment Date after the Effective Date, the percentages set forth in Level I of the pricing grid below; and

     (b) On the first day of each of the last three Fiscal Quarters of each Fiscal Year (each, an “ Adjustment Date ”), commencing with the Fiscal Quarter beginning on or about August 1, 2009, the Applicable Margin shall be determined from the pricing grid below based upon Average Daily Excess Availability for the most recently ended three month period immediately preceding such Adjustment Date.

     “ Applicable Termination Date ” means (a) in the case of the Non-Extending Lenders, the Existing Termination Date, and (b) in the case of the Extending Lenders, the Extended Termination Date.

     “ Appraised Value ” means the Average Seasonal Net Appraised Recovery Value of the Borrowers’ Inventory as set forth in the Borrowers’ stock ledger (expressed as a percentage of the Cost of such Inventory) as determined from time to time by reference to the most recent appraisal received by the Agents conducted by an independent appraiser reasonably satisfactory to the Agents. Initially, the Appraised Value shall be separately established for TRU Inventory and BRU Inventory; in the event that the Lead Borrower and the Agents so agree, the Appraised Value may be determined through a combined appraisal of the TRU Inventory and BRU Inventory.

     “ Approved Fund ” means any Fund that is administered or managed by (a) a Credit Party, (b) an Affiliate of a credit Party (c) an entity or an Affiliate of an entity that administers or manages a Credit Party, or (d) the same investment advisor or an advisor under common control with such Credit Party or advisor, as applicable.

     “ Arrangers ” means, collectively, Banc of America Securities LLC and Wells Fargo Retail Finance, LLC.

     “ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by SECTION 9.04), and accepted by the Administrative Agent, in the form of Exhibit A-1 or Exhibit A-2 , as applicable, or any other form approved by the Administrative Agent.

     “ Availability Reserves ” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, such reserves as any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) from time to time determines in its reasonable commercial discretion exercised in good faith as being appropriate (a) to reflect any impediments to the realization upon the Collateral included in the Tranche A Borrowing Base or Canadian Borrowing Base, (b) to reflect claims and liabilities that any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) determines will need to be satisfied in connection with the realization upon such Collateral, or (c) to reflect criteria, events, conditions, contingencies or risks which adversely affect any component of the Tranche A Borrowing Base, the Canadian Borrowing Base or the Collateral or the validity or enforceability of this Agreement or the other Loan Documents or any of the material rights or remedies of the Secured Parties hereunder or thereunder. Upon the determination by any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) that an Availability Reserve should be established or modified, the Co-Collateral Agents shall notify the Administrative Agent in writing and the Administrative Agent shall thereupon establish or modify such Availability Reserve, subject to the other provisions of this Agreement. In the event that the Co-Collateral Agents do not agree on the establishment or amount of Reserves to be imposed, the Administrative Agent shall nevertheless undertake such action with respect thereto as any Co-Collateral Agent may request (subject to the other provisions of this Agreement); provided that the amount of Reserves established or increased by any Co-Collateral Agent in the event of any such disagreement may not exceed $35,000,000 in the aggregate at any time outstanding for all such disagreements; and further provided that the Administrative Agent may not, without the prior consent of such Co-Collateral Agent, reduce or eliminate any such Reserves established under this sentence; and further provided that if the Co-Collateral Agents subsequently agree on the establishment or amount of Reserves to be imposed after their initial disagreement, the Reserves so established upon such agreement shall not be subject to the first proviso hereof and shall not be included in calculating the amount of Reserves permitted under such first proviso.

     “ Average Daily Excess Availability ” has the meaning set forth in the Existing Credit Agreement.

     “ Average Daily Uncapped Availability ” shall mean, for any date of calculation, the average daily Uncapped Availability for the most recently ended three month period immediately preceding such date of calculation.

     “ Average Seasonal Net Appraised Recovery Value ” means the average monthly net appraised recovery value (expressed as a percentage of Cost) of the Borrowers’ Inventory during the High Selling Period or the Low Selling Period, as applicable.

     “ BA Equivalent Loan ” shall mean any Loan in CD$ bearing interest at a rate determined by reference to the BA Rate in accordance with the provisions of Article II.

     “ BA Equivalent Loan Borrowing ” shall mean any Borrowing comprised of BA Equivalent Loans.

     “ BA Rate ” means, for the Interest Period of each BA Equivalent Loan, the rate of interest per annum equal to the annual rates applicable to CD$ Bankers’ Acceptances having an identical or comparable term as the proposed BA Equivalent Loan displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuter Monitor Money Rates Service as at approximately 10:00 A.M. on such day (or, if such day is not a Business Day, as of 10:00 A.M. on the immediately preceding Business Day), plus five (5) basis points; provided that if such rates do not appear on the CDOR Page at such time on such date, the rate for such date will be the annual discount rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as of 10:00 A.M. on such day at which a Canadian chartered bank listed on Schedule 1 of the Bank Act (Canada) as selected by the Canadian Agent is then offering to purchase CD$ Bankers’ Acceptances accepted by it having such specified term (or a term as closely as possible comparable to such specified term), plus five (5) basis points.

     “ Bank of America ” means Bank of America, N.A., a national banking association, and its Subsidiaries, Affiliates and branches.

     “ Bank of America-Canada Branch ” means Bank of America, N.A. (acting through its Canada branch).

     “ Bank Products ” means any services or facilities provided to any Loan Party by any Lender or any of its Affiliates on account of each Hedge Agreement that (a) is in effect on the Effective Date with a counterparty that is a Credit Party as of the Effective Date or (b) is entered into after the Effective Date with any counterparty that is a Credit Party at the time such Hedge Agreement is entered into.

     “ Bankruptcy Code ” means each of (i) Title 11, U.S.C., as now or hereafter in effect, or any successor thereto, and (ii) the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and the Winding-up and Restructuring Act (Canada), as now or hereafter in effect, or any successor thereto.

     “ BAS ” means Banc of America Securities LLC and its successors.

     “ Blocked Account ” has the meaning provided in SECTION 2.18(c).

     “ Blocked Account Agreement ” has the meaning provided in SECTION 2.18(c).

     “ Blocked Account Banks ” means the banks with whom deposit accounts are maintained in which material amounts (as reasonably determined by the Co-Collateral Agents) of funds of any of the Loan Parties from one or more DDAs are concentrated and with whom a Blocked Account Agreement has been, or is required to be, executed in accordance with the terms hereof.

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

     “ Bookrunners ” means, collectively, Banc of America Securities LLC, Wells Fargo Retail Finance, LLC and Deutsche Bank AG New York Branch.

     “ Borrower ” means the Lead Borrower, each other Domestic Borrower and the Canadian Borrower; “Borrowers” shall mean, collectively, the Domestic Borrowers and the Canadian Borrower.

     “ Borrowing ” means (a) the incurrence of Revolving Credit Loans of a single Type, on a single date and having, in the case of LIBO Loans and BA Equivalent Loans, a single Interest Period, or (b) a Swingline Loan.

     “ Borrowing Base Certificate ” has the meaning provided in SECTION 5.01(f).

     “ Borrowing Request ” means a request by the Lead Borrower on behalf of any of the Domestic Borrowers or by the Canadian Borrower for a Borrowing in accordance with SECTION 2.04.

     “ Breakage Costs ” has the meaning provided in SECTION 2.16(b).

     “ BRU Inventory ” means all Inventory of the Loan Parties which is offered for sale (or is designated for sale) at any “Babies “R” Us” Store, including, but not limited to, any such Inventory held for sale in internet and other direct sales, and all Inventory of the Loan Parties specifically designated as “Babies “R” Us” Inventory at any distribution center or warehouse maintained by the Loan Parties.

     “ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in Boston, Massachusetts are authorized or required by law to remain closed; provided , however , that when used in connection with a LIBO Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market; provided further that, when used in connection with any Loan to the Canadian Borrower, the term “Business Day” shall also exclude any day on which banks are authorized or required by law to be closed in Toronto, Ontario, Canada.

     “ Canadian Agent ” has the meaning set forth in the preamble hereto.

     “ Canadian Availability ” means, at any time of calculation, the lesser of (a) or (b), where:

     (a) is the result of:

     (i) the Canadian Credit Ceiling,

      Minus

     (ii) The aggregate outstanding amount of Credit Extensions to, or for the account of, the Canadian Borrower,

     (b) is the result of:

     (i) The Canadian Borrowing Base,

      Minus

     (ii) The aggregate unpaid balance of Credit Extensions to, or for the account of, the Canadian Borrower.

In calculating Canadian Availability at any time and for any purpose under this Agreement, any amount calculated or referenced in dollars shall also refer to the equivalent amount in CDN$.

     “ Canadian Borrower ” means Toys “R” Us (Canada) Ltd. Toys “R” Us (Canada) Ltee, a corporation organized under the laws of the Province of Ontario.

     “ Canadian Borrowing Base ” means, at any time of calculation, an amount equal to the Equivalent Amount in dollars of:

     (a) the face amount of Eligible Credit Card Receivables of the Canadian Loan Parties multiplied by ninety percent (90%);

      plus

     (b) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of TRU Inventory, net of Inventory Reserves, multiplied by the Inventory Advance Rate for TRU Inventory, multiplied by the Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of TRU Inventory;

      plus

     (c) (i) prior to the time that more than ten (10) “Babies “R” Us” Stores are operating in Canada and the BRU Inventory in Canada has been separately appraised, the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of BRU Inventory, net of Inventory Reserves, multiplied by the Inventory Advance Rate for TRU Inventory multiplied by the Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of TRU Inventory; and (ii) after more than ten (10) “Babies “R” Us” Stores are operating in Canada and the BRU Inventory in Canada has been separately appraised, the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of BRU Inventory, net of Inventory Reserves, multiplied by the Inventory Advance Rate for BRU Inventory, multiplied by the Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties consisting of BRU Inventory;

      plus

     (d) the Cost of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of TRU Inventory, net of Inventory Reserves, multiplied by the Inventory

Advance Rate for TRU Inventory, multiplied by the Appraised Value of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of TRU Inventory; provided that in no event shall the amounts available to be borrowed pursuant to this clause (d), together with amounts available to be advanced under clause (e) of this definition and clauses (d) and (e) of the definition of “Tranche A Borrowing Base” exceed 12 ¹ / 2 % of the Combined Borrowing Base in the aggregate;

      plus

     (e) (i) prior to the time that more than ten (10) “Babies “R” Us” Stores are operating in Canada and the BRU Inventory in Canada has been separately appraised, the Cost of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of BRU Inventory, net of Inventory Reserves, multiplied by the Inventory Advance Rate for TRU Inventory multiplied by the Appraised Value of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of TRU Inventory; and (ii) after more than ten (10) “Babies “R” Us” Stores are operating in Canada and the BRU Inventory in Canada has been separately appraised, the Cost of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of BRU Inventory, net of Inventory Reserves, multiplied by the Inventory Advance Rate for BRU Inventory, multiplied by the Appraised Value of Eligible In-Transit Inventory of the Canadian Loan Parties consisting of BRU Inventory; provided that in no event shall the amounts available to be borrowed pursuant to this clause (e), together with amounts available to be advanced under clause (d) of this definition and clauses (d) and (e) of the definition of “Tranche A Borrowing Base”, exceed 12 ¹ / 2 % of the Combined Borrowing Base;

     plus

     (f) the lesser of (i) the FMV of Eligible Real Estate of the Canadian Loan Parties, less the Canadian Realty Reserves, multiplied by fifty percent (50%), or (ii) $75,000,000;

      minus

     (g) the then amount of all Availability Reserves and, as long as Eligible Real Estate is included in the Canadian Borrowing Base, Canadian Sales Reserves.

     “ Canadian Capped Availability ” means (a) the lesser of (i) the Canadian Commitments or (ii) the Canadian Borrowing Base minus (b) the outstanding Credit Extensions to the Canadian Borrower, provided that in determining that Canadian Capped Availability, any Credit Extensions to the Domestic Borrowers in excess of fifty percent (50%) of Domestic Availability shall be deemed to have been made pro rata (based upon the ratio of the Canadian Commitments to the Total Commitments) to the Domestic Borrowers and the Canadian Borrower.

     “ Canadian Commitment ” shall mean, with respect to each Canadian Lender, the commitment of such Canadian Lender hereunder to make Credit Extensions to the Canadian Borrower in the amount set forth opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be increased from

time to time pursuant to SECTION 2.02 or reduced from time to time pursuant to SECTION 2.15 and SECTION 2.17.

     “ Canadian Commitment Percentage ” shall mean, with respect to each Canadian Lender, that percentage of the Canadian Commitments of all Canadian Lenders hereunder to make Credit Extensions to the Canadian Borrower in the amount set forth opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be increased from time to time pursuant to SECTION 2.02 or reduced from time to time pursuant to SECTION 2.15 and SECTION 2.17; provided that , unless the Canadian Commitments of all Lenders shall have then expired or been terminated, after the Canadian Commitments of the Non-Extending Lenders shall have expired or been terminated and all Obligations owed to the Non-Extending Lenders shall have been paid in full, the Canadian Commitment Percentages of the Extending Lenders shall be appropriately adjusted to reflect the expiration or termination of the Canadian Commitments of the Non-Extending Lenders.

     “ Canadian Concentration Account ” has the meaning provided in SECTION 2.18(d).

     “ Canadian Credit Ceiling ” means, initially, $200,000,000, as such amount may be increased from time to time pursuant to SECTION 2.02 or decreased from time to time pursuant to SECTION 2.15 and SECTION 2.17.

     “ Canadian Lenders ” means the Lenders having Canadian Commitments from time to time or at any time. Any Person may be a Canadian Lender only if (i) it is a financial institution that is listed on Schedule I, II or III of the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such financial institution is not resident in Canada and is not deemed to be resident in Canada for purposes of the Income Tax Act (Canada), then such financial institution deals at arm’s length with each Canadian Loan Party for purposes of the Income Tax Act (Canada), and (ii) it or any of its Affiliates also has Domestic Commitments in an amount at least equal to its Canadian Commitment; provided that ABN Amro Bank, N.V., Canada Branch (but not any of its assignees) may be a Canadian Lender notwithstanding that it does not hold a Domestic Commitment.

     “ Canadian Letter of Credit ” shall mean a Letter of Credit that is issued pursuant to this Agreement for the account of the Canadian Borrower.

     “ Canadian Letter of Credit Outstandings ” shall mean, at any time, the sum of (a) with respect to Canadian Letters of Credit outstanding at such time, the aggregate maximum amount that then is, or at any time thereafter may become, available for drawing or payment thereunder plus , without duplication, (b) all amounts theretofore drawn or paid under Canadian Letters of Credit for which the applicable Issuing Bank has not then been reimbursed.

     “ Canadian Letter of Credit Sublimit ” means $30,000,000.

     “ Canadian Liabilities ” means (a) (i) the principal of, and interest on, the Loans made hereunder to, or for the benefit of, the Canadian Borrower or any of its Subsidiaries, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise (including all interest that accrues after the commencement of any case or proceeding by or against the Canadian Borrower or any of its Subsidiaries under the Bankruptcy Code,

whether or not allowed in such case or proceeding), (ii) other amounts owing by the Canadian Borrower or any of its Subsidiaries under this Agreement and the other Loan Documents in respect of any Canadian Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations, including fees, costs, expenses and indemnities (including all fees, costs, expenses and indemnities that accrue after the commencement of any case or proceeding by or against the Canadian Borrower or any of its Subsidiaries under the Bankruptcy Code, whether or not allowed in such case or proceeding), whether primary, secondary, direct, contingent, fixed or otherwise, of the Canadian Borrower or any of its Subsidiaries to any of the Secured Parties under this Agreement and the other Loan Documents, (b) the due and punctual payment and performance of all covenants, agreements, obligations and liabilities of the Canadian Borrower or any of its Subsidiaries under or pursuant to this Agreement or the other Loan Documents, and (c) any Cash Management Services or Bank Products entered into or furnished to the Canadian Borrower or any of its Subsidiaries.

     “ Canadian Loan Party ” means the Canadian Borrower and each Canadian Subsidiary which becomes a Loan Party pursuant to the terms of SECTION 5.12.

     “ Canadian Loans ” means, collectively, the Loans made by the Canadian Lenders pursuant to ARTICLE II.

