SECOND LIEN CREDIT AGREEMENT

Exhibit 4.1 EXPLANATORY NOTE: "*" INDICATES THE PORTION OF THIS EXHIBIT THAT HAS BEEN OMITTED AND SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.   SECOND LIEN CREDIT AGREEMENT by and among BAKERS FOOTWEAR GROUP, INC. as Borrower, and THE LENDERS THAT ARE SIGNATORIES HERETO as the Lenders, and PRIVATE EQUITY MANAGEMENT GROUP, INC. as the Arranger and Administrative Agent Dated as of February 1, 2008  

Table of Contents

EXHIBITS AND SCHEDULES

SECOND LIEN CREDIT AGREEMENT       THIS SECOND LIEN CREDIT AGREEMENT (this " Agreement "), is entered into as of February 1, 2008, by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a " Lender " and collectively as the " Lenders "), PRIVATE EQUITY MANAGEMENT GROUP, INC., a Nevada corporation, as the arranger and administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, " Agent "), and BAKERS FOOTWEAR GROUP, INC., a Missouri corporation (" Borrower "). INTRODUCTION      All defined terms not otherwise defined above or in this Introduction are as defined in Schedule 1.1 or as defined elsewhere herein.      Borrower has requested that the Lenders agree to make Borrower a secured term loan of $7,500,000 the proceeds of which will be used for (i) the partial pay down of the Indebtedness outstanding under the Senior Loan Agreement, (ii) working capital for business operations, and (iii) fees and expenses related to the transactions contemplated by the Loan Documents.      To provide assurance and security for the repayment of the loans and other Obligations of Borrower hereunder, Borrower will provide or will cause to be provided to Agent (for the benefit of the Lender Group) a security interest in all of its personal property assets pursuant to the Security Agreement (as defined herein).      As additional inducement to the Lenders, the Borrower has agreed that, on the Funding Date, the Borrower will issue to Agent or its Affiliates shares of the Borrower’s Common Stock as is set forth next to such Person’s name on Schedule E-1 hereto, which shares shall in the aggregate total 350,000 shares of the Common Stock of the Borrower. On the Funding Date, the parties will enter into the Registration Rights Agreement, pursuant to which, among other things the Borrower will agree to provide certain registration rights under the Securities Act. The Agent, each Lender and Borrower are executing and delivering this Agreement and the Loan Documents in reliance upon the exemption from securities registration afforded by the provisions of Regulation D as promulgated by the SEC under the Securities Act.      Subject to the terms and conditions set forth herein, Agent is willing to act as agent for the Lenders and each Lender is willing to make loans to Borrower in an aggregate amount not in excess of its Commitment hereunder.      Accordingly, the parties hereto hereby agree as follows:

     1.1 Definitions. Except as otherwise provided herein, capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

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     1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrower" is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Agent shall so request, the Agent and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.      1.3 Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein, provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Divisions of the Code, the definition of such term contained in Article 9 shall govern.      1.4 Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms "includes" and "including" are not limiting, the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or," and any provision that is set forth herein as part of a list or series is to be construed in a manner that does not result in duplication of any other provision in such list or series. The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein, subject to qualifications of materiality set forth in the Loan Documents.      1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

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     2.1 2.1 INTENTIONALLY OMITTED.      2.2 Term Loan.           (a) Subject to the terms and conditions of this Agreement, on the Closing Date, each Lender agrees (severally, not jointly or jointly and severally) to make a term loan (collectively, the " Term Loan ") to Borrower in an amount equal to such Lender’s Pro Rata Share of the Commitment.           (b) All amounts outstanding under the Term Loan shall constitute Obligations. No portion of the Term Loan which is repaid or prepaid may be reborrowed. The Term Loan shall be repaid in installments as set forth in the tables set forth in subsections (c) and (d) below; provided, however, that the outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loan shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration.           (c) Subject to subsection (b) above and subsection (d) below, the principal of the Term Loan shall be repaid in installments as follows:                (i) commencing on March 1, 2008, and continuing on the first day of each of the 34 consecutive months thereafter, equal installments of $208,333.33; and                (ii) on the Maturity Date, a final installment in an amount equal to the then unpaid principal balance of the Term Loan.           (d) If Borrower prepays any portion of the Term Loan prior to the Maturity Date, such prepayment shall be made in the inverse order of maturity, and the payment schedule for the remaining balance shall be recalculated so as to result in equal payments which fully amortize the remaining principal balance over the remaining term of the Term Loan.      2.3 Borrowing Procedure.           (a) Generally .                (i) The Borrowing of the Term Loan shall be made by an irrevocable written request by an Authorized Person delivered to Agent and the Lenders. Such notice must be received by Agent and the Lenders no later than 10:00 a.m. (California time) on the Closing Date, specifying the requested Funding Date, which shall be a Business Day.                (ii) [INTENTIONALLY OMITTED]                (iii) Borrower shall borrow pursuant to Section 2.2(a) an amount equal to the Term Loan in a single drawing.                (iv) Subject to the other conditions set forth in this Section 2.3(a) , each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing

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available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Date. After Agent’s receipt of such funds, Agent shall make such funds available to Borrower on the Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Borrower’s Designated Account; provided , however , that Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any portion of the Term Loan if Agent shall have actual knowledge that one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the Borrowing unless such condition has been waived. In the event any Lender shall not have made the amount of Lender’s Pro Rata Share of the requested Borrowing in accordance with the provisions of this Section 2.3(a) , Agent or its designee shall fund any such shortfall and the Lenders’ Pro Rata Shares shall be deemed to be adjusted accordingly.                (v) Agent shall not be obligated to transfer to a Defaulting Lender any payments respecting the Term Loan made by Borrower to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender’s portion of the Term Loan was funded by the other members of the Lender Group). Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a " Lender " and such Lender’s Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable portion of the Term Loan and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrower of its duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Group’s or Borrower’s rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.           (b) Notation. Agent shall record on its books the principal amount of the Term Loan owing to each Lender, and the interests therein of each Lender, from time to time and

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such records shall, absent manifest error, gross negligence or willful misconduct on the part of Agent, conclusively be presumed to be correct and accurate.           (c) Lenders’ Failure to Perform. All portions of the Term Loan shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares and subject to Section 2.2 . It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any portion of the Term Loan (or other extensions of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.      2.4 Payments.           (a) Payments by Borrower .                (i) Except as otherwise expressly provided herein and subject to the Senior Loan Subordination Agreement, all payments by Borrower shall be made in Dollars to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time) shall be deemed to have been received on the following Business Day, and any applicable interest or fee shall continue to accrue until such following Business Day.                (ii) Unless Agent receives notice from Borrower prior to the date on which any payment is due to the Lenders that Borrower will not make such payment in full as and when required, Agent may assume that Borrower has made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrower does not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.           (b) Apportionment and Application .                (i) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender), and payments of fees and expenses (other than fees or expenses that are for Agent’s separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders. Subject to the Senior Loan Subordination Agreement, all payments shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows:

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                    (A)  first , ratably to pay any Lender Group Expenses then due to Agent or any of the Lenders under the Loan Documents, until paid in full,                     (B)  second , ratably to pay any fees or premiums then due to Agent (for its separate account, after giving effect to any agreements between Agent and individual Lenders) or any of the Lenders under the Loan Documents until paid in full,                     (C)  third , ratably to pay interest due in respect of the Term Loan until paid in full,                     (D)  fourth , ratably to pay any principal amount then due and payable with respect to the Term Loan until paid in full; provided that, if Borrower is making a prepayment of the Term Loan in accordance with Sections 2.4(d) or 2.4(e) , in accordance with Section 2.2(d) ; and                     (E)  fifth , to Borrower (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.                (ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive.                (iii) In each instance, so long as no Event of Default has occurred and is continuing, this Section 2.4(b) shall not apply to any payment made by Borrower to Agent and specified by Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement.                (iv) For purposes of the foregoing, " paid in full " means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding.                (v) In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern.                (vi) The provisions of this Section 2.4 constitute an agreement among Borrower and the Lender Group as to the application of payments, Collections and proceeds of Collateral and do not constitute any subordination of (x) any Obligations or (y) the right to payment of any Obligations.           (c) Mandatory Prepayments.