     “ Canadian Overadvance ” means a Credit Extension to the Canadian Borrower to the extent that, immediately after the making of such Credit Extension, Canadian Availability is less than zero.

     “ Canadian Prime Rate ” means the rate of interest publicly announced from time to time by Bank of America-Canada Branch as its reference rate of interest for loans made either (a) in CD$ to Canadian customers and designated as its “prime” rate, or (b) in dollars to Canadian customers and designated as its “base rate”. The “prime” rate or “base rate”, as applicable, is a rate set by Bank of America-Canada Branch based upon various factors, including Bank of America-Canada Branch’s costs and desired return, general economic conditions and other factors and is used as a reference point for pricing some loans. Any change in the Canadian Prime Rate due to a change in Bank of America-Canada Branch’s “prime” rate or “base rate”, as applicable, shall be effective on the effective date of such change in Bank of America-Canada Branch’s “prime” rate or “base rate”, as applicable.

     “ Canadian Realty Reserves ” means, without duplication of any other Reserves, such reserves as any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) from time to time determines in its reasonable commercial discretion exercised in good faith as being appropriate to reflect any impediments to the realization upon any Collateral consisting of Eligible Real Estate of the Canadian Loan Parties (including, without limitation, claims that any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) determines will need to be satisfied in connection with the realization upon such Eligible Real Estate and any Environmental Compliance Reserve with respect to such Eligible Real Estate). Canadian Realty Reserves shall include, without limitation, a reserve in an amount equal to ten percent (10%) of the FMV of any Eligible Real Estate of the Canadian Borrower which is subject to a right of first refusal or similar right to which the Mortgage in favor of the Canadian Agent is subject.

     “ Canadian Sales Reserve ” means a Reserve in an amount equal to 10% of the FMV of each parcel of Eligible Real Estate sold by the Canadian Loan Parties not constituting Excess Canadian Real Estate; provided that the maximum aggregate Canadian Sales Reserve shall not exceed $10,000,000.

     “ Canadian Security Documents ” means the General Security Agreement, Mortgages, and the deed of hypothec charging the universality of moveable property, in each case granted by the Canadian Borrower and each other Canadian Loan Party in favor of the Canadian Agent.

     “ Canadian Subsidiary ” means any Subsidiary of the Canadian Borrower organized under the laws of Canada or any province thereof.

     “ Canadian Swingline Loan Ceiling ” means $20,000,000, as such amount may be increased or reduced in accordance with the provisions of this Agreement.

     “ Canadian Total Commitment Increase Amount ” means, as of any proposed Commitment Increase Date, the least of (a) $500,000,000 minus the aggregate amount of Commitment Increases of the Domestic Commitments from and after the Closing Date to and including such Commitment Increase Date, (b) $150,000,000, or (c) the amount, if any, by which the Canadian Borrowing Base as calculated on such Commitment Increase Date exceeds the Canadian Borrowing Base as calculated on the Closing Date ( provided that any such increased amount of the Canadian Borrowing Base shall have been maintained by the Canadian Borrower for at least thirty (30) consecutive days prior to the proposed Commitment Increase Date for the Canadian Borrower).

     “ Canadian Total Commitments ” means the aggregate of the Canadian Commitments of all Canadian Lenders. On the Effective Date, the Canadian Total Commitments are $200,000,000.

     “ Canadian Unused Fee ” has the meaning provided in SECTION 2.19(d).

     “ Capital Expenditures ” means, with respect to the Loan Parties for any period, the additions to property, plant and equipment and other capital expenditures of the Loan Parties that are (or would be) set forth in a Consolidated statement of cash flows of the Loan Parties for such period prepared in accordance with GAAP; provided that “Capital Expenditures” shall not include (i) any additions to property, plant and equipment and other capital expenditures made with (A) the proceeds of any equity securities issued or capital contributions received, or Indebtedness borrowed (excluding borrowings under this Agreement, the Term Loan, or the Permanent Financing Facility) by any Loan Party or any Subsidiary in connection with such capital expenditures, (B) the proceeds from any casualty insurance or condemnation or eminent domain, to the extent that the proceeds therefrom are utilized for capital expenditures within twelve months of the receipt of such proceeds, (C) the proceeds from any sale or other disposition of any Loan Party’s assets (other than assets constituting Collateral consisting of Inventory, Accounts, and Eligible Real Estate and the proceeds thereof), to the extent that the proceeds therefrom are utilized for capital expenditures within twelve months of the receipt of such proceeds, (ii) any portion of the purchase price of a Permitted Acquisition which is allocated to property, plant or equipment acquired as part of such Permitted Acquisition, or (iii)

any expenditures which are contractually required to be, and are, reimbursed to the Loan Parties in cash by a third party (including landlords) during such period of calculation.

     “ Capital Lease Obligations ” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

     “ Capital Stock ” means, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing.

     “ Capped Availability ” means the difference between (a) the Line Cap and (b) the outstanding Credit Extensions to the Borrowers.

     “ Cash Collateral Account ” means an interest bearing account established by the Loan Parties (other than the Canadian Borrower and its Subsidiaries) with the Administrative Agent, for its own benefit and the benefit of the other Secured Parties, at Bank of America under the sole and exclusive dominion and control of the Administrative Agent, in the name of the Administrative Agent or as the Administrative Agent shall otherwise direct, in which deposits are required to be made in accordance with this Agreement, and, in the case of the Canadian Borrower and its Subsidiaries, an interest bearing account established by the Canadian Borrower and its Subsidiaries with the Canadian Agent, for its own benefit and the benefit of the other Secured Parties, at Bank of America-Canada Branch under the sole and exclusive dominion and control of the Canadian Agent, in the name of the Canadian Agent or as the Canadian Agent shall otherwise direct, in which deposits are required to be made in accordance with this Agreement.

     “ Cash Collateralize ” has the meaning provided in SECTION 2.13(j).

     “ Cash Dominion Event ” means the occurrence of any of the following: (a) the occurrence and continuance of any Specified Default; or (b) except during any Holiday Season, the failure of the Borrowers to maintain Capped Availability for any three (3) days (whether or not consecutive) during any thirty (30) day period at least equal to the greater of (i) $175,000,000 or (ii) seventeen and one-half percent (17.5%) of the Line Cap; or (c) except during any Holiday Season, the failure of the Borrowers to maintain Capped Availability at any time at least equal to $150,000,000, or (d) during any Holiday Season, (i) the failure of the Borrowers to maintain Uncapped Availability for any three (3) days (whether or not consecutive) during any thirty (30)

day period of at least seventeen and one-half percent (17.5%) of the Combined Borrowing Base or (ii) the failure of the Borrowers to maintain Capped Availability for any three (3) days (whether or not consecutive) during any thirty (30) day period of at least twelve and one-half percent (12.5%) of the Line Cap, or (e) during any Holiday Season, (i) the failure of the Borrowers to maintain Uncapped Availability at any time of at least fifteen percent (15%) of the Combined Borrowing Base or (ii) the failure of the Borrowers to maintain Capped Availability at any time of at least ten percent (10%) of the Line Cap; provided that the Lead Borrower may elect that the provisions of clauses (b) and (c) hereof apply during the Holiday Season of any year in lieu of the provisions of clause (d) and (e), such election to be made by the Lead Borrower in writing on or before October 31 ^st of each such year; provided further that, unless and until such election is made, the provisions of clauses (d) and (e) shall apply during each Holiday Season. For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (A) so long as such Specified Default has not been waived, and/or (B) if the Cash Dominion Event arises as a result of the Borrowers’ failure to maintain Capped Availability, as required pursuant to clause (b) hereunder, until Capped Availability has exceeded the greater of (x) $175,000,000 or (y) seventeen and one-half percent (17.5%) of the Line Cap for thirty (30) consecutive days, (C) if the Cash Dominion Event arises as a result of the Borrowers’ failure to maintain Capped Availability, as required pursuant to clause (c) hereunder, until Capped Availability has exceeded the $150,000,000 for thirty (30) consecutive days, (D) if the Cash Dominion Event arises as a result of the Borrowers’ failure to maintain Uncapped Availability or Capped Availability, as applicable, as required pursuant to clause (d) hereunder, until (x) Uncapped Availability has exceeded seventeen and one-half percent (17.5%) of the Combined Borrowing Base and (y) Capped Availability has exceeded twelve and one-half percent (12.5%) of the Line Cap, in each case for thirty (30) consecutive days, and/or (E) if the Cash Dominion Event arises as a result of the Borrowers’ failure to maintain Uncapped Availability or Capped Availability, as applicable, as required pursuant to clause (e) hereunder, until (x) Uncapped Availability has exceeded fifteen percent (15%) of the Combined Borrowing Base and (y) Capped Availability has exceeded ten percent (10%) of the Line Cap, in each case for thirty (30) consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided that a Cash Dominion Event may not be so cured on more than two (2) occasions in any period of 365 consecutive days.

     “ Cash Management Reserves ” means such reserves as any Co-Collateral Agent (after consultation with the other Co-Collateral Agent), from time to time after the occurrence and during the continuation of a Cash Dominion Event, determines in its reasonable commercial discretion exercised in good faith as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Cash Management Services then provided or outstanding.

     “ Cash Management Services ” means any one or more of the following types of services or facilities provided to any Loan Party by any Lender or any of its Affiliates: (a) ACH transactions; (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft and electronic funds transfer services; (c) foreign exchange facilities; (d) credit card processing services; (e) purchase cards; and (f) credit or debit cards.

     “ Cash Receipts ” has the meaning provided in SECTION 2.18(d).

     “ CD$ ” means Canadian dollars.

     “ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

     “ Change in Control ” means, at any time:

     (a) occupation of a majority of the seats (other than vacant seats) on the board of directors (or other body exercising similar management authority) of the Parent by Persons who were neither (i) nominated by the board of directors of the Parent (or prior to the consummation of a Qualifying IPO, the Sponsor) nor (ii) appointed by directors so nominated; or

     (b) after the consummation of a Qualifying IPO, any person or “group” (within the meaning of the Securities and Exchange Act of 1934, as amended), other than any one or more of the Sponsor Group, is or becomes the beneficial owner (within the meaning of Rule 13d-3 or 13d-5 of the Securities and Exchange Act of 1934, as amended, except that such person shall be deemed to have “beneficial ownership” of all Capital Stock that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of (i) twenty-five percent (25%) or more (on a fully diluted basis) of the total then outstanding Capital Stock of the Parent entitled to vote for the election of directors of the Parent, and (ii) Capital Stock of the Parent entitled to vote for the election of directors of the Parent in an amount greater than the number of shares of such Capital Stock beneficially owned by the Sponsor Group (or over which the Sponsor Group has voting control); or

     (c) prior to the consummation of a Qualifying IPO, a change in the Control of the Parent such that the Loan Parties are not Controlled by any one or more of the Sponsor Group; or

     (d) the Parent fails at any time to own, directly or indirectly, 100% of the Capital Stock of each Loan Party free and clear of all Liens (other than those Liens specified in clauses (a), (e), (i) and (l) of the definition of Permitted Encumbrances), except where such failure is as a result of a transaction permitted by the Loan Documents.

     “ Change in Law ” means (a) the adoption of any law, rule or regulation after the Effective Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Effective Date or (c) compliance by any Credit Party (or, for purposes of SECTION 2.14, by any lending office of such Credit Party or by such Credit Party’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Effective Date.

     “ Charges ” has the meaning provided in SECTION 9.13.

     “ Charter Document ” means as to any Person, its partnership agreement, certificate of incorporation, operating agreement, membership agreement or similar constitutive document or agreement or its by-laws.

     “ Closing Date ” means July 21, 2005.

     “ CMBS Facilities ” mean the mortgage financing and mezzanine financing arrangements between certain Special Purpose Entities, which are direct or indirect subsidiaries of the Lead Borrower, and German American Capital Corporation on behalf of the noteholders dated as of the Closing Date in the aggregate principal amount of $800,000,000, and any refinancing, extension or replacement thereof.

     “ Co-Collateral Agents ” has the meaning provided in the preamble to this Agreement.

     “ Co-Documentation Agents ” has the meaning provided in the preamble to this Agreement.

     “ Code ” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated thereunder, as amended from time to time.

     “ Collateral ” means any and all “Collateral” or words of similar intent as defined in any applicable Security Document; provided that (a) any assets of the Canadian Borrower and its Subsidiaries shall secure only the Canadian Liabilities, and (b) any Lien on intellectual property rights shall be limited to a non-exclusive right to use such assets in connection with a Liquidation.

     “ Combined Borrowing Base ” means the sum of (a) the Tranche A Borrowing Base plus (b) the Canadian Borrowing Base; provided that in determining that portion of the Combined Borrowing Base attributable to the Canadian Borrowing Base for purposes of SECTION 6.10, any Credit Extensions to the Domestic Borrowers in excess of fifty percent (50%) of Domestic Availability (without giving effect to clauses (a)(ii) and (b)(ii) of the definition thereof) shall be deemed to have been made pro rata (based upon the ratio of the Canadian Commitments to the Total Commitments) to the Domestic Borrowers and the Canadian Borrower.

     “ Commercial Letter of Credit ” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Borrower in the ordinary course of business of such Borrower.

     “ Commitment ” means, with respect to each Lender, the aggregate commitment(s) of such Lender hereunder in the amount set forth opposite its name on Schedule 1.1 hereto (being the aggregate of the Domestic Commitments and the Canadian Commitments of such Lender) or as may subsequently be set forth in the Register from time to time, as the same may be increased or reduced from time to time pursuant to this Agreement.

     “ Commitment Increase ” shall have the meaning provided in SECTION 2.02(b).

     “ Commitment Increase Date ” shall have the meaning provided in SECTION 2.02(e).

     “ Commitment Percentage ” means, with respect to each Lender, that percentage of the Commitments of all Lenders hereunder, in the amount set forth opposite such Lender’s name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be increased or reduced from time to time pursuant to this Agreement; provided that

unless the Commitments of all Lenders shall have then expired or been terminated, after the Commitments of the Non-Extending Lenders shall have expired or been terminated and all Obligations owed to the Non-Extending Lenders shall have been paid in full, the Commitment Percentages of the Extending Lenders shall be appropriately adjusted to reflect the expiration or termination of the Commitments of the Non-Extending Lenders.

     “ Compliance Certificate ” has the meaning provided in SECTION 5.01(d).

     “ Consolidated ” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

     “ Consolidated EBITDA ” means, with respect to any Person for any period, the sum (without duplication) of (a) Consolidated Net Income for such period, plus , in each case to the extent deducted in determining Consolidated Net Income for such period, (b) depreciation, amortization, and all other non-cash charges (other than non-cash charges for which a cash payment will be required to be made in that period), (c) provisions for Taxes based on income, (d) interest expense, (e) Advisory Fees, and (f) unusual, non-recurring or extraordinary expenses, losses or charges as reasonably approved by the Administrative Agent; provided , however , that, upon the termination of the Canadian Commitments in accordance with the terms of this Agreement, the results of the Canadian Borrower and any Canadian Subsidiaries shall be excluded from the calculation of Consolidated EBITDA.

     “ Consolidated Fixed Charge Coverage Ratio ” means, with respect to any Person for any period, the ratio of (a) (i) Consolidated EBITDA for such period minus (ii) Capital Expenditures during such period, to (b) the sum of (i) Debt Service Charges payable in cash during such period plus (ii) federal, state and foreign income Taxes paid in cash (net of refunds received) during such period, all as determined on a Consolidated basis in accordance with GAAP; provided , however , that, upon the termination of the Canadian Commitments in accordance with the terms of this Agreement, the results of the Canadian Borrower and any Canadian Subsidiaries shall be excluded from the calculation of the Consolidated Fixed Charge Coverage Ratio. For purposes of determining the Consolidated Fixed Charge Coverage Ratio, GAAP shall be consistently applied with the principles existing on the Effective Date.

     “ Consolidated Interest Expense ” means, with respect to any Person for any period, total interest expense (including that attributable to Capital Lease Obligations in accordance with GAAP) of such Person on a Consolidated basis with respect to all outstanding Indebtedness of such Person, including, without limitation, the Obligations and all commissions, discounts and other fees and charges owed with respect thereto, but excluding any non-cash or deferred interest financing costs, all as determined on a Consolidated basis in accordance with GAAP; provided , however , that, upon the termination of the Canadian Commitments in accordance with the terms of this Agreement, interest expense of the Canadian Borrower and any Canadian Subsidiaries shall be excluded from the calculation of Consolidated Interest Expense.