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               (i) [INTENTIONALLY OMITTED]                (ii) No later than two (2) Business Days following receipt of Net Cash Proceeds from any voluntary or involuntary sale or disposition by Borrower or any of its Subsidiaries of property or assets after the Closing Date (other than sales or dispositions of Inventory or Equipment or other fixed assets in the ordinary course of business and other than any proceeds from the termination of the lease for Borrower’s store located on 34th Street, New York City, NY), subject to the Senior Loan Subordination Agreement, Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of the Net Cash Proceeds in excess of $500,000 in any fiscal year of Borrower received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received by Borrower and its Subsidiaries (and not paid to Agent as a prepayment of the Obligations) for all such sales or dispositions shall exceed $500,000 in any fiscal year. Nothing contained in this subclause (ii) shall permit Borrower or any of its Subsidiaries to sell or otherwise dispose of any property or assets other than in accordance with Section 6.4 .                (iii) No later than two (2) Business Days following the receipt by Borrower or any of its Subsidiaries of any cash or other collected funds in respect of Extraordinary Receipts after the Closing Date in excess of $500,000 in the aggregate in any fiscal year of Borrower ending after the Closing Date, subject to the Senior Loan Subordination Agreement, Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of such Extraordinary Receipts in excess of $500,000 in the aggregate in any fiscal year of Borrower ending after the Closing Date, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.                (iv) No later than two (2) Business Days following the issuance or incurrence by Borrower or any of its Subsidiaries of any Indebtedness (other than Indebtedness referred to in clauses (a) through (c) and (e) through (g) of Section 6.1 ) after the Closing Date, or the sale or issuance by Borrower or any of its Subsidiaries of any shares of its Capital Stock in an amount in excess of $500,000 in any one transaction or series of related transactions, subject to the Senior Loan Subordination Agreement and excluding proceeds from the issuance of Capital Stock as a result of the exercise of options, warrants or subordinated convertible debentures outstanding prior to the Closing Date or the exercise of rights with respect to any Capital Stock based compensation awarded to officers, directors or employees of Borrower, Borrower shall prepay the outstanding principal of the Obligations in accordance with clause (d) in an amount equal to 50% of the Net Cash Proceeds received by Borrower or its Subsidiaries in connection with such sale, issuance, or incurrence. The provisions of this subsection (iv) shall not be deemed to be implied consent to any such sale, issuance, or incurrence otherwise prohibited by the terms and conditions of this Agreement.           (d) Application of Prepayments .                (i) Each prepayment pursuant to subclauses (c)(ii) and (c)(iii) above (in each case except with respect to insurance proceeds and condemnation awards related to a casualty or loss of Collateral) and subclause (c)(iv) above shall be applied first, to payment of the Applicable Prepayment Premium, and then in accordance with Section 2.2(d) .