     “ Consolidated Net Income ” means, with respect to any Person for any period, the net income (or loss) of such Person on a Consolidated basis for such period taken as a single

accounting period determined in accordance with GAAP; provided , however , that there shall be excluded (a) the income (or loss) of such Person in which any other Person has a joint interest, except to the extent of the amount of dividends or other distributions actually paid in cash to such Person during such period, (b) the income of any direct or indirect Subsidiary of a Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its Charter Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, and (c) upon the termination of the Canadian Commitments in accordance with the terms of this Agreement, the income (or loss) of the Canadian Borrower and any Canadian Subsidiaries.

     “ Control ” means the possession, directly or indirectly, of the power (a) to vote 50% or more of the securities having ordinary voting power for the election of directors (or any similar governing body) of a Person, or (b) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms “ Controlling ” and “ Controlled ” have meanings correlative thereto.

     “ Cost ” means the cost of purchases, as reported on the Borrowers’ financial stock ledger based upon the Borrowers’ accounting practices in effect on the Effective Date or thereafter consented to by the Administrative Agent, whose consent will not be unreasonably withheld. “Cost” does not include inventory capitalization costs or other non-purchase price charges (except for freight charges with respect to all Inventory (other than unpaid freight charges for Eligible In-Transit Inventory) to the extent treated consistently with the Borrowers’ accounting practices in effect on the Effective Date) used in the Borrowers’ calculation of cost of goods sold.

     “ Credit Card Notifications ” has the meaning provided in SECTION 2.18(c).

     “ Credit Extensions ” as of any day, shall be equal to the sum of (a) the principal balance of all Loans then outstanding, and (b) the then amount of the Letter of Credit Outstandings.

     “ Credit Party ” means (a) the Lenders, (b) the Agents and the Canadian Agent and their respective Affiliates and branches, (c) the Issuing Banks, (d) the Arrangers and (e) the successors and permitted assigns of each of the foregoing.

     “ Credit Party Expenses ” means, without limitation, all of the following to the extent incurred in connection with this Agreement and the other Loan Documents: (a) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Co-Collateral Agents, the Canadian Agent and the Arrangers in connection with the preparation of the Loan Documents and the syndication of the credit facilities provided for herein, including, without limitation, the reasonable fees, charges and disbursements of one United States counsel for the Administrative Agent and its Affiliates, one Canadian counsel for the Canadian Agent and its Affiliates and branches (plus local counsel in any other jurisdiction to the extent reasonably necessary), and outside consultants for the Agents and the Canadian Agent consisting of one inventory appraisal firm and one Canadian real estate appraisal firm, one commercial finance examination firm and one Canadian environmental engineering firm; (b) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Co-Collateral Agents, the Canadian Agent and the

Arrangers in connection with the administration of this Agreement and the other Loan Documents and any amendments, modifications or waivers requested by a Loan Party of the provisions hereof or thereof (whether or not any such amendments, modifications or waivers shall be consummated), including the reasonable fees, charges and disbursements of one United States counsel for Bank of America and its Affiliates, one United States counsel for Wells Fargo and its Affiliates, and one Canadian counsel for the Canadian Agent and its Affiliates and branches (plus local counsel in any other jurisdiction to the extent reasonably necessary); (c) all reasonable out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; (d) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Co-Collateral Agents, the Canadian Agent and their respective Affiliates and branches in connection with the enforcement and protection of their rights in connection with the Loan Documents (including all such out-of-pocket expenses incurred during any workout, restructuring or related negotiations in respect of such Loan Documents), including the reasonable fees, charges and disbursements of one United States counsel for Bank of America and its Affiliates, one United States counsel for Wells Fargo and its Affiliates, one Canadian counsel for the Canadian Agent and its Affiliates (plus local counsel in any other jurisdiction to the extent reasonably necessary) and outside consultants for the Agents (including, without limitation, except as permitted in clause (e) hereof, one inventory appraisal firm and one real estate appraisal firm, one commercial finance examination firm and one environmental engineering firm); and (e) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Co-Collateral Agents, the Canadian Agent and their respective Affiliates and branches in connection with the enforcement of their rights in any case under the Bankruptcy Code or any judicial proceeding commenced by any Loan Party against the Credit Parties relating to the Loan Documents after the occurrence and during the continuance of an Event of Default, including the reasonable fees, charges and disbursements of one United States counsel for Bank of America and its Affiliates, one United States counsel for Wells Fargo and its Affiliates, one Canadian counsel for the Canadian Agent and its Affiliates (plus local counsel in any other jurisdiction to the extent reasonably necessary) and outside consultants for the Agents (including, without limitation, inventory appraisal firm(s) and real estate appraisal firm(s), commercial finance examination firm(s) and environmental engineering firm(s)); provided that , in addition to the foregoing, the Lenders who are not the Agents or the Canadian Agent shall be entitled to reimbursement for no more than one counsel representing all such Lenders (absent a conflict of interest in which case the Lenders may engage and be reimbursed for additional counsel). Credit Party Expenses shall not include the allocation of any overhead expenses of any Credit Party; provided further that the amounts available to be reimbursed to Wells Fargo and its Affiliates on account of fees, disbursements and charges of its counsel under clause (b) of this paragraph shall not exceed $75,000 in any Fiscal Year.

     “ Customer Credit Liabilities ” means, at any time, the aggregate remaining balance at such time of (a) outstanding gift certificates and gift cards of the Loan Parties entitling the holder thereof to use all or a portion of the certificate or gift card to pay all or a portion of the purchase price for any Inventory, and (b) outstanding merchandise credits and customer deposits of the Loan Parties, net of any dormancy reserves maintained by the Loan Parties on their books and records in the ordinary course of business consistent with past practices.

     “ Customs Broker Agreement ” means an agreement in substantially the form attached hereto as Exhibit B among a Loan Party, a customs broker or other carrier, and the Administrative Agent or the Canadian Agent, as applicable, in which the customs broker or other carrier acknowledges that it has control over and holds the documents evidencing ownership of the subject Inventory or other property for the benefit of the Administrative Agent or the Canadian Agent, as applicable, and agrees, upon notice from the Administrative Agent or the Canadian Agent, as applicable, to hold and dispose of the subject Inventory and other property solely as directed by the Administrative Agent or the Canadian Agent, as applicable.

     “ DDAs ” means any checking or other demand deposit account maintained by the Loan Parties. All funds in such DDAs shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents, the Canadian Agent and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the DDAs.

     “ Debt Service Charges ” means, for any period, the sum of (a) Consolidated Interest Expense payable in cash, plus (b) scheduled principal payments made or required to be made (after giving effect to any prepayments paid in cash that reduce the amount of such required payments) on account of Indebtedness, including the full amount of any non-recourse Indebtedness (excluding the Obligations, payments to reimburse any drawings under any commercial letters of credit, and any payments on Indebtedness required to be made on the final maturity date thereof, but including, without limitation, Capitalized Lease Obligations) for such period, plus (c) scheduled mandatory payments on account of Disqualified Capital Stock (whether in the nature of dividends, redemption, repurchase or otherwise) required to be made during such period, in each case determined in accordance with GAAP; provided , however , that, upon the termination of the Canadian Commitments in accordance with the terms of this Agreement, Debt Service Charges attributable to the Canadian Borrower and any Canadian Subsidiaries shall be excluded from the calculation of Debt Service Charges.

     “ Default ” means any event or condition described in SECTION 7.01 that constitutes an Event of Default or that upon notice, lapse of any cure period set forth in SECTION 7.01, or both, would, unless cured or waived, become an Event of Default.

     “ Default Rate ” has the meaning provided in SECTION 2.12.

     “ Delinquent Lender ” has the meaning provided in SECTION 8.17.

     “ Designated Account ” has the meaning provided in SECTION 2.18(d); provided , however , that notwithstanding anything to the contrary contained therein, in no event shall the amounts which may be deposited into the Designated Account on or after the Effective Date exceed $25,000,000 in the aggregate.

     “ Deteriorating Lender ” means any Delinquent Lender or any Lender as to which (a) any of the Issuing Banks or the Swingline Lender has reasonably ascertained that such Lender or its Subsidiary has, without cause, defaulted in fulfilling its obligations under one or more other syndicated credit facilities, or (b) such Lender or a Person that controls such Lender has been deemed insolvent or become the subject of a bankruptcy, insolvency or similar proceeding.

     “ Determination Date ” shall mean the date upon which each of the following has occurred:

     (a) The Canadian Commitments and/or the Domestic Commitments have been terminated by the Required Lenders (or are deemed terminated) upon the occurrence of an Event of Default; and

     (b) The Obligations and/or the Canadian Liabilities have been declared to be due and payable (or has become automatically due and payable) and have not been paid in accordance with the terms of this Agreement.

     “ Disbursement Accounts ” has the meaning provided in SECTION 2.18(g).

     “ Disclosed Matters ” means the actions, suits and proceedings and the environmental matters disclosed on Schedule 3.06(a) and Schedule 3.06(b) .

     “ Disqualified Capital Stock ” means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) is mandatorily redeemable in whole or in part prior to the Extended Term Maturity Date, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) Indebtedness or any Capital Stock referred to in (a) above prior to the Extended Term Maturity Date, or (c) contains any mandatory repurchase obligation which comes into effect prior to the Extended Term Maturity Date; provided that any Capital Stock that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Capital Stock is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Capital Stock upon the occurrence of a change in control or an asset sale shall not constitute Disqualified Capital Stock.

     “ Disqualified Lenders ” means those Persons identified as such in that certain side letter dated July 21, 2005 between the Sponsors and the Agents.

     “ dollars ” or “ $ ” refers to lawful money of the United States of America.

     “ Domestic Availability ” means the lesser of (a) or (b), where:

     (a) is the result of:

     (i) The Revolving Credit Ceiling,

      Minus

     (ii) The aggregate outstanding amount of Credit Extensions to, or for the account of, the Domestic Borrowers,

      Minus

     (iii) The aggregate outstanding amount of Credit Extensions to, or for the account of, the Canadian Borrower.

     (b) is the result of the following, as applicable:

     (i) The Tranche A Borrowing Base, as determined from the most recent Borrowing Base Certificate (as adjusted pursuant to SECTION 2.03 hereof);

      Minus

     (ii) The aggregate outstanding amount of Credit Extensions to, or for the account of, the Domestic Borrowers.

     “ Domestic Borrowers ” means, collectively, the Lead Borrower, the other Domestic Borrowers identified on the signature pages hereto and each Other Borrower who becomes a Domestic Borrower hereunder in accordance with the terms of this Agreement.

     “ Domestic Commitment ” shall mean, with respect to each Domestic Lender, the commitment of such Domestic Lender hereunder to make Credit Extensions to the Domestic Borrowers in the amount set forth opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be increased from time to time pursuant to SECTION 2.02 or reduced from time to time pursuant to SECTION 2.15 and SECTION 2.17.

     “ Domestic Commitment Percentage ” shall mean, with respect to each Domestic Lender, that percentage of the Domestic Commitments of all Domestic Lenders hereunder to make Credit Extensions to the Domestic Borrowers, in the amount set forth opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be increased from time to time pursuant to SECTION 2.02 or reduced from time to time pursuant to SECTION 2.15 and SECTION 2.17; provided that , unless the Domestic Commitments of all Lenders shall have then expired or been terminated, after the Domestic Commitments of the Non-Extending Lenders shall have expired or been terminated and all Obligations owed to the Non-Extending Lenders shall have been paid in full, the Domestic Commitment Percentages of the Extending Lenders shall be appropriately adjusted to reflect the termination of the Domestic Commitments of the Non-Extending Lenders.

     “ Domestic Concentration Account ” has the meaning provided in SECTION 2.18(d).

     “ Domestic Lenders ” means the Lenders having Domestic Commitments from time to time or at any time.

     “ Domestic Letter of Credit ” means a Letter of Credit that is issued pursuant to this Agreement for the account of a Domestic Borrower.

     “ Domestic Letter of Credit Outstandings ” means, at any time, the sum of (a) with respect to Domestic Letters of Credit outstanding at such time, the aggregate maximum amount that then is, or at any time thereafter may become, available for drawing or payment thereunder, plus ,

without duplication, (b) all amounts theretofore drawn or paid under Domestic Letters of Credit for which the applicable Issuing Bank has not then been reimbursed.

     “ Domestic Letter of Credit Sublimit ” means, at any time, the sum of $400,000,000 less the then Canadian Letter of Credit Outstandings, as such amount may be increased or reduced in accordance with the terms of this Agreement.

     “ Domestic Loan Party ” means any Loan Party other than a Canadian Loan Party.

     “ Domestic Loans ” means, collectively, the Loans made by the Domestic Lenders pursuant to Article II.

     “ Domestic Overadvance ” means a Credit Extension to the Domestic Borrowers to the extent that, immediately after the making of such Credit Extension, Domestic Availability is less than zero.

     “ Domestic Swingline Loan Ceiling ” means (a) from January 1 ^st through August 31 ^st of each year, $50,000,000 and (b) from September 1 ^st through December 31 ^st of each year, $100,000,000, as such amount may be increased or reduced in accordance with the provisions of this Agreement.

     “ Domestic Total Commitments ” means the aggregate of the Domestic Commitments of all Domestic Lenders. On the Effective Date, the Domestic Total Commitments are $2,042,500,000.

     “ Earnout Obligations ” means the maximum amount of all obligations incurred or to be incurred in connection with any Acquisition of a Person pursuant to a Permitted Acquisition under non-compete agreements, consulting agreements, earn-out agreements and similar deferred purchase arrangements.

     “ Effective Date ” means June 24, 2009.

     “ Eligible Assignee ” means a commercial bank, insurance company, or company engaged in the business of making commercial loans or a commercial finance company, which Person, together with its Affiliates, has a combined capital and surplus in excess of $500,000,000, or any Affiliate of any Credit Party under common control with such Credit Party, or an Approved Fund of any Credit Party, or any Person to whom a Credit Party assigns its rights and obligations under this Agreement as part of an assignment and transfer of such Credit Party’s rights in and to a material portion of such Credit Party’s portfolio of asset based credit facilities; provided that , in any event, “Eligible Assignee” shall not include (w) any natural person, (x) any Disqualified Lender, (y) the Parent, or (z) the Sponsor Group or any of their respective Affiliates to the extent that, after giving effect to any proposed assignment, the Sponsor Group and their respective Affiliates would hold in the aggregate more than 25% of the then outstanding Credit Extensions; provided that , (1) to the extent that the Sponsor Group or any of their respective Affiliates hold in the aggregate more than 10% of the then outstanding Credit Extensions, the Sponsor Group and their respective Affiliates shall be subject to clauses (a) and (b) of the definition of Sponsor Lender Limitations with respect to that portion of their outstanding Credit Extensions or Commitments which exceeds 10%, and (2) the Sponsor Group and each of their respective Affiliates shall in all events be subject to the provisions of clause (c) of the definition of Sponsor Lender Limitations. Upon the occurrence of an Event of Default, no Person (other than a Lender) shall be an “Eligible

Assignee” if the assignment of any Commitment to such Person would cause such Person to have Commitments in excess of twenty-five percent (25%) of the then outstanding Total Commitments.

     “ Eligible Credit Card Receivables ” means, as of any date of determination, Accounts due to a Loan Party from major credit card processors (including, but not limited to, VISA, Mastercard, American Express, Diners Club and DiscoverCard) as arise in the ordinary course of business and which have been earned by performance, that are not excluded as ineligible by virtue of one or more of the criteria set forth below. None of the following shall be deemed to be Eligible Credit Card Receivables:

     (a) Accounts due from major credit card processors that have been outstanding for more than five (5) Business Days from the date of sale (except that, with respect to those due from American Express to the Canadian Loan Parties, that have been outstanding for more than ten (10) Business Days from the date of sale), or for such longer period(s) as may approved by the Co-Collateral Agents;

     (b) Accounts due from major credit card processors with respect to which a Loan Party does not have good, valid and marketable title thereto, free and clear of any Lien (other than Liens granted to the Administrative Agent or the Canadian Agent, as applicable, for its own benefit and the benefit of the other Secured Parties pursuant to the Security Documents, those Liens specified in clauses (a) and (e) of the definition of Permitted Encumbrances and Permitted Encumbrances having priority by operation of Applicable Law over the Lien of the Administrative Agent or Canadian Agent, as applicable) (the foregoing not being intended to limit the discretion of the Co-Collateral Agents to change, establish or eliminate any Reserves on account of any such Liens);

     (c) Accounts due from major credit card processors that are not subject to a first priority (except as provided in clause (b), above) security interest in favor of the Administrative Agent or the Canadian Agent, as applicable, for its own benefit and the benefit of the other Secured Parties;

     (d) Accounts due from major credit card processors which are disputed, or with respect to which a claim, counterclaim, offset or chargeback has been asserted, by the related credit card processor (but only to the extent of such dispute, counterclaim, offset or chargeback) (it being the intent that chargebacks in the ordinary course by the credit card processors shall not be deemed violative of this clause);

     (e) Except as otherwise approved by the Co-Collateral Agents, Accounts due from major credit card processors as to which the credit card processor has the right under certain circumstances to require a Loan Party to repurchase the Accounts from such credit card processor; or

     (f) Accounts due from major credit card processors (other than Visa, Mastercard, American Express, Diners Club and Discover) which any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) determines in its commercial reasonable discretion acting in good faith to be unlikely to be collected.

     “ Eligible In-Transit Inventory ” means, as of any date of determination, without duplication of other Eligible Inventory, Inventory (a) (i) which has been delivered to a carrier in a foreign port or foreign airport for receipt by a Loan Party in the United States or Canada within sixty (60) days of the date of determination, but which has not yet been received by a Loan Party or (ii) which has been delivered to a carrier in the United States or Canada for receipt by a Loan Party in the United States or Canada within five (5) Business Days of the date of determination, but which has not yet been received by a Loan Party, (b) for which the purchase order is in the name of a Loan Party and title has passed to a Loan Party, (c) except as otherwise agreed by the Co-Collateral Agents, for which a Loan Party is designated as “shipper” and/or the consignor and the document of title or waybill reflects a Loan Party as consignee (along with delivery to a Loan Party or its customs broker of the documents of title, to the extent applicable, with respect thereto), (d) as to which the Administrative Agent or the Canadian Agent, as applicable, has control over the documents of title, to the extent applicable, which evidence ownership of the subject Inventory (such as by the delivery of a Customs Broker Agreement), (e) as to which a Tri-Party Agreement has been executed and delivered in favor of the Co-Collateral Agents, (f) which is insured in accordance with the provisions of this Agreement and the other Loan Documents, including, without limitation marine cargo insurance; and (g) which otherwise is not excluded from the definition of Eligible Inventory; provided that the Administrative Agent may (and shall, at the written direction of any Co-Collateral Agent, after consultation with the other Co-Collateral Agent), upon notice to the Lead Borrower, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event that the Administrative Agent or any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) determines that such Inventory is subject to any Person’s right or claim which is (or is capable of being) senior to, or pari passu with, the Lien of the Administrative Agent or the Canadian Agent (such as, without limitation, a right of stoppage in transit), as applicable, or may otherwise adversely impact the ability of the Administrative Agent, the Co-Collateral Agents or the Canadian Agent, as applicable, to realize upon such Inventory.

     “ Eligible Inventory ” means, as of any date of determination, without duplication, (a) Eligible Letter of Credit Inventory, (b) Eligible In-Transit Inventory, (c) Inventory reported at Location 5001 in the Loan Parties’ books and records (such being cross-docked product and not then included in the Loan Parties’ stock ledger but which is otherwise Eligible Inventory), and (d) items of Inventory of a Loan Party that are finished goods, merchantable and readily saleable to the public in the ordinary course that are not excluded as ineligible by virtue of the one or more of the criteria set forth below. None of the following shall be deemed to be Eligible Inventory:

     (a) Inventory that is not solely owned by a Loan Party, or is leased by or is on consignment to a Loan Party, or as to which the Loan Parties do not have title thereto;

     (b) Inventory (other than any Eligible Letter of Credit Inventory and Eligible In-Transit Inventory) that is not located in the United States of America or Canada (or any territories or possessions thereof);

     (c) Inventory (other than any Eligible Letter of Credit Inventory and Eligible In-Transit Inventory) that is not located at a location that is owned or leased by the Loan Parties, except to the extent that the Loan Parties shall have used commercially

reasonable efforts to furnish (in the case of each such location leased by a third party for which the Loan Parties contracted with such third party on or before the Effective Date), or shall have furnished (in the case of each such location leased by a third party for which the Loan Parties contracted with such third party after the Effective Date), the Administrative Agent or the Canadian Agent, as applicable, with (i) any UCC financing statements, PPSA filings or other registrations that the Administrative Agent or the Canadian Agent, as applicable, may reasonably determine to be necessary to perfect its security interest in such Inventory at such location, and (ii) an intercreditor agreement (containing, among other things, a lien waiver) executed by the Person owning any such location on terms reasonably acceptable to the Co-Collateral Agents and, if applicable, the Canadian Agent; provided that , with respect to any location which is leased by a third party as of the Effective Date and which contains Inventory to be utilized to fulfill internet orders or Inventory to be forwarded to stores or distribution centers of the Loan Parties, such Inventory shall not be deemed ineligible solely by virtue of this clause (c) if such an intercreditor agreement is not obtained by the Borrowers (after having used commercially reasonable efforts to obtain same); provided further that any Inventory located at a location described in clauses (i) and/or (ii) below shall not be deemed ineligible solely by virtue of this clause (c) even if such an intercreditor agreement is not furnished for any such location: (i) any location that is not owned or leased by the Loan Parties at which Inventory of a Domestic Loan Party is located (or locations under the control of the same Person other than store leases) having a value of less than or equal to $20,000,000 at Cost (or, with respect to seasonal locations, at which Inventory is located having a value less than or equal to $40,000,000 at Cost for a period of not greater than 60 days), or (ii) any location that is not owned or leased by the Loan Parties at which Inventory of a Canadian Loan Party is located (or under the control of the same Person other than store leases) having a value of less than or equal to $5,000,000 at Cost (or, with respect to seasonal locations, at which Inventory is located having a value less than or equal to $10,000,000 at Cost for a period of not greater than 60 days);

     (d) Inventory that is located at a distribution center that is leased by the Loan Parties, except to the extent that (unless otherwise agreed by the Co-Collateral Agents or the Canadian Agent, as applicable) the Loan Parties shall have used commercially reasonable efforts to furnish (in the case of each such distribution center for which the Loan Parties have entered into a lease on or before the Effective Date), or shall have furnished (in the case of each such distribution center for which the Loan Parties have entered into a lease after the Effective Date), the Administrative Agent or the Canadian Agent, as applicable, with a landlord’s lien waiver and collateral access agreement on terms reasonably acceptable to the Co-Collateral Agents or the Canadian Agent, as applicable, executed by the Person owning any such distribution center; provided that any Inventory located at a distribution center described in clauses (i) and/or (ii) below shall not be deemed ineligible solely by virtue of this clause (d) even if such a landlord’s lien waiver and collateral access agreement is not furnished for any such distribution center: (i) any distribution center at which Inventory of a Domestic Loan Party is located (or locations under the control of the same Person other than store leases) having a value of less than or equal to $20,000,000 at Cost (or, with respect to seasonal warehouses, at which Inventory is located having a value less than or equal to $40,000,000 at Cost for a period of not greater than 60 days), or (ii) any distribution center at which Inventory of a

Canadian Loan Party is located (or under the control of the same Person other than store leases) having a value of less than or equal to $5,000,000 at Cost (or, with respect to seasonal warehouses, at which Inventory is located having a value less than or equal to $10,000,000 at Cost for a period of not greater than 60 days);

     (e) Inventory that represents goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are work in process, raw materials, or that constitute spare parts or supplies used or consumed in a Loan Party’s business (iv) are bill and hold goods, or (v) are not in compliance in all material respects with all standards imposed by any Governmental Authority having regulatory authority with respect thereto;

     (f) Except as otherwise agreed by the Co-Collateral Agents, Inventory that represents goods that do not conform in all material respects to the representations and warranties contained in this Agreement or any of the Security Documents;

     (g) Inventory that is not subject to a perfected first priority security interest in favor of the Administrative Agent or Canadian Agent, as applicable, for its own benefit and the benefit of the other Secured Parties (subject only to Permitted Encumbrances having priority by operation of Applicable Law);

     (h) Inventory which consists of samples, labels, bags, packaging materials, and other similar non-merchandise categories;

     (i) Inventory as to which casualty insurance in compliance with the provisions of SECTION 5.07 is not in effect;

     (j) Inventory which has been sold but not yet delivered or Inventory to the extent that any Loan Party has accepted a deposit therefor; or

     (k) Inventory acquired in a Permitted Acquisition (including, without limitation, the FAO Acquisition), unless the Co-Collateral Agents shall have received or conducted (i) appraisals, from appraisers reasonably satisfactory to the Co-Collateral Agents, of such Inventory to be acquired in such Acquisition and (ii) such other due diligence as the Co-Collateral Agents may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Co-Collateral Agents.

     “ Eligible Letter of Credit Inventory ” means, as of any date of determination (without duplication of other Eligible Inventory), Inventory:

     (a) (i) which has been delivered to a carrier in a foreign port or foreign airport for receipt by a Loan Party in the United States or Canada within sixty (60) days of the date of determination, but which has not yet been received by a Loan Party, or (ii) which has been delivered to a carrier in the United States or Canada for receipt by a Loan Party in the United States or Canada within five (5) Business Days of the date of determination, but which has not yet been received by a Loan Party;

     (b) the purchase order for which is in the name of a Loan Party, title has passed to a Loan Party and the purchase of which is supported by a Commercial Letter of Credit issued under this Agreement having an initial expiry, subject to the proviso hereto, within 120 days after the date of initial issuance of such Commercial Letter of Credit; provided that ninety percent (90%) of the maximum Stated Amount all such Commercial Letters of Credit shall not, at any time, have an initial expiry greater than ninety (90) days after the original date of issuance of such Commercial Letters of Credit;

     (c) except as otherwise agreed by the Co-Collateral Agents, for which a Loan Party is designated as “shipper” and/or consignor and the document of title or waybill reflects a Loan Party as consignee (along with delivery to a Loan Party or its customs broker of the documents of title, to the extent applicable, with respect thereto);

     (d) as to which the Administrative Agent or the Canadian Agent, as applicable, has control over the documents of title, to the extent applicable, which evidence ownership of the subject Inventory (such as by the delivery of a Customs Broker Agreement);

     (e) which is insured in accordance with the provisions of this Agreement and the other Loan Documents, including, without limitation marine cargo insurance;

     (f) as to which a Tri-Party Agreement has been executed and delivered in favor of the Co-Collateral Agents, and

     (g) Which otherwise is not excluded from the definition of Eligible Inventory;

      provided that the Administrative Agent may (and shall, at the written direction of any Co-Collateral Agent, after consultation with the other Co-Collateral Agent), upon notice to the Lead Borrower, exclude any particular Inventory from the definition of “Eligible Letter of Credit Inventory” in the event that the Administrative Agent or any Co-Collateral Agent (after consultation with the other Co-Collateral Agent) determines that such Inventory is subject to any Person’s right or claim which is (or is capable of being) senior to, or pari passu with, the Lien of the Administrative Agent or the Canadian Agent (such as, without limitation, a right of stoppage in transit), as applicable, or may otherwise adversely impact the ability of the Administrative Agent, the Co-Collateral Agents or the Canadian Agent, as applicable, to realize upon such Inventory.

     “ Eligible Real Estate ” means Real Estate which satisfies each of the following conditions:

     (a) Either (i) a Canadian Loan Party owns fee title or (ii) a Canadian Loan Party is ground lessee under a ground lease on real estate improved by a building owned by such Canadian Loan Party, the terms and conditions of which ground lease permit assignment and mortgaging thereof in the Co-Collateral Agents’ and the Canadian Agent’s reasonable commercial discretion exercised in good faith;

     (b) The applicable Canadian Loan Party has executed and delivered to the Canadian Agent such Mortgages as the Co-Collateral Agents and the Canadian Agent may reasonably request;

     (c) The applicable Canadian Loan Party shall have delivered to the Co-Collateral Agents (i) title insurance and environmental site assessments reasonably satisfactory to the Co-Collateral Agents and the Canadian Agent, and (ii) other real estate items, if any, as reasonably required by, and reasonably satisfactory to, the Co-Collateral Agents and the Canadian Agent;

     (d) The Canadian Agent has a perfected first priority lien in such Real Estate (subject only to Permitted Encumbrances having priority by operation of Applicable Law) for its own benefit and the benefit of other Secured Parties;

     (e) Each such parcel of Real Estate has been appraised by a third party appraiser reasonably acceptable to the Agents and the Canadian Agent;

     (f) Either (i) the Real Estate is used by a Canadian Loan Party for offices, as a Store or distribution center, or is being held for sale and, if more than twelve (12) months have elapsed from the date such Real Estate was initially held for sale, the Co-Collateral Agents and the Canadian Agent shall have received an updated appraisal of such Real Estate, or (ii) the Real Estate is leased by a Canadian Loan Party to another Person, the terms of such lease and the creditworthiness of the lessee are reasonably satisfactory to the Co-Collateral Agents, and the Co-Collateral Agents and the Canadian Agent shall have received an updated appraisal of such Real Estate reflecting the effect of such lease on FMV, provided that Real Estate described in this clause (f)(ii) shall not comprise more than 25% of the Canadian Borrowing Base; and

     (g) As to any particular property, except as otherwise agreed by the Co-Collateral Agents, the Canadian Borrower is in compliance in all material respects with the representations, warranties and covenants set forth in the Mortgage relating to such property.

     “ Enumerated Defaults ” means the failure of any Loan Party to comply with the terms of SECTION 2.18(c)(ii), SECTION 2.18(d), SECTION 2.18(e), SECTION 2.18(f), or SECTION 2.18(h) or the occurrence of any Event of Default specified in SECTION 7.01(a), SECTION 7.01(b), SECTION 7.01(h), or SECTION 7.01(i).

     “ Environmental Compliance Reserve ” means, with respect to Eligible Real Estate, any reserve which any Co-Collateral Agent (after consultation with the other Co-Collateral Agent and the Canadian Agent), from time to time in its reasonable commercial discretion exercised in good faith, establishes for estimable amounts that are reasonably likely to be expended by any of the Canadian Loan Parties in order for such Loan Party and its operations and property (a) to comply with any notice from a Governmental Authority asserting non-compliance with Environmental Laws, or (b) to correct any such non-compliance with Environmental Laws relating to such Eligible Real Estate.

     “ Environmental Laws ” means all Applicable Laws issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the protection of human health or the environment, to the handling, treatment, storage, disposal of Hazardous Materials or to the assessment or remediation of any Release or threatened Release of any Hazardous Material to the environment.

     “ Environmental Liability ” means any liability, contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “ Equipment ” has the meaning set forth in the Security Documents.

     “ Equivalent Amount ” means, on any date, the rate at which CD$ may be exchanged into dollars, determined by reference to the Bank of Canada noon rate as published on the Reuters Screen BOFC on the immediately preceding Business Day. In the event that such rate does not appear on such Reuters page, “Equivalent Amount” shall mean, on any date, the amount of dollars into which an amount of CD$ may be converted or the amount of CD$ into which an amount of dollars may be converted, in either case, at, in the case of the Canadian Borrower, the Canadian Agent’s spot buying rate in Toronto as at approximately 12:00 noon (Toronto time) on such date and, in the case of a Domestic Borrower, the Administrative Agent’s spot buying rate in New York as at approximately 12:00 noon (New York City time) on the immediately preceding Business Day.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated and rulings issued thereunder.

     “ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with Lead Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

     “ ERISA Event ” means: (a) with respect to the Domestic Borrowers, any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) with respect to the Domestic Borrowers, the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA) in excess of $100,000,000 (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect), whether or not waived, and with respect to the Canadian Borrower, the existence with respect to any Plan of any due but un-remitted contribution, whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the

incurrence by the Lead Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Lead Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Lead Borrower or any of its ERISA Affiliates of any liability in excess of $100,000,000 (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Lead Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Lead Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability in excess of $100,000,000 (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

     “ Event of Default ” has the meaning provided in SECTION 7.01. An “Event of Default” shall be deemed to have occurred and to be continuing unless and until that Event of Default has been duly waived in writing in accordance with the terms of this Agreement.