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               (ii) Each prepayment pursuant to subclauses (c)(ii) above and (c)(iii) with respect to insurance proceeds and condemnation awards related to a casualty or loss of Collateral shall be applied in the manner set forth in Section 2.4(b)(i) , provided , however , that, except during the continuation of a Default or an Event of Default, such proceeds shall not be required to be so applied to the extent that such proceeds are used to replace, repair, or restore the properties or assets in respect of which such proceeds were paid if (i) the amount of proceeds received in respect of such sales, dispositions, insurance policies, or condemnation awards are less than $5,000,000 in the aggregate during the term of this Agreement, (ii) Borrower delivers a certificate to Agent within 30 days after such sale or 30 days after the date of such loss, destruction, or taking, as the case may be, stating that such proceeds shall be used to replace, repair, or restore such properties or assets within a period specified in such certificate not to exceed the earlier of (x) 180 days after the receipt of such proceeds and (y) the Maturity Date (which certificate shall set forth estimates of the proceeds to be so expended), and (iii) such proceeds are immediately deposited in a Deposit Account subject to a Control Agreement. If all or any portion of such proceeds not so applied to the prepayment of the Obligations in accordance with this clause (ii) are not used in accordance with the preceding sentence within the period specified in the relevant certificate furnished pursuant hereto, such remaining portion shall be applied to the Obligations in accordance with this clause (ii) on the last day of such specified period. Each such prepayment of the Term Loan shall be applied in accordance with Section 2.2(d) .           (e) Optional Prepayment of Term Loan. Borrower shall have the right to make full or partial prepayments of the Term Loan, upon two (2) Business Days prior written notice to the Agent; provided that any such prepayment shall be accompanied by the Applicable Prepayment Premium as provided in the Fee Letter. Any optional prepayment of the Term Loan shall be in a minimum amount of the lesser of (x) the then remaining principal balance of the Term Loan and (y) $500,000. Each such prepayment of the Term Loan shall be applied against the remaining installments of principal of the Term Loan in the inverse order of maturity.      2.5 Payment of Obligations. Borrower hereby promises to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as and when due and payable under the terms of this Agreement and the other Loan Documents.      2.6 Interest: Rates, Payments, and Calculations.           (a) Interest Rate . Except as provided in clause (b) below, all Obligations that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at fifteen percent (15%) per annum.           (b) Default Rate . Upon the occurrence and during the continuation of an Event of Default (and at the election of Agent or the Required Lenders), all Obligations that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to two and one half (2 1/2) percentage points above the per annum rate otherwise applicable hereunder.           (c) Payment . Except as provided to the contrary in Section 2.11 , interest and all fees payable hereunder shall be due and payable, in arrears, on the first day of each month at

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any time that Obligations are outstanding. Borrower hereby authorizes Agent, from time to time, without prior notice to Borrower, to charge all fees (when due and payable), all Lender Group Expenses (as and when incurred), all fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan Document (including the amounts due and payable with respect to the Term Loan) and in each case (other than fees provided in Section 2 of the Fee Letter) which are not paid by Borrower within thirty (30) days of the date of Agent’s invoice therefor to Borrower’s Loan Account, which amounts thereafter shall accrue interest at the rate then applicable to the Term Loan. Any interest not paid when due shall be compounded by being charged to Borrower’s Loan Account and shall accrue interest at the rate then applicable to the applicable Loan.           (d) Computation . All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.           (e) Intent to Limit Charges to Maximum Lawful Rate . In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrower and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided , however , that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto , as of the date of this Agreement, Borrower is and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrower in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.      2.7 INTENTIONALLY OMITTED.      2.8 Crediting Payments. The receipt of any payment item by Agent shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrower shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.      2.9 Designated Account. Agent is authorized to make the Loans under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(c). Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Term Loan requested by Borrower and made by Agent