     “ Excess Canadian Real Estate ” means Eligible Real Estate of the Canadian Loan Parties having a FMV in excess of $150,000,000.

     “ Excess Swingline Loans ” has the meaning provided in SECTION 2.22(b).

     “ Excluded Taxes ” means, with respect to the Agents, the Canadian Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income or franchise taxes imposed on (or measured by) its gross or net income by the United States of America, or by the jurisdiction 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 of America or any similar tax imposed by any other jurisdiction in which any Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by a Borrower under SECTION 2.24(a) or a Lender that becomes a Domestic Lender by virtue of the application of SECTION 8.18), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office other than at the request of a Borrower under SECTION 2.24) or is attributable to such Foreign Lender’s failure to comply with SECTION 2.23(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding tax pursuant to SECTION 2.23(a), and (d) in the case of a Canadian Lender (other than an assignee pursuant to a request by a Borrower under SECTION 2.24(b) or a Lender that becomes a Domestic Lender by virtue of the application of SECTION 8.18), any withholding tax that is imposed on amounts payable to such Canadian Lender at the time such Canadian Lender becomes a party to this Agreement (or designates a new lending office other than at the request of a Borrower under SECTION 2.24) or is attributable to such Canadian Lender’s failure to comply with SECTION 2.23(j), except to the extent that such Canadian Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts

from the Canadian Borrower with respect to such withholding tax pursuant to SECTION 2.23(a); provided that the provisions of the foregoing clause (d) shall not apply upon and after the occurrence of the Determination Date; provided further that each such Lender shall use reasonable efforts to eliminate or reduce amounts payable pursuant to this clause (d).

     “ Existing Maturity Date ” means July 21, 2010.

     “ Existing Termination Date ” means the earlier to occur of (i) the Existing Maturity Date, or (ii) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with ARTICLE VII.

     “ Extended Term Applicable Margin ” means:

(a) From and after the Effective Date until July 31, 2010, the percentages set forth in Level II of the pricing grid below; and

(b) On the first day of each of the last three Fiscal Quarters of each Fiscal Year (each, an “ Adjustment Date ”), commencing with the Fiscal Quarter beginning on or about August 1, 2010, the Extended Term Applicable Margin shall be determined from the pricing grid below based upon average daily outstanding Credit Extensions for the most recently ended three month period immediately preceding such Adjustment Date, provided that if any Borrowing Base Certificates are at any time restated or otherwise revised (including as a result of an audit) or if the information set forth in any Borrowing Base Certificates otherwise proves to be false or incorrect such that the Extended Term Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand.

     “ Extended Term Canadian Prime Rate ” means, for any day, the higher of: (a) the rate of interest publicly announced from time to time by Bank of America-Canada Branch as its reference rate of interest for loans made either (i) in CD$ to Canadian customers and designated

as its “prime” rate, or (ii) in dollars to Canadian customers and designated as its “base rate”; or (b) the Adjusted LIBO Rate (calculated utilizing the LIBO Rate for a one-month Interest Period) plus one percent (1.00%) per annum. The “prime” rate or “base rate”, as applicable, is a rate set by Bank of America-Canada Branch based upon various factors, including Bank of America-Canada Branch’s costs and desired return, general economic conditions and other factors and is used as a reference point for pricing some loans. If for any reason the Canadian Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the LIBO Rate for any reason, including the inability or failure of the Canadian Agent to obtain sufficient quotations thereof in accordance with the terms hereof, the Extended Term Canadian Prime Rate shall be determined without regard to clause (a)(i) of the definition of Adjusted LIBO Rate until the circumstances giving rise to such inability no longer exist. Any change in the Extended Term Canadian Prime Rate due to a change in Bank of America-Canada Branch’s “prime” rate or “base rate”, as applicable, or the Adjusted LIBO Rate shall be effective on the effective date of such change in Bank of America-Canada Branch’s “prime” rate or “base rate”, as applicable, or the Adjusted LIBO Rate, respectively.

     “ Extended Term Canadian Unused Fee ” has the meaning provided in SECTION 2.19(e).

     “ Extended Term Maturity Date ” means May 21, 2012.

     “ Extended Term Prime Rate ” means, for any day, the highest of: (a) the variable annual rate of interest then most recently announced by Bank of America, N.A. at its head office in Charlotte, North Carolina as its “prime rate”; (b) the Federal Funds Effective Rate in effect on such day plus one-half of one percent (0.50%) per annum; or (c) the Adjusted LIBO Rate (calculated utilizing the LIBO Rate for a one-month Interest Period) plus one percent (1.00%) per annum. The “prime rate” is a reference rate and does not necessarily represent the lowest or best rate being charged by Bank of America, N.A. to any customer. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the LIBO Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations thereof in accordance with the terms hereof, the Extended Term Prime Rate shall be determined without regard to clause (b) of the first sentence of this definition or clause (a)(i) of the definition of Adjusted LIBO Rate, as applicable, until the circumstances giving rise to such inability no longer exist. Any change in the Extended Term Prime Rate due to a change in Bank of America’s “prime rate”, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in Bank of America’s Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

     “ Extended Term Unused Fee ” has the meaning provided in SECTION 2.19(c).

     “ Extended Termination Date ” means the earlier to occur of (a) the Extended Term Maturity Date, or (b) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with ARTICLE VII.

     “ Extending Lender ” means each Lender listed on Schedule 1.1 under the heading “Extending Lenders”, whose Commitment shall terminate on the Extended Termination Date;

provided that any Non-Extending Lender which is a Domestic Lender may become an Extending Lender after the Effective Date but on or before July 17, 2009 by furnishing written notice to the Lead Borrower and the Administrative Agent of its election to become a Domestic Lender which is an Extending Lender, which election shall not be effective until the first date thereafter on which no Loans bearing interest at the Adjusted LIBO Rate are outstanding.

     “ Facility Guarantee ” means (a) any Guarantee of the Obligations and Other Liabilities executed by the Domestic Borrowers and their respective Material Subsidiaries (other than Foreign Subsidiaries, TRU (Vermont), Inc., Toys ‘R’ Us Service, LLC, TRU of Puerto Rico, Inc. and Geoffrey, LLC and its Subsidiaries) which are or hereafter become Facility Guarantors in favor of the Administrative Agent and the other Secured Parties (it being understood that the Canadian Borrower and its Foreign Subsidiaries shall not be required to execute a Facility Guarantee of the Obligations or Other Liabilities of the Domestic Borrowers), and (b) in addition to the Guarantee described in clause (a), any Guarantee of the Canadian Liabilities executed by any of the Canadian Borrower’s Subsidiaries in favor of the Canadian Agent and the other Secured Parties.

     “ Facility Guarantors ” means any Person executing a Facility Guarantee.

     “ Facility Guarantors’ Collateral Documents ” means all security agreements, Mortgages, pledge agreements, deeds of trust, and other instruments, documents or agreements executed and delivered by the Facility Guarantors to secure the Facility Guarantee, the Obligations, the Other Liabilities, or the Canadian Liabilities, as applicable.

     “ FAO Acquisition ” means the acquisition by the Lead Borrower, on or about the Effective Date, of all of the issued and outstanding membership interests of Toys Acquisition, LLC pursuant to the terms of that certain Membership Interest Purchase Agreement, dated as of June 22, 2009, by and between the Parent and the Lead Borrower.

     “ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of one percent (1%)) 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 that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of one percent (1%)) of the quotations for such day for such transactions received by the Administrative Agent from three (3) federal funds brokers of recognized standing selected by the Administrative Agent.

     “ Fee Letter ” means the Fee Letter dated April 22, 2009 by and among the Lead Borrower, the Canadian Borrower, Bank of America, N.A., Banc of America Securities LLC and Wells Fargo Retail Finance, LLC, as amended, modified, supplemented or replaced and in effect from time to time.

     “ Financial Consultant ” has the meaning provided in SECTION 5.14.

     “ Financial Officer ” means, with respect to any Loan Party, the chief financial officer, the senior vice president of finance, treasurer, assistant treasurer, controller or assistant controller of such Loan Party.

     “ Fiscal Month ” means any fiscal month of any Fiscal Year, which month shall generally end on the last Saturday of each calendar month in accordance with the fiscal accounting calendar of the Borrowers.

     “ Fiscal Quarter ” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on the last Saturday of each April, July, October or January of such Fiscal Year in accordance with the fiscal accounting calendar of the Borrowers.

     “ Fiscal Year ” means any period of twelve consecutive months ending on the Saturday closest to January 31 of any calendar year.

     “ Fixed Assets ” means Equipment and Real Estate.

     “ FMV ” means, as to any Eligible Real Estate, the fair market value of such Eligible Real Estate determined in accordance with an appraisal from an independent appraisal firm, each reasonably acceptable to the Co-Collateral Agents.

     “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

     “ Foreign Subsidiary ” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

     “ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

     “ GAAP ” means principles which are consistent with those promulgated or adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made; provided that , with respect to Foreign Subsidiaries of Borrower organized under the laws of Canada, “GAAP” shall mean principles which are consistent with those promulgated or adopted by the Canadian Institute of Chartered Accountants and its predecessors (or successors) in effect and applicable to the accounting period in respect of which reference to GAAP is being made.

     “ General Security Agreement ” means the General Security Agreement dated as of the Closing Date among the Canadian Borrower and its Subsidiaries and the Canadian Agent for the benefit of the Secured Parties thereunder, as amended and in effect from time to time.

     “ Geoffrey ” means Geoffrey, LLC, a Delaware limited liability company.

     “ Governmental Authority ” means the government of the United States of America, Canada, any other nation or any political subdivision thereof, whether state, local or provincial, and any agency, authority, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

     “ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.

     “ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, mold, fungi or similar bacteria, and all other substances or wastes of any nature regulated pursuant to any Environmental Law because of their dangerous or deleterious properties, including any material listed as a hazardous substance under Section 101(14) of CERCLA.

     “ Hedge Agreement ” means any derivative agreement, or any interest rate protection agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement designed to hedge against fluctuations in interest rates or foreign exchange rates or commodity prices.

     “ High Selling Period ” means (i) with respect to the TRU Inventory owned by the Domestic Loan Parties and all Inventory owned by the Canadian Loan Parties, the period in each year commencing on October 15 ^th and ending on the first Sunday after December 15 ^th , and (ii) with respect to BRU Inventory owned by the Domestic Loan Parties, the period commencing each year on February 1 ^st and ending on October 31 ^st .

     “ Holiday Season ” means (a) the period commencing on October 15, 2010 and continuing through the first Sunday after December 15, 2010, and (b) the period commencing on October 15 ^th and continuing through the first Sunday after December 15 ^th of each year thereafter.

     “ Indebtedness ” of any Person means, without duplication:

     (a) All obligations of such Person for borrowed money (including any obligations which are without recourse to the credit of such Person); provided , however , that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

     (b) All obligations of such Person evidenced by bonds, debentures, notes or similar instruments;

     (c) All obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person; provided , however , that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

     (d) All obligations of such Person in respect of the deferred purchase price of property or services (excluding accrued expenses and accounts payable incurred in the ordinary course of business);

     (f) 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 property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed; provided , however , that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

     (g) All Guarantees by such Person of Indebtedness of others;

     (h) All Capital Lease Obligations of such Person; provided , however , that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

     (i) All obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty;

     (j) All obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances;

     (k) The Agreement Value of all Hedge Agreements;

     (l) The principal and interest portions of all rental obligations of such Person under any Synthetic Lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP; and

     (m) Indebtedness consisting of Earn-Out Obligations in connection with Permitted Acquisitions but only to the extent that the contingent consideration relating thereto is not paid within thirty (30) days after the amount due is finally determined;

Indebtedness shall not include (A) any sale-leaseback transactions to the extent the lease or sublease thereunder is not required to be recorded under GAAP as a Capital Lease, (B) any obligations relating to overdraft protection and netting services, or (C) any preferred stock required to be included as Indebtedness in accordance with GAAP and FAS 150.

The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

     “ Indemnified Taxes ” means Taxes other than Excluded Taxes.

     “ Indemnitee ” has the meaning provided in SECTION 9.03(b).

     “ Indentures ” means each of (a) the Indenture, dated as of July 24, 2001, originally between the Parent and The Bank of New York, as Trustee, with respect to 7.625% Notes due 2011, (b) the Indenture, dated as of May 28, 2002, originally between the Parent and The Bank of New York, as Trustee, with respect to 7.875% Notes due 2013, (c) the Indenture, dated as of May 28, 2002, originally between the Parent and The Bank of New York, as Trustee, with respect to 7.375% Notes due 2018, and (d) the Indenture, dated as of August 29, 1991, originally between the Parent and Bank of New York, as successor Trustee, with respect to Debentures due 2021, each as modified, amended, supplemented or restated and in effect from time to time.

     “ Information ” has the meaning provided in SECTION 9.15.

     “ Informational Website ” has the meaning provided in SECTION 5.01.

     “ Intellectual Property Rights Agreement ” means the agreement dated as of the Closing Date between Geoffrey and the Administrative Agent, for its own benefit and the benefit of the Secured Parties.

     “ Intercreditor Agreement ” means that certain Intercreditor Agreement dated as of July 19, 2006 by and between the Agents and Banc of America Bridge LLC, as administrative agent for the holders of the Term Loan, as amended and in effect from time to time.

     “ Interest Payment Date ” means (a) with respect to any Prime Rate Loan (including a Swingline Loan), the last day of each calendar quarter, and (b) with respect to any LIBO Loan or BA Equivalent Loan, on the last day of the Interest Period applicable to the Borrowing of which such LIBO Loan or BA Equivalent Loan is a part, and, in addition, if such LIBO Loan or BA Equivalent Loan has an Interest Period of greater than ninety (90) days, on the last day of every third month of such Interest Period.

     “ Interest Period ” means, with respect to any LIBO Borrowing or BA Equivalent Loan, the period commencing on the date of such Borrowing and ending (i) on the day that is one (1) or two (2) weeks thereafter or (ii) ending on the numerically corresponding day in the calendar month that is one (1), two (2), three (3), six (6), nine (9) or twelve (12) months thereafter (or such shorter period, to the extent available, to which the Administrative Agent or the Canadian Agent, as applicable, may reasonably consent), as the Lead Borrower or the Canadian Borrower, as applicable, may elect by notice to the Administrative Agent or the Canadian Agent in accordance with the provisions of this Agreement; provided , however , that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business

Day, (b) any Interest Period of one month or more that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month during which such Interest Period ends) shall end on the last Business Day of the calendar month of such Interest Period, and (c) (i) until such time as the Commitments of the Non-Extending Lenders shall have expired or been terminated and all Obligations owed to the Non-Extending Lenders shall have been paid in full, no Interest Period shall extend beyond the Existing Maturity Date, and (ii) thereafter, no Interest Period shall extend beyond the Extended Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

     “ Inventory ” has the meaning assigned to such term in the Security Agreement or the General Security Agreement and, as regards the Canadian Borrower, includes all “inventory” as defined in the PPSA.

     “ Inventory Advance Rate ” means the following percentages for TRU Inventory and BRU Inventory under the Tranche A Borrowing Base and the Canadian Borrowing Base for the following periods:

     “ Inventory Reserves ” means such reserves as may be established from time to time by any Co-Collateral Agent (after consultation with
the other Co-Collateral Agent), in its reasonable commercial discretion exercised in good faith, with respect to changes in the determination of the saleability, at retail, of the Eligible Inventory or which reflect such other factors as negatively affect the market value of the Eligible Inventory.

     “ Investment ” means, with respect to any Person:

     (a) Any Capital Stock of another Person, evidence of Indebtedness or other security of another Person, including any option, warrant or right to acquire the same;

     (b) Any loan, advance, contribution to capital, extension of credit (except for current trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business) to another Person;

     (c) Any Acquisition; and

     (d) Any other investment of money or capital in order to obtain a profitable return,

     in all cases, whether now existing or hereafter made. For purposes of calculation, the amount of any Investment outstanding at any time shall be the aggregate cash Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends and distributions) received by such Person.

     “ ISDA Master Agreement ” means the form entitled “2002 ISDA Master Agreement” or such other replacement form then currently published by the International Swap and Derivatives Association, Inc., or any successor thereto.

     “ Issuing Banks ” means, individually and collectively, (a) as to the Domestic Borrowers, each of Bank of America, Wells Fargo, Deutsche Bank AG New York Branch, and no more than two other Domestic Lenders selected by the Lead Borrower and approved by the Administrative Agent in its reasonable discretion (such approval not to be unreasonably withheld), and (b) as to the Canadian Borrower, each of Bank of America-Canada Branch and no more than one other Canadian Lender selected by the Canadian Borrower and approved by the Canadian Agent in its reasonable discretion (such approval not to be unreasonably withheld), in each case in its capacity as the issuer of Letters of Credit hereunder, and any successor in such capacity. Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

     “ Joinder Agreement ” shall mean an agreement, in the form attached hereto as Exhibit H , pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a Borrower or a Facility Guarantor, as the Administrative Agent may determine.

     “ Judgment Conversion Date ” has the meaning set forth in SECTION 9.19.

     “ Judgment Currency ” has the meaning set forth in SECTION 9.19.

     “ Landlord Lien State ” means Washington, Virginia, Pennsylvania and such other state(s) or province(s) in which a landlord’s claim for rent has priority by operation of Applicable Law over the lien of the Administrative Agent or the Canadian Agent in any of the Collateral.

     “ L/C Credit Support ” has the meaning set forth in SECTION 2.13(k).

     “ Lead Borrower ” has the meaning set forth in the Preamble to this Agreement.

     “ Lease ” means any agreement, whether written or oral, no matter how styled or structured, pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time.

     “ Lenders ” means, collectively, the Domestic Lenders and the Canadian Lenders (including, in each case, Extending Lenders and Non-Extending Lenders) and each assignee that becomes a party to this Agreement as set forth in SECTION 9.04(b) and each Additional Commitment Lender that becomes a party to this Agreement as set forth in SECTION 2.02.

     “ Letter of Credit ” means a letter of credit that is (i) issued by an Issuing Bank pursuant to this Agreement for the account of a Borrower, (ii) a Standby Letter of Credit or Commercial Letter of Credit, issued in connection with the purchase of Inventory by a Borrower and for other purposes for which such Borrower has historically obtained letters of credit, or for any other purpose that is reasonably acceptable to the Administrative Agent or the Canadian Agent, as applicable, and (iii) in form reasonably satisfactory to the applicable Issuing Bank.

     “ Letter of Credit Disbursement ” means a payment made by an Issuing Bank to the beneficiary of, and pursuant to, a Letter of Credit.

     “ Letter of Credit Outstandings ” means, collectively, Canadian Letter of Credit Outstandings and Domestic Letter of Credit Outstandings.

     “ Letter of Credit Fees ” means the fees payable in respect of Letters of Credit pursuant to SECTION 2.19.

     “ LIBO Borrowing ” means a Borrowing comprised of LIBO Loans.

     “ LIBO Loan ” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

     “ LIBO Rate ” means, with respect to any LIBO Borrowing for any Interest Period, the rate appearing on Telerate Page 3750, as determined by the Administrative Agent or the Canadian Agent, as applicable, from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such LIBO Borrowing for such Interest Period shall be that rate of interest (rounded upwards, if necessary to the next 1/100 of 1%) determined by the Administrative Agent to be the highest prevailing rate per annum at which deposits in dollars are offered to Bank of America by first class banks in the London interbank market in which Bank of America participates at 11:00 a.m. (London time) not less than two Business Days before the first day of the Interest Period for the subject LIBO Borrowing, for a deposit approximately in the amount of the subject Borrowing and for a period of time approximately equal to such Interest Period.

     “ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, collateral assignment, charge or security interest in, on or of such asset, and, with respect to the Canadian Borrower, also includes any prior claim or deemed trust in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of

securities, any purchase option, call or similar right of a third party with respect to such securities.

     “ Line Cap ” means, at any time of determination, the lesser of (a) the Total Commitments or (b) the Combined Borrowing Base.

     “ Liquidation ” means the exercise by the Administrative Agent, the Co-Collateral Agents or the Canadian Agent, as applicable, of those rights and remedies accorded to the Administrative Agent, the Co-Collateral Agents or the Canadian Agent, as applicable, under the Loan Documents and Applicable Law as a creditor of the Loan Parties, including (after the occurrence and during the continuation of an Event of Default) the conduct by the Loan Parties, acting with the consent of the Co-Collateral Agents, of any public, private or “Going-Out-Of-Business Sale” or other disposition of Collateral for the purpose of liquidating the Collateral. Derivations of the word “Liquidation” (such as “ Liquidate ”) are used with like meaning in this Agreement.

     “ Liquidation Percentage ” shall mean, for any Lender, a fraction, the numerator of which is the sum of such Lender’s Domestic Commitment and Canadian Commitment on the Determination Date and the denominator of which is the Total Commitments of all Lenders on the Determination Date.

     “ Loan Account ” has the meaning provided in SECTION 2.20.

     “ Loan Documents ” means this Agreement, the Notes, the Letters of Credit, the Fee Letter, all Borrowing Base Certificates, the Blocked Account Agreements, the Credit Card Notifications, the Security Documents, the Facility Guarantees, the Facility Guarantors’ Collateral Documents, the Intercreditor Agreement, and any other instrument or agreement now or hereafter executed and delivered in connection herewith (excluding agreements entered into in connection with any transaction arising out of any Bank Product or Cash Management Services), each as amended and in effect from time to time.

     “ Loan Party ” or “ Loan Parties ” means the Borrowers and the Facility Guarantors.

     “ Loans ” means all Revolving Credit Loans (including Domestic Loans and Canadian Loans), Swingline Loans and other advances to or for account of any of the Borrowers pursuant to this Agreement.

     “ Low Selling Period ” means (i) with respect to the TRU Inventory owned by the Domestic Loan Parties and all Inventory owned by the Canadian Loan Parties, the period in each year commencing on the first day after the first Sunday after December 15 ^th and ending on October 14 ^th of the subsequent year and (ii) with respect to BRU Inventory owned by the Domestic Loan Parties, the period in each year commencing on November 1 and ending on January 31 of the subsequent year.

     “ Margin Stock ” has the meaning assigned to such term in Regulation U.

     “ Master Lease ” means, collectively, each of the Master Leases entered into by a Loan Party with any Special Purpose Entity of the Parent and its subsidiaries, including, without

limitation, with Giraffe Intermediate Holdings, LLC and Giraffe Properties, LLC, on the Closing Date, and any and all modifications thereto, substitutions therefore and replacements thereof made with the consent of the Co-Collateral Agents or not in violation of the provisions of SECTION 6.09.

     “ Master Lease Liquidation Event ” means the acceleration of any Indebtedness of a Special Purpose Entity (or any successor in interest thereto) which is secured by the Real Estate which is the subject of a Master Lease, whether under the CMBS Facilities, the Supplemental Real Estate Facilities or otherwise, and the commencement of the exercise of remedies seeking to collect such Indebtedness (including, without limitation, foreclosure, by the holder of such Indebtedness), as a result of which either (a) the Loan Parties occupying such Real Estate could reasonably be expected to be dispossessed of such Real Estate due to the failure by the Loan Party to fulfill the terms of any SNDA or (b) any Access Agreement could reasonably be expected to be unenforceable or ineffective.

     “ Material Adverse Effect ” means any event, facts, or circumstances, which, after the Effective Date, has a material adverse effect on (a) the business, assets, financial condition or income of the Loan Parties taken as a whole or (b) the validity or enforceability of this Agreement or the other Loan Documents in any material respect or any of the material rights or remedies of the Secured Parties hereunder or thereunder.

     “ Material Indebtedness ” means Indebtedness (other than the Obligations) of the Loan Parties, individually or in the aggregate, having an aggregate principal amount exceeding $190,000,000.

     “ Material Canadian Subsidiary ” means, as to any Person, a Canadian Subsidiary of such Person that, as of the end of the most recent Fiscal Quarter for which annual financial statements or quarterly financial statements (whichever are more recent) are available prior to the date of determination, (a) owns assets consisting of Inventory, Accounts, and Eligible Real Estate of more than $5,000,000, individually, or collectively with all non-Material Canadian Subsidiaries, more than $15,000,000 of such assets, or (b) owns tangible net assets (as determined in accordance with GAAP), whether or not of the type included in the Canadian Borrowing Base of more than $20,000,000. The designation of a Subsidiary as a “Material Canadian Subsidiary” shall be permanent notwithstanding any subsequent reduction in such Subsidiary’s net tangible assets, unless otherwise consented to by the Administrative Agent. As of the Closing Date, the Subsidiaries listed on Schedule 1.2 are not Material Canadian Subsidiaries.

     “ Material Domestic Subsidiary ” means, as to any Person, a Domestic Subsidiary of such Person that, as of the end of the most recent Fiscal Quarter for which annual financial statements or quarterly financial statements (whichever are more recent) are available prior to the date of determination, (a) owns assets consisting of Inventory and Accounts of more than $10,000,000, individually, or collectively with all non-Material Domestic Subsidiaries, more than $40,000,000 of such assets or (b) owns tangible net assets (as determined in accordance with GAAP), whether or not of the type included in the Tranche A Borrowing Base of more than $50,000,000. The designation of a Subsidiary as a “Material Domestic Subsidiary” shall be permanent notwithstanding any subsequent reduction in such Subsidiary’s net tangible assets, unless otherwise consented to by the Administrative Agent. Notwithstanding the foregoing, Geoffrey

Holdings LLC (as well as any successor direct parent company of Geoffrey) and each other Subsidiary of the Lead Borrower that is a Loan Party on the Closing Date (in each case so long as they are a Subsidiary of a Loan Party), shall at all times be deemed a Material Domestic Subsidiary. As of the Closing Date, the Subsidiaries listed on Schedule 1.3 are not Material Domestic Subsidiaries.

     “ Material Subsidiary ” means a Material Canadian Subsidiary or a Material Domestic Subsidiary, as the case may be.

     “ Maximum Rate ” has the meaning provided in SECTION 9.13.

     “ Minority Lenders ” has the meaning provided in SECTION 9.02(c).

     “ Monthly Capped Availability ” means, for any date of calculation, Capped Availability on the last day of each month during such measurement period.

     “ Moody’s ” means Moody’s Investors Service, Inc.

     “ Mortgages ” means the Collateral Mortgages, Assignments of Leases and Rents, Hypothecs of Immoveable Property and any other security documents granting a Lien on Real Estate between the Loan Party owning the Real Estate encumbered thereby and the Canadian Agent for the benefit of the Canadian Agent and the other Secured Parties.

     “ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

     “ Net Proceeds ” means, with respect to any event, (a) the cash proceeds received in respect of such event, including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, in each case net of (b) the sum of (i) all reasonable fees and out-of-pocket fees and expenses (including appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party or a Subsidiary to third parties (other than Affiliates, except to the extent permitted under SECTION 6.07 hereof) in connection with such event, and (ii) in the case of a sale or other disposition of an asset (including pursuant to a casualty or condemnation), the amount of all payments required to be made by any Loan Party or any of their respective Subsidiaries as a result of such event to repay (or to establish an escrow for the repayment of) any Indebtedness (other than the Obligations and any other obligations secured by the Security Documents) secured by a Permitted Encumbrance that is senior to the Lien of the Administrative Agent or Canadian Agent, as applicable, and (iii) as long as the Determination Date has not occurred, capital gains or other income taxes paid or payable as a result of any such sale or disposition (after taking into account any available tax credits or deductions).

     “ Non-Extending Lender ” means each Lender listed on Schedule 1.1 under the heading “Non-Extending Lenders”, whose Commitment shall terminate on the Existing Termination Date.

     “ Notes ” means, collectively, (a) the Revolving Credit Notes and (b) the Swingline Notes, each as may be amended, supplemented or modified from time to time.

     “ Obligations ” means (a) (i) the principal of, and interest (including all interest that accrues after the commencement of any case or proceeding by or against any Borrower or Facility Guarantor under the Bankruptcy Code or any state, federal or provincial bankruptcy, insolvency, receivership or similar law, whether or not allowed in such case or proceeding) on the Loans and Facility Guarantees, (ii) other amounts owing by the Loan Parties under this Agreement or any other Loan Document in respect of any Letter of Credit, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities (including all fees, costs, expenses and indemnities that accrue after the commencement of any case or proceeding by or against any Borrower or Facility Guarantor under the Bankruptcy Code or any state, federal or provincial bankruptcy, insolvency, receivership or similar law, whether or not allowed in such case or proceeding), whether primary, secondary, direct, contingent, fixed or otherwise, of the Loan Parties to the Secured Parties under this Agreement and the other Loan Documents, and (b) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of each Loan Party under or pursuant to this Agreement and the other Loan Documents. Without limiting the foregoing, for purposes of clarity, whenever used herein the term “Obligations” shall include all Canadian Liabilities.

     “ Other Borrower ” means each Person who shall from time to time enter into a Joinder Agreement as a “Domestic Borrower” hereunder.

     “ Other Liabilities ” means (a) any Cash Management Services furnished to any of the Loan Parties or any of their Subsidiaries and/or (b) any transaction with any Agent, the Canadian Agent, any Lender or any of their respective Affiliates, which arises out of any Bank Product entered into with any Loan Party and any such Person, as each may be amended from time to time.

     “ Other Taxes ” means any and all current 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.

     “ Participant ” shall have the meaning provided in SECTION 9.04(e).

     “ Parent ” means Toys “R” Us, Inc., a Delaware corporation.

     “ Participation Register ” has the meaning provided in SECTION 9.04(e).

     “ Payment Conditions ” means, at the time of determination with respect to a specified transaction or payment, that (a) no Specified Default then exists or would arise as a result of the entering into of such transaction or the making of such payment and (b) after giving effect to such transaction or payment, the Pro Forma Availability Condition has been satisfied and the Consolidated Fixed Charge Coverage Ratio, as projected on a pro-forma basis for the twelve months following such transaction or payment, will be equal to or greater than 1.25:1.00. Prior to undertaking any transaction or payment which is subject to the Payment Conditions, the Loan

Parties shall deliver to the Administrative Agent evidence of satisfaction of the conditions contained in clause (b) above on a basis reasonably satisfactory to the Administrative Agent.

     “ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

     “ Permanent Financing Facility ” means any Indebtedness facility or facilities, the proceeds of which are used for any purpose determined by the Responsible Officers in their reasonable business judgment and otherwise permitted hereunder, so long as after giving effect thereto (i) the final maturity date of such Indebtedness (including all options of the Borrowers to extend the maturity date included in the documentation evidencing same) shall be on or after the Extended Term Maturity Date, and (ii) no scheduled principal amortization in excess of $200,000,000 in any Fiscal Year or $500,000,000 in the aggregate after the Closing Date is required until on or after the Extended Term Maturity Date.