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or the Lenders hereunder. Unless otherwise agreed by Agent and Borrower, the proceeds of the Term Loan shall be made to the Designated Account.      2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an account on its books in the name of Borrower (the "Loan Account") on which Borrower will be charged with the Term Loan, and with all other payment Obligations hereunder or under the other Loan Documents, including accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrower or for Borrower’s account. Agent shall render statements regarding the Loan Account to Borrower, including principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be rebuttably presumed to be correct and accurate.      2.11 Fees. Borrower shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.      2.12 INTENTIONALLY OMITTED.      2.13 INTENTIONALLY OMITTED.      2.14 Registered Notes. Agent, acting solely for this purpose as a non-fiduciary agent on behalf of Borrower (or in the case of an assignment not recorded in the Register in accordance with Section 13.1(f), the assigning Lender) agrees to record the Commitments and Term Loan on the Register. The Term Loan recorded on the Register shall be evidenced only by the Registered Notes (as defined below). Upon the registration of the Term Loan, Borrower agrees to execute and deliver to each Lender a Subordinated Term Note, in the form of Exhibit B-1 hereto, and registered as provided in Section 13.1(f) (a "Registered Note"), payable to the order of such Lender or its registered assigns and otherwise duly completed. Once recorded on the Register, no Commitment or Term Loan may be removed from the Register so long as it or they remain outstanding, and a Registered Note may not be exchanged for a promissory note that is not a Registered Note.      2.15 Issuance of Common Shares. Subject to the terms and conditions of this Agreement, on the Closing Date at the closing, the Agent shall purchase and the Borrower shall sell and issue to the Agent or its designees the Common Shares in the respective amounts set forth on Schedule E-1 hereto as additional consideration for the Agent entering into this Agreement and arranging the Term Loan.

     3.1 Conditions Precedent to the Extension of Credit and Issuance of Common Shares. The obligation of each Lender to make its extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set forth on Schedule 3.1 (the making of such extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent). The Borrower’s obligation to sell and issue the Notes and Common Shares and to accept the extension of credit at the closing is subject to the fulfillment to the satisfaction of the Borrower

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on or prior to the Closing Date of the conditions precedent set forth on Schedule 3.1A, any of which may be waived by the Borrower.      3.2 INTENTIONALLY OMITTED.      3.3 Term. This Agreement shall continue in full force and effect for a term ending on February 1, 2011 (the "Maturity Date"), unless terminated earlier in accordance with the terms of this Agreement. The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement pursuant to Section 8.1.      3.4 Effect of Termination. On the date of termination of this Agreement, all Obligations immediately shall become due and payable without notice or demand. No termination of this Agreement, however, shall relieve or discharge Borrower of its duties, Obligations, or covenants hereunder or under any other Loan Document, and the Agent’s Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender Group’s obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrower’s sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent’s Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations.      3.5 Early Termination by Borrower. Borrower has the option, at any time upon 2 Business Days prior written notice by Borrower to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations in full. If Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Commitments shall terminate and Borrower shall be obligated to repay in cash the Obligations in full on the date set forth as the date of termination of this Agreement in such notice.

     In order to induce the Lender Group to enter into this Agreement, Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete as of the date hereof, and shall be true, correct, and complete as of the Closing Date, (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:      4.1 No Encumbrances. Borrower has good and indefeasible title to, or a valid leasehold interest in, its personal property assets and good and marketable title to, or a valid leasehold interest in, its Real Property, in each case, free and clear of Liens except for Permitted Liens.      4.2 INTENTIONALLY OMITTED.      4.3 INTENTIONALLY OMITTED.

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     4.4 Equipment. Each item of Equipment of Borrower and its Subsidiaries which is material to their business is in good working order, ordinary wear and tear and damage by casualty excepted.      4.5 Location of Inventory and Equipment. The Inventory and Equipment (other than vehicles or Equipment out for repair) of Borrower are not stored with a bailee, warehouseman, or similar party except as set forth in Schedule 4.5 and are located only at, or in-transit between, the locations identified on Schedule 4.5 (as such Schedule may be updated pursuant to Section 5.9).      4.6 Inventory Records . Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its Inventory and the book value thereof in all material respects.      4.7 State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims .           (a) The name and jurisdiction of organization of Borrower and each of its Subsidiaries is set forth on Schedule 4.7(a) .           (b) The chief executive office of Borrower and, as of the Closing Date, each of its Subsidiaries, is located at the address indicated on Schedule 4.7(b) .           (c) Borrower’s and each of its Subsidiaries’ organizational identification number, if any, is identified on Schedule 4.7(c) .           (d) As of the Closing Date, to the best of Borrower’s knowledge, Borrower and its Subsidiaries do not hold any commercial tort claims, except as set forth on Schedule 4.7(d) .      4.8 Due Organization and Qualification; Subsidiaries.           (a) Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.           (b) Set forth on Schedule 4.8(b) is a complete and accurate description of the authorized capital stock of Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 4.8(b) , there are no subscriptions, options, warrants, or calls relating to any shares of Borrower’s capital stock, including any right of conversion or exchange under any outstanding security or other instrument. Borrower is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any security convertible into or exchangeable for any of its capital stock.           (c) Set forth on Schedule 4.8(c) is a complete and accurate list of Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of its organization, (ii) the number of shares of each class of common and preferred stock authorized for each of such Subsidiaries,

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and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Borrower. All of the outstanding capital stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.           (d) Except as set forth on Schedule 4.8(c) , there are no subscriptions, options, warrants, or calls relating to any shares of Borrower’s Subsidiaries’ capital stock, including any right of conversion or exchange under any outstanding security or other instrument. Neither Borrower nor any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of Borrower’s Subsidiaries’ capital stock or any security convertible into or exchangeable for any such capital stock.      4.9 Due Authorization; No Conflict.           (a) The execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action on the part of Borrower.           (b) Other than as identified on Schedule 4.9(b) , the execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which it is a party do not (i) violate any provision of federal, state, or local law or regulation applicable to Borrower, the Governing Documents of Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contract to which Borrower is a party, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any of the material properties or assets of Borrower, other than Permitted Liens, or (iv) require any approval of Borrower’s interest holders or any approval or consent of any Person under any material contract to which Borrower is a party, other than consents or approvals that have been obtained and that are still in force and effect.           (c) Other than the consents and filings identified on Schedule 4.9(c) , the execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority or other third Person, other than consents or approvals that have been obtained and that are still in force and effect.           (d) This Agreement and the other Loan Documents to which Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by Borrower will be the legally valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.           (e) The Agent’s Liens are validly created, perfected (to the extent perfected by filing of a UCC-1 financing statement) and first priority Liens, subject only to Permitted Liens.      4.10 Litigation. Other than those matters disclosed on Schedule 4.10, there are no material actions, suits, or proceedings pending or, to the best knowledge of Borrower, threatened

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against Borrower or any of its Subsidiaries, as applicable, except for (a) matters that are fully covered by insurance (subject to customary deductibles) and (b) matters arising after the Closing Date that, if decided adversely to Borrower or any of its Subsidiaries, as applicable, reasonably could not be expected to result in a Material Adverse Change.      4.11 No Material Adverse Change. All financial statements of Borrower and its Subsidiaries that have been delivered by Borrower to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrower’s and its Subsidiaries’ financial condition in accordance with GAAP as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Borrower and its Subsidiaries since the date of the latest consolidated financial statements submitted to Agent on or before the Closing Date.      4.12 Fraudulent Transfer.           (a) Borrower is Solvent.           (b) No transfer of property is being made by Borrower or any Subsidiary of Borrower and no obligation is being incurred by Borrower or any Subsidiary of Borrower in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrower or its Subsidiaries.      4.13 Employee Benefits. None of Borrower, any of its Subsidiaries, or any of its ERISA Affiliates maintains or contributes to any Benefit Plan or Multiemployer Plan. No ERISA Event has occurred nor has any other event occurred that may result in an ERISA Event that reasonably could be expected to result in a Material Adverse Change.      4.14 Environmental Condition. Except as set forth on Schedule 4.14, and except for other matters that, in the aggregate, could not reasonably be expected to result in a Material Adverse Change: (a) to Borrower’s knowledge, none of Borrower’s properties or assets has ever been used by Borrower or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Borrower’s knowledge, none of Borrower’s properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) Borrower has not received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Borrower, and (d) Borrower has not received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by Borrower resulting in the releasing or disposing of Hazardous Materials into the environment.      4.15 Intellectual Property.           (a) Borrower and each Subsidiary of Borrower owns or has a right to use all Patents, Copyrights, Trademarks and Licenses that are necessary to the conduct of its business as