     “ Permitted Acquisition ” means (i) the FAO Acquisition, and (ii) any other Acquisition in which each of the following conditions is satisfied:

     (a) No Default or Event of Default then exists or would arise from the consummation of such Acquisition;

     (b) Such Acquisition shall have been approved by the Board of Directors of the Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition will violate Applicable Law;

     (c) The Lead Borrower shall have furnished the Administrative Agent with ten (10) days’ prior notice of such intended Acquisition and shall have furnished the Administrative Agent with (i) a current draft of the acquisition agreement and other acquisition documents relating to the Acquisition and (ii) to the extent the purchase price relating to the Acquisition is in excess of $50,000,000 (excluding such portion of the purchase price consisting of Capital Stock or Subordinated Indebtedness of a Loan Party (or cash proceeds of the issuance of the foregoing) or contingent Earn Out Obligations), a summary of any due diligence undertaken by the Borrowers in connection with such Acquisition, appropriate financial statements of the Person which is the subject of such Acquisition, pro forma projected financial statements for the twelve (12) month period following such Acquisition after giving effect to such Acquisition (including balance sheets, cash flows and income statements by month for the acquired Person, individually, and on a Consolidated basis with all Loan Parties) and such other information readily available to the Loan Parties as the Administrative Agent shall reasonably request;

     (d) To the extent the purchase price relating to the acquisition is in excess of $50,000,000 (excluding such portion of the purchase price consisting of Capital Stock or Subordinated Indebtedness of a Loan Party (or cash proceeds of the issuance of the foregoing) or under contingent Earn Out Obligations), either (i) the legal structure of the Acquisition shall be acceptable to the Administrative Agent in its reasonable discretion,

or (ii) the Loan Parties shall have provided the Administrative Agent with a solvency opinion from an unaffiliated third party valuation firm reasonably satisfactory to the Administrative Agent;

     (e) If the Acquisition is an Acquisition of Capital Stock, (i) a Loan Party shall acquire and own, directly or indirectly, a majority of the Capital Stock in the Person being acquired and (ii) shall Control a majority of any voting interests or otherwise Control the governance of the Person being acquired;

     (f) Any material assets acquired shall be utilized in, and if the Acquisition involves a merger, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Borrower under this Agreement;

     (h) If the Person which is the subject of such Acquisition will be maintained as a Subsidiary of a Loan Party, or if the assets acquired in an acquisition will be transferred to a Subsidiary which is not then a Loan Party, such Subsidiary shall have been joined as a “Borrower” hereunder or as a Facility Guarantor, as required by SECTION 5.12, and the Administrative Agent or the Canadian Agent, as applicable, shall have received a first priority security and/or mortgage interest (subject only to Permitted Encumbrances (x) having priority by operation of Applicable Law on Collateral included in the Tranche A Borrowing Base and/or the Canadian Borrowing Base, or (y) on any Collateral not described in clause (x) above) in such Subsidiary’s Inventory, Accounts and other property constituting Collateral under the Security Documents in order to secure the Obligations and the Other Liabilities (or the Canadian Liabilities if such Person is a Canadian Loan Party);

     (i) The total consideration paid for all such Acquisitions (whether in cash, tangible property, notes or other property) after the Effective Date shall not exceed in the aggregate the sum of $150,000,000; and

     (j) The Borrowers shall have satisfied the Payment Conditions.

     “ Permitted Canadian Overadvance ” means a Canadian Overadvance made by the Canadian Agent, in its reasonable discretion, or at the direction of any Co-Collateral Agent, which:

     (a) Is made to maintain, protect or preserve the Collateral and/or the Secured Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Secured Parties; or

     (b) Is made to enhance the likelihood of, or maximize the amount of, repayment of any Obligation; or

     (c) Is made to pay any other amount chargeable to the Canadian Borrower hereunder; and

     (d) Together with all other Permitted Canadian Overadvances then outstanding, shall not (i) exceed the lesser of $10,000,000 or five percent (5%) of the Canadian Borrowing Base in the aggregate outstanding at any time, (ii) unless a Liquidation is occurring, remain outstanding for more than forty-five (45) consecutive Business Days, and (iii) unless a Liquidation is occurring, be made more than on one occasion during any 180 consecutive day period or on more than two occasions in any twelve month period, unless, in the case of clauses (ii) and (iii), the Required Lenders otherwise agree;

      provided however , that the foregoing shall not (i) modify or abrogate any of the provisions of SECTION 2.13(e) regarding any Lender’s obligations with respect to Letter of Credit Disbursements, or (ii) result in any claim or liability against the Canadian Agent or any Co-Collateral Agent (regardless of the amount of any Canadian Overadvance) for “inadvertent Canadian Overadvances” (i.e. where a Canadian Overadvance results from changed circumstances beyond the control of the Canadian Agent or the Co-Collateral Agents (such as a reduction in the collateral value)) and such “inadvertent Overadvances” shall not reduce the amount of Permitted Canadian Overadvances allowed hereunder; provided further that in no event shall the Canadian Agent make a Canadian Overadvance, if after giving effect thereto, the principal amount of the Canadian Loans and the then amount of the Canadian Letter of Credit Outstandings would exceed the aggregate of the Canadian Commitments (as in effect prior to any termination of the Canadian Commitments pursuant to SECTION 7.01).

     “ Permitted Disposition ” means any of the following:

     (a) (i) Licenses, sublicenses, settlement of claims, and entering into co-existence agreements with respect to intellectual property or (ii) licenses of licensed departments of a Loan Party or any of its Subsidiaries, in each case, in the ordinary course of business;

     (b) As long as no breach of the provisions of SECTION 6.10 hereof then exists or would arise therefrom, bulk sales or other dispositions of the Loan Parties’ Inventory not in the ordinary course of business in connection with Store closings, at arm’s length; provided that such Store closures and related Inventory dispositions shall not exceed (i) in any Fiscal Year of the Parent and its Subsidiaries, fifteen percent (15%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year (net of new Store openings) and (ii) in the aggregate from and after the Effective Date, thirty percent (30%) of the number of the Loan Parties’ Stores in existence as of the Effective Date (net of new Store openings); provided further that all sales of Inventory in connection with Store closings in a transaction or series of related transactions which in the aggregate involve Inventory having a value greater than $20,000,000 at Cost shall be in accordance with liquidation agreements and with professional liquidators reasonably acceptable to the Co-Collateral Agents; provided further that all Net Proceeds received in connection therewith, whether or not a Cash Dominion Event then exists, shall be paid over to the Administrative Agent on receipt by the Loan Parties and shall be utilized to prepay the Loans in the order of priority set forth in SECTION 7.03; and provided further that, notwithstanding the existence of a breach of the provisions of SECTION 6.10 hereof, such bulk sales or dispositions may be undertaken in accordance with this clause

(b) if, as a result thereof, Capped Availability would be greater than existed prior to such disposition;

     (c) Dispositions of assets (other than Real Estate and other than assets included in the Canadian Borrowing Base or the Tranche A Borrowing Base) in the ordinary course of business that are substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no longer useful or necessary in its business or that of any Subsidiary;

     (d) Sales, transfers and dispositions among the Loan Parties; provided that no such sales, transfers or dispositions shall be made from a Domestic Loan Party to a Canadian Loan Party, if, after giving effect thereto, the provisions of SECTION 6.10 hereof would be breached;

     (e) As long as no Specified Default then exists or would arise therefrom, sales and transfers of Real Estate of any Domestic Loan Party (or sales or transfers of any Person or Persons created to hold such Real Estate or the equity interests in such Person or Persons), including sale-leaseback transactions involving any such Real Estate, as long as: (i) such sale or transfer is made for fair market value; (ii) any such lease is on market terms (iii) if such sale or transfer is made to a non-Affiliated Person, the consideration received for such sale or transfer is at least 50% cash or, if such sale or transfer is to an Affiliated Person, the entire consideration received for such sale or transfer is paid in cash;

provided that , in the case of any sale-leaseback transaction permitted hereunder, the Agents shall have received from each such purchaser or transferee a collateral access agreement on terms and conditions reasonably satisfactory to the Agents; provided further that, notwithstanding the existence of a breach of the provisions of SECTION 6.10 hereof, sales (but not transfers) of Real Estate of the Domestic Loan Parties may be undertaken in accordance with this clause (e) if, as a result thereof, Capped Availability would be greater than existed prior to such sales;

     (f) Sales or forgiveness of Accounts in the ordinary course of business or in connection with the collection or compromise thereof;

     (g) Leases, subleases, licenses and sublicenses of real or personal property entered into by Loan Parties and their Subsidiaries in the ordinary course of business at arm’s length and on market terms;

     (h) Sales of non-core assets acquired in connection with Permitted Acquisitions which are not used in the business of the Loan Parties;

     (i) Issuances of equity by Foreign Subsidiaries (other than the Canadian Borrower or any other Canadian Subsidiary) to qualifying directors of such Foreign Subsidiaries;

     (j) As long as no Event of Default would arise therefrom, sales or other dispositions of Permitted Investments (other than those described in clauses (h)(ii), (i),

(n), (o), (p), (u), (v), and (x) of the definition thereof) and the Loan Parties’ interest in SALTRU Associates JV;

     (k) Any disposition of Real Estate to a Governmental Authority as a result of a condemnation of such Real Estate; provided that all Net Proceeds received from Real Estate of the Canadian Loan Parties in connection therewith are applied to the Canadian Liabilities, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof;

     (l) The making of Permitted Investments and payments permitted under SECTION 6.06;

     (m) Permitted Encumbrances;

     (n) Leasing of Real Estate no longer used in the business of the Loan Parties;

     (o) Sales of Fixed Assets listed on Schedule 6.05 ; provided that all Net Proceeds received in connection therewith are applied to the Obligations or the Canadian Liabilities, as applicable, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof;

     (p) Exchanges or swaps of Equipment, Store leases and other Real Estate of the Domestic Loan Parties having substantially equivalent value; provided that , upon the completion of any such exchange or swap, (i) the Administrative Agent or the Canadian Agent, as applicable, for its own benefit and the benefit of other Secured Parties, has a perfected first priority lien (subject only to Permitted Encumbrances having priority by operation of Applicable Law) in such Equipment received by the Loan Parties, and (ii) all Net Proceeds, if any, received in connection with any such exchange or swap of Equipment are applied to the Obligations or the Canadian Liabilities, as applicable, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof;

     (q) Forgiveness of Permitted Investments described in clauses (h)(ii), (i), and (n) of the definition thereof as long as the Payment Conditions are satisfied at the time of foregiveness and such Investment does not constitute proceeds of Collateral previously included in the Tranche A Borrowing Base or the Canadian Borrowing Base;

     (r) As long as no Event of Default exists or would arise as a result of the transaction, sales of a Subsidiary or any business segment, or any portion thereof (including, in each case, sales of any Person created to hold such assets), (i) to a Person other than a Loan Party or a Subsidiary or Affiliate of a Loan Party, for fair market value, or (ii) to a Subsidiary or Affiliate of a Loan Party, if the Payment Conditions are satisfied; provided that , in each case, such sale shall be for cash in an amount at least equal to the greater of the amounts advanced or available to be advanced against the assets included in the sale under the Tranche A Borrowing Base or Canadian Borrowing Base, as applicable; provided further that all Net Proceeds, if any, received in connection with any such sales are applied to the Obligations or the Canadian Liabilities, as applicable, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof;

     (s) As long as no breach of the provisions of SECTION 6.10 hereof exists or would arise as a result of the transaction, sales or other dispositions of Real Estate of the Canadian Loan Parties for fair market value; provided that such sale shall be for cash in an amount at least equal to the greater of the amounts advanced or available to be advanced against the assets included in the sale under the Canadian Borrowing Base; provided further that all Net Proceeds, if any, received in connection with any such sales are applied to the Canadian Liabilities, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof; and provided further that, notwithstanding the existence of a breach of the provisions of SECTION 6.10 hereof, sales of Real Estate of the Canadian Loan Parties may be undertaken if, as a result thereof, Capped Availability would be greater than existed prior to such sale;

     (t) As long as no Specified Default exists or would arise as a result of the transaction, other dispositions of assets (other than Real Estate and assets included in the Canadian Borrowing Base or the Tranche A Borrowing Base) in an aggregate amount for all Loan Parties not to exceed $100,000,000 in any Fiscal Year; provided that all Net Proceeds, if any, received in connection with any such sales are applied to the Obligations or the Canadian Liabilities, as applicable, if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof; provided further that, notwithstanding the existence of a breach of the provisions of SECTION 6.10 hereof, such dispositions may be undertaken in accordance with this clause (t) if, as a result thereof, Capped Availability would be greater than existed prior to such dispositions; and

     (u) Sale-leaseback transactions of Equipment, to the extent not otherwise prohibited hereunder.

     “ Permitted Domestic Overadvance ” means a Domestic Overadvance made by the Administrative Agent, in its reasonable discretion, or at the direction of any Co-Collateral Agent, which:

     (a) Is made to maintain, protect or preserve the Collateral and/or the Secured Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Secured Parties; or

     (b) Is made to enhance the likelihood of, or maximize the amount of, repayment of any Obligation; or

     (c) Is made to pay any other amount chargeable to any Domestic Borrower hereunder; and

     (d) Together with all other Permitted Domestic Overadvances then outstanding, shall not (i) exceed the lesser of $100,000,000 or five percent (5%) of the Tranche A Borrowing Base in the aggregate outstanding at any time, (ii) unless a Liquidation is occurring, remain outstanding for more than forty-five (45) consecutive Business Days, and (iii) unless a Liquidation is occurring, be made more than on one occasion during any 180 consecutive day period or on more than two occasions in any

twelve month period, unless, in the case of clauses (ii) and (iii), the Required Lenders otherwise agree;

      provided however , that the foregoing shall not (i) modify or abrogate any of the provisions of SECTION 2.13(e) regarding any Lender’s obligations with respect to Letter of Credit Disbursements, or (ii) result in any claim or liability against the Administrative Agent or any Co-Collateral Agent (regardless of the amount of any Domestic Overadvance) for “inadvertent Domestic Overadvances” (i.e. where a Domestic Overadvance results from changed circumstances beyond the control of the Administrative Agent or the Co-Collateral Agents (such as a reduction in the collateral value)) and such “inadvertent Overadvances” shall not reduce the amount of Permitted Domestic Overadvances allowed hereunder; provided further that in no event shall the Administrative Agent make a Domestic Overadvance, if after giving effect thereto, the principal amount of the Domestic Loans and the then amount of the Domestic Letter of Credit Outstandings would exceed the aggregate of the Domestic Commitments (as in effect prior to any termination of the Domestic Commitments pursuant to SECTION 7.01).

     “ Permitted Encumbrances ” means:

     (a) Liens imposed by law for Taxes that are not required to be paid pursuant to SECTION 5.05;

     (b) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by Applicable Law (i) arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days, (ii) (A) that are being contested in good faith by appropriate proceedings, (B) as to which the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (C) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, or (iii) the existence of which would not reasonably be expected to result in a Material Adverse Effect;

     (c) Pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

     (d) Deposits to secure, or relating to, the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds (and Liens arising in accordance with Applicable Law in connection therewith), and other obligations of a like nature, in each case in the ordinary course of business;

     (e) Judgment Liens in respect of judgments that do not constitute an Event of Default under SECTION 7.01(k);

     (f) Easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way, development, site plan or similar agreements and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of

business of a Loan Party and such other minor title defects, or survey matters that are disclosed by current surveys, but that, in each case, do not interfere with the current use of the property in any material respect;

     (g) Any Lien on any property or asset of any Loan Party set forth on Schedule 6.02 ; provided that , if such Lien secures Indebtedness, such Lien shall secure only the Indebtedness listed on Schedule 6.01 as of the Effective Date (and extensions, renewals and replacements thereof permitted under SECTION 6.01);

     (h) (i) Liens on fixed or capital assets acquired by any Loan Party which are permitted under clause (e) of the definition of Permitted Indebtedness, so long as (A) such Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of the construction or improvement thereof (other than refinancings thereof permitted hereunder), (B) the Indebtedness secured thereby does not exceed 100% of the cost of acquisition or improvement of such fixed or capital assets, (C) such Liens shall not violate the terms of the Indentures, and (D) such Liens shall not extend to any other property or assets of the Loan Parties; and (ii) Liens incurred in connection with sale-leaseback transactions of fixed or capital assets permitted under clause (m) of the definition of Permitted Indebtedness, so long as (A) such Liens shall not violate the terms of the Indentures, and (B) such Liens shall not extend to any other property or assets of the Loan Parties;

     (i) Liens in favor of the Administrative Agent or the Canadian Agent, as applicable, for its own benefit and the benefit of the other Secured Parties;

     (j) Landlords’ and lessors’ Liens in respect of rent not in default for more than sixty (60) days or the existence of which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect;

     (k) Possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the Effective Date and Permitted Investments; provided that such liens (a) attach only to such Investments and (b) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;

     (l) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries;

     (m) Liens on Real Estate or on the Capital Stock of the Persons owning such Real Estate to finance or refinance Indebtedness permitted by clause (j) of the definition of Permitted Indebtedness; provided that such Liens shall not apply to any property or assets of the Loan Parties other than the Real Estate or Capital Stock so financed or refinanced;

     (n) Liens attaching solely to cash earnest money deposits in connection with any letter of intent or purchase agreement in connection with a Permitted Acquisition;

     (o) Liens arising from precautionary UCC filings regarding “true” operating leases or the consignment of goods to a Loan Party;

     (p) Voluntary Liens on Fixed Assets in existence at the time such Fixed Assets are acquired pursuant to a Permitted Acquisition or on Fixed Assets of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition; provided that such Liens are not incurred in connection with or in anticipation of such Permitted Acquisition and do not attach to any other assets of any Loan Party or any of its Subsidiaries;