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currently conducted. Attached hereto as Schedule 4.15 (as updated annually) is a true, correct, and complete listing of Patents, Copyrights and Trademarks as to which Borrower and each Subsidiary of Borrower is the owner or is an exclusive licensee (collectively, the " Scheduled Intellectual Property Collateral ") as of the date hereof.           (b) Except as set forth in Schedule 4.15 :                (i) Borrower and each Subsidiary of Borrower is the sole owner or is an exclusive licensee of its Scheduled Intellectual Property Collateral, free and clear of any Lien (other than any Permitted Lien) without the payment of any monies or royalty except with respect to off-the-shelf software;                (ii) Borrower and each Subsidiary of Borrower has taken, and will continue to take, all actions which are reasonably necessary or advisable to acquire and protect its Scheduled Intellectual Property Collateral, including: (x) registering all Copyrights included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment, in the U.S. Copyright Office, and (y) registering all Patents and Trademarks included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment, in the United States Patent and Trademark Office;                (iii) Borrower’s and each Subsidiary of Borrower’s rights in the Scheduled Intellectual Property Collateral are valid and enforceable;                (iv) Neither Borrower nor any Subsidiary of Borrower has received any material demand, claim, notice or inquiry from any Person in respect of the Scheduled Intellectual Property Collateral which challenges, threatens to challenge or inquiries as to whether there is any basis to challenge, the validity of, the rights of Borrower and its Subsidiaries in or the right of Borrower and its Subsidiaries to use, any such Scheduled Intellectual Property Collateral, and Borrower and its Subsidiaries know of no basis for any such challenge;                (v) Borrower and its Subsidiaries have not received any written notice of any violation or infringement of any proprietary rights of any other Person that could reasonably be expected to result in a Material Adverse Change;                (vi) Borrower and its Subsidiaries have not granted any license with respect to any Scheduled Intellectual Property Collateral to any Person;                (vii) Borrower and its Subsidiaries are not pursuing any claims or causes of actions against any Person for infringement of the Scheduled Intellectual Property Collateral that could reasonably be expected to result in a Material Adverse Change; and                (viii) Notwithstanding any provision of the Loan Documents to the contrary, neither the Borrower nor any Subsidiary of Borrower shall be obligated to acquire, maintain, or protect any Scheduled Intellectual Property Collateral in the event Borrower or its Subsidiary determines, in its reasonable business judgment, that such collateral is no longer necessary or desirable in the conduct of its business.

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     4.16 Leases. Borrower enjoys peaceful and undisturbed possession under all leases of Equipment and Real Property material to their business and to which they are parties or under which they are operating, and all of such material leases are valid and subsisting and no material default by Borrower which has continued beyond any applicable notice and cure period exists under any of them. Borrower’s Subsidiaries enjoy peaceful and undisturbed possession under all leases of Equipment and Real Property material to the business of the Borrower and its Subsidiaries, taken as a whole, and to which they are parties or under which they are operating, and all of such material leases are valid and subsisting and no default material to the business of the Borrower and its Subsidiaries, taken as a whole, by any of Borrower’s Subsidiaries exists under any of them.      4.17 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 is a listing of all of Borrower’s and its Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.      4.18 Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Borrower or its Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents, including the SEC Filings), for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Borrower or its Subsidiaries in writing to Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information not misleading at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Borrower’s good faith estimate of its consolidated future performance for the periods covered thereby, taking into account the assumptions and qualifications discussed therein; provided, however, that the Closing Date Projections and additional Projections are not to be viewed as facts and that actual results during the period or periods covered by such Projections may differ from such Projections and that the differences may be material.      4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of Borrower and each Subsidiary of Borrower outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date, and such Schedule accurately reflects the aggregate principal amount of such Indebtedness as of the Closing Date.      4.20 Regulation U. No action has been taken or is currently planned by Borrower or any of its Subsidiaries which would cause this Agreement or any of the other Loan Documents to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System, or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock as one of its important activities and, except as may be expressly agreed to and documented between Borrower and Agent, none of the proceeds of the Term Loan will be used directly or indirectly for such purpose.

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4A . AGENT’S AND LENDERS’ REPRESENTATIONS AND WARRANTIES. Agent and each Lender hereby represent and warrant to the Borrower as follows:      4A.1 Organization; Authorization . All action on the part of such Agent and each Lender necessary for the authorization, execution, delivery and performance of all its obligations under this Agreement has been (or will be) taken prior to the Closing Date. Such Agent and each Lender is a natural person or is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with requisite individual, corporate, or organizational power and authority to enter into and to consummate the transactions contemplated by the Loan Documents and to otherwise carry out its obligations hereunder. The Loan Documents, when executed and delivered by Agent and each Lender, shall constitute a valid and legally binding obligation of Agent and each Lender enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by equitable principles of general application.      4A.2 Brokers and Finders . No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Borrower or Agent or any Lender for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of Agent or any Lender.      4A.3 Prohibited Transactions . Since the time the Agent or any Lender was first contacted regarding an investment in the Borrower until the date hereof, neither Agent or any Lender nor any Affiliate of Agent or any Lender which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to Agent or such Lender’s investments or trading or information concerning Agent or such Lender’s investments, including in respect of the Securities, or (z) is subject to Agent or such Lender’s review or input concerning such Affiliate’s investments or trading (collectively, " Trading Affiliates ") has, directly or indirectly, effected or agreed to effect any transactions in the securities of the Borrower, including any short sale, whether or not against the box, established any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Securities (each, a " Prohibited Transaction "). Agent and each Lender shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited Transaction during the period from the date hereof until such time as (i) the transactions contemplated by this Agreement are first publicly announced or (ii) this Agreement is terminated.      4A.4 Limited Ownership . The purchase by Agent and each Lender of the Securities issuable to it at the closing will not result in Agent nor each such Lender (individually or together with other Persons with whom Agent or such Lender has identified, or will have identified, itself as part of a "group" in a public filing made with the SEC involving the Borrower’s securities) acquiring, or obtaining the right to acquire, beneficial ownership in excess of 19.999% of the outstanding shares of Common Stock or the voting power of the Borrower on a post-transaction basis that assumes that such closing shall have occurred. Agent and each Lender does not presently intend to, alone or together with others, make a public filing with the

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SEC to disclose that it has (or that it together with such other Persons have) acquired, or obtained the right to acquire, as a result of such closing (when added to any other securities of the Borrower that it or they then own or have the right to acquire), beneficial ownership in excess of 19.99% of the outstanding shares of Common Stock or the voting power of the Borrower on a post-transaction basis that assumes that the closing at issue shall have occurred.      4A.5 Independent Investment Decision . Agent and each Lender has independently evaluated the merits of its decision to purchase Securities pursuant to the Loan Documents, and Agent and each Lender confirms that it has not relied on the advice of any other Person’s business, tax and/or legal counsel in making such decision. Agent and each Lender has not relied on the business, legal advice or tax advice of the Borrower or any of the Borrower’s agents, counsel or Affiliates in making its investment decision hereunder. Agent and each Lender acknowledges that the Borrower makes no representations or warranties regarding the tax consequences of the Securities to Agent and each Lender.      4A.6 Investment Representations .           (a) This Agreement is made with the Agent and each Lender in reliance upon each of Agent’s and Lender’s representation to the Borrower, which by its acceptance hereof Agent and each Lender hereby confirms, that the Securities to be received by it will be acquired for investment purposes and for its own account (not as a nominee or agent