     (q) Liens in favor of customs and revenues authorities imposed by Applicable Law arising in the ordinary course of business in connection with the importation of goods and securing obligations (i) that are not overdue by more than sixty (60) days, (ii)(A) that are being contested in good faith by appropriate proceedings, (B) as to which the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (C) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, or (iii) the existence of which would not reasonably be expected to result in a Material Adverse Effect;

     (r) Liens placed on any of the assets or equity interests of a Foreign Subsidiary (other than the Canadian Borrower or any other Canadian Loan Party);

     (s) Any interest or title of a licensor, sublicensor, lessor or sublessor under any license or operating or true lease agreement;

     (t) Licenses, sublicenses, leases or subleases granted to third Persons in the ordinary course of business;

     (u) The replacement, extension or renewal of any Permitted Encumbrance; provided that such Lien shall at no time be extended to cover any assets or property other than such assets or property subject thereto on the Effective Date or the date such Lien was incurred, as applicable;

     (v) Liens on insurance proceeds incurred in the ordinary course of business in connection with the financing of insurance premiums;

     (w) Liens on securities which are the subject of repurchase agreements incurred in the ordinary course of business;

     (x) Liens arising by operation of law under Article 4 of the UCC (or any similar law in Canada) in connection with collection of items provided for therein;

     (y) Liens arising by operation of law under Article 2 of the UCC (or any similar laws in Canada) in favor of a reclaiming seller of goods or buyer of goods;

     (z) Liens on deposit accounts or securities accounts in connection with overdraft protection and netting services;

     (aa) Security given to a public or private utility or any Governmental Authority as required in the ordinary course of business;

     (bb) With respect to any Real Property located in Canada, any rights, reservations, limitations and conditions contained in the grant from the Crown or any Crown Patent;

     (cc) Liens on royalty payments due or to become due to Geoffrey and its Subsidiaries to secure Indebtedness described in clause (y) of the definition of Permitted Indebtedness;

     (dd) Liens on assets not otherwise permitted hereunder; provided that (i) if such Liens secure Indebtedness, such Indebtedness is Permitted Indebtedness and (ii) no Collateral consisting of Inventory, Accounts, and Eligible Real Estate and the proceeds thereof is subject to any such Liens (other than those Permitted Encumbrances described in clauses (a) and (b) of the definition of Permitted Encumbrances) and (iii) the aggregate outstanding principal amount of the obligations secured by such Liens does not exceed (as to all Loan Parties) $50,000,000 at any one time;

     (ee) Liens in favor of a financial institution encumbering deposits (including the right of setoff) held by such financial institution in the ordinary course of business in respect of Indebtedness permitted hereunder and which are within the general parameters customary in the banking industry;

     (ff) Liens in the nature of the right of setoff in favor of counterparties to contractual agreements with the Loan Parties (other than the Sponsor Related Parties (other than the Parent and any of its Subsidiaries)) in the ordinary course of business;

     (gg) Liens to secure Indebtedness, to the extent permitted under clause (w) of the definition of Permitted Indebtedness; and

     (hh) Liens on the assets of the Lead Borrower and certain of its Domestic Subsidiaries to secure Indebtedness under the Term Loan;

      provided , however , that, except as provided in any one or more of clauses (a) through (hh) above, the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money. The designation of a Lien as a Permitted Encumbrance shall not limit or restrict the ability of the Agents to establish any Reserve relating thereto.

     “ Permitted Indebtedness ” means each of the following:

     (a) Indebtedness created under the Loan Documents;

     (b) Indebtedness set forth on Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness, so long as, after giving effect thereto, (i) the

principal amount of the Indebtedness outstanding at such time is not increased (except by the amount of any accrued interest, reasonable closing costs, expenses, fees, and premium paid in connection with such extension, renewal or replacement), (ii) if the final maturity date of such Indebtedness on Schedule 6.01 is prior to the Extended Term Maturity Date, the result of such extension, renewal or replacement shall not be an earlier maturity date or decreased weighted average life, and (iii) if the final maturity date of such Indebtedness on Schedule 6.01 is after the Extended Term Maturity Date, the result of such extension, renewal or replacement shall not be a maturity date earlier than the Extended Term Maturity Date;

     (c) Indebtedness of any Loan Party to any other Loan Party or to the Parent or any of the Parent’s other Subsidiaries;

     (d) Guarantees by any Loan Party of Indebtedness or other obligations arising in the ordinary course of business of any other Loan Party;

     (e) Purchase money Indebtedness of any Loan Party to finance the acquisition or improvement of any fixed or capital assets (other than Real Estate), including Capital Lease Obligations (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted under clause (m) of this definition), and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; provided that the holders of such Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the obligor or obligors than those contained in the Indebtedness being extended, renewed or replaced; provided further that, if requested by the Co-Collateral Agents, the Loan Parties will use commercially reasonable efforts to cause the holder of such Indebtedness to enter into an intercreditor agreement with the Co-Collateral Agents or the Canadian Agent, as applicable, providing for access and use of the property during a Liquidation on terms reasonably satisfactory to the Co-Collateral Agents;

     (f) Indebtedness under Hedge Agreements, other than for speculative purposes, entered into in the ordinary course of business;

     (g) Contingent liabilities under surety bonds or similar instruments incurred in the ordinary course of business in connection with the construction or improvement of retail stores;

     (h) Indebtedness of the Lead Borrower and the Domestic Subsidiaries which are guarantors under the Term Loan; provided that in no event shall the principal amount of such Indebtedness, when combined with Indebtedness outstanding under clauses (i), (aa) and (bb) of this definition, exceed $2,750,000,000 (plus non-cash accruals of interest, accretion or amortization of original issue discount and/or payment-in-kind interest) at any time outstanding;

     (i) Indebtedness under the Permanent Financing Facility; provided that in no event shall the principal amount of such Indebtedness, when combined with Indebtedness outstanding under clauses (h), (aa) and (bb) of this definition, exceed $2,750,000,000 (plus non-cash accruals of interest, accretion or amortization of original issue discount and/or payment-in-kind interest) at any time outstanding;

     (j) Indebtedness incurred for the construction or acquisition or improvement of, or to finance or to refinance, any Real Estate owned by any Loan Party (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted under clause (m) hereof); provided that , (i) the incurrence of such Indebtedness shall not violate or result in a default under the Indentures and (ii) with respect to any Eligible Real Estate, the proceeds therefrom are at least equal to the amounts then available to be borrowed with respect thereto under the Canadian Borrowing Base and (iii) all Net Proceeds received in connection with any Indebtedness are applied to the Canadian Liabilities if then required in accordance with SECTION 2.17 or SECTION 2.18 hereof;

     (k) Indebtedness with respect to the deferred purchase price for any Permitted Acquisition; provided that such Indebtedness does not require the payment in cash of principal (other than in respect of working capital adjustments) prior to the Extended Term Maturity Date, has a maturity which extends beyond the Extended Term Maturity Date, and is subordinated to the Obligations and the Other Liabilities on terms materially consistent with Exhibit L hereto or otherwise reasonably acceptable to the Agents;

     (l) Indebtedness due to the Sponsor, Sponsor Related Parties, and/or other stockholders of the Parent and its Affiliates (excluding the Parent and any of its Subsidiaries); provided that such Indebtedness does not require the payment in cash of principal or interest at a rate in excess of 10% per annum prior to the Extended Term Maturity Date, has a maturity which extends beyond the Extended Term Maturity Date, and is subordinated to the Obligations and Other Liabilities on terms reasonably acceptable to the Agents;

     (m) Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder;

     (n) Subordinated Indebtedness;

     (o) Indebtedness incurred by any Foreign Subsidiary (other than the Canadian Borrower or any other Canadian Loan Party) for working capital or general corporate purposes which is not guaranteed by or secured by any assets of any Loan Party (other than the capital stock of such Foreign Subsidiary);

     (p) Indebtedness constituting the obligation to make purchase price adjustments and indemnities in connection with Permitted Acquisitions;

     (q) Guarantees and letters of credit and surety bonds issued in connection with Permitted Acquisitions and Permitted Dispositions;

     (r) Indebtedness incurred in the ordinary course of business in connection with the financing of insurance premiums;

     (s) Indebtedness consisting of the deferred purchase price (including notes issued to officers, directors and employees) for the purchase or redemption of equity interests (or option or warrants or similar instruments) of a Loan Party or Affiliate;

     (t) Indebtedness of any Loan Party acquired pursuant to a Permitted Acquisition (or Indebtedness assumed at the time, and as a result, of a Permitted Acquisition); provided that , in each case, such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition;

     (u) Indebtedness relating to surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

     (v) Without duplication of any other Indebtedness, non-cash accruals of interest, accretion or amortization of original issue discount and/or pay-in-kind interest;

     (w) Indebtedness relating to letters of credit obtained in the ordinary course of business; provided that the security for any such documentary letter of credit may be secured only by Liens attaching to the related documents of title and not the Inventory represented thereby;

     (x) Indebtedness under each guaranty of recourse obligations and environmental indemnity agreement executed and delivered by the Lead Borrower on the Closing Date in connection with the CMBS Facilities or any Supplemental Real Estate Facilities;

     (y) Indebtedness of Geoffrey and its Subsidiaries in connection with the financing of the anticipated royalty payments due or to become due to such Persons;

     (z) Guaranties of joint venture Indebtedness described in Schedule 6.01(z) ;

     (aa) Indebtedness under the Supplemental Real Estate Facilities; provided that in no event shall the principal amount of such Indebtedness, when combined with Indebtedness outstanding under the Term Loan, under the Permanent Financing Facility and under clause (bb) of this definition, exceed $2,750,000,000 (plus non-cash accruals of interest, accretion or amortization of original issue discount and/or payment-in-kind interest) at any time outstanding; and

     (bb) Other Indebtedness (other than Subordinated Indebtedness) in an aggregate principal amount not exceeding $750,000,000 at any time outstanding; provided that such Indebtedness may not be secured except in an aggregate principal amount not exceeding $50,000,000 at any time outstanding; provided further that in no event shall the principal amount of such Indebtedness, when combined with Indebtedness outstanding under the Term Loan, under the Permanent Financing Facility and under clause (aa) of this definition, exceed $2,750,000,000 (plus non-cash accruals of interest,

accretion or amortization of original issue discount and/or payment-in-kind interest) at any time outstanding.

     “ Permitted Investments ” means each of the following:

     (a) Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or, with respect to the Canadian Loan Parties, Canada (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America or Canada, as applicable) or any state or state agency thereof, in each case maturing within one (1) year from the date of acquisition thereof;

     (b) Investments in commercial paper maturing within 360 days from the date of acquisition thereof and having, at the date of acquisition, the highest or next highest credit rating obtainable from S&P or from Moody’s;

     (c) Investments in certificates of deposit, banker’s acceptances and time deposits maturing within 360 days from the date of acquisition thereof which are issued or guaranteed by, or placed with, and demand deposit and money market deposit accounts issued or offered by, any Lender or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof (or with respect to the Canadian Loan Parties, Canada or any province thereof) that has a combined capital and surplus and undivided profits of not less than $500,000,000;

     (d) Fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above or with any primary dealer;

     (e) Shares of any money market or mutual fund that has substantially all of its assets invested in the types of investments referred to in clauses (a) through (d), above;

     (f) Investments existing on the Effective Date and set forth on Schedule 6.04 ;

     (g) Investments made in accordance with the investment policy of the Borrowers set forth as Schedule 6.04(g) hereto;

     (h) Capital contributions or loans made by (i) any Loan Party to any other Loan Party or (ii) as long as no Specified Default then exists or would arise therefrom, any Loan Party to any Subsidiary or Affiliate of any Loan Party (other than to the Sponsors, Sponsor Related Parties or any other stockholder of the Parent) in an aggregate amount not to exceed $25,000,000 at any time outstanding (or in an aggregate amount exceeding $25,000,0000, provided that the Pro Forma Availability Condition has been satisfied at the time such capital contribution or loan is made), in each case determined without regard to any write-downs or write-offs thereof;

     (i) Provided no Specified Default then exists or would arise therefrom, (A) loans made by any Loan Party to any other Loan Party or any Subsidiary or Affiliate of

any Loan Party (other than to the Sponsors, Sponsor Related Parties or any other stockholder of the Parent) solely for the purpose of (1) paying scheduled principal payments (including at maturity) due and payable by such Loan Party, Subsidiary or any such Affiliate, or (2) payments in respect of Guarantees of Indebtedness of another Loan Party or any Subsidiary or any such Affiliate of a Loan Party due and payable by such Loan Party, Subsidiary or Affiliate, or (B) loans made by any Loan Party to the Parent or any Subsidiary or any Affiliate of any Loan Party (other than to the Sponsors, Sponsor Related Parties or any other stockholder of the Parent) for the purpose of paying taxes and operating expenses incurred in the ordinary course of business by such Subsidiary or such Affiliate but only to the extent such Subsidiary or such Affiliate has insufficient liquidity or insufficient cash flow to pay such taxes or operating expenses; provided that in no event shall any Loan Party make loans to any Person other than any other Loan Party pursuant to this clause (i) in an aggregate amount exceeding $25,000,000 at any time outstanding unless the Pro Forma Availability Condition has been satisfied at the time such loans are made;

     (j) Provided no Enumerated Default or breach of SECTION 6.10 then exists or would arise therefrom, (i) loans made by any Loan Party to any other Loan Party or any Subsidiary or Affiliate of any Loan Party (other than to the Sponsors, Sponsor Related Parties or any other stockholder of the Parent) solely for the purpose of paying scheduled interest payments (including at maturity) due and payable by such Loan Party, Subsidiary or any such Affiliate, or (ii) loans made by any Loan Party to any other Loan Party or to the Parent solely for the purpose of paying taxes and operating expenses incurred in the ordinary course of business by such Loan Party or the Parent;

     (k) Guarantees constituting Permitted Indebtedness;

     (l) Guarantees of Indebtedness of Subsidiaries that are not Loan Parties not in excess of $100,000,000 in the aggregate at any time outstanding; provided that in no event shall any Loan Party issue Guarantees of Indebtedness of Subsidiaries that are not Loan Parties pursuant to this clause (l) in an aggregate amount exceeding $25,000,000 at any time outstanding unless the Pro Forma Availability Condition has been satisfied at the time such Guarantees are issued;

     (m) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

     (n) Loans or advances to employees for the purpose of travel, entertainment or relocation in the ordinary course of business; provided that all such loans and advances to employees shall not exceed $20,000,000 in the aggregate at any time, and determined without regard to any write-downs or write-offs thereof;

     (o) Investments received from purchasers of assets pursuant to dispositions permitted pursuant to SECTION 6.05;

     (p) Investments consisting of ownership interests in Special Purpose Entities;

     (q) Permitted Acquisitions and existing Investments of the Persons acquired in connection with Permitted Acquisitions so long as such Investment was not made in contemplation of such Permitted Acquisition;

     (r) Hedging Agreements entered into in the ordinary course of business for non-speculative purposes;

     (s) To the extent permitted by Applicable Law, notes from officers and employees in exchange for equity interests of the Parent purchased by such officers or employees pursuant to a stock ownership or purchase plan or compensation plan;

     (t) Earnest money required in connection with Permitted Acquisitions;

     (u) Subject to SECTION 2.18, Investments in deposit accounts opened in the ordinary course of business;

     (v) (i) Capitalization or forgiveness of any Indebtedness owed to any Loan Party by other Loan Parties or (ii) capitalization or forgiveness of any Indebtedness owed to any Loan Party by Persons other than Loan Parties, provided that the Payment Conditions are satisfied after giving effect thereto, and (iii) forgiveness of any Indebtedness owed to a Loan Party which was obtained through a transfer or sale of Real Estate permitted pursuant to clause (e) of the definition of Permitted Dispositions;

     (w) Investments in Foreign Subsidiaries; provided that such Investments shall not exceed $25,000,000 in the aggregate outstanding at any time ( plus the amount of any Net Cash Proceeds of any equity issuance actually used for such purpose);

     (x) Investments to secure obligations of TRU (Vermont), Inc. not to exceed $250,000,000;

     (y) Creation and capitalization of new Subsidiaries, subject to the provisions of SECTION 5.12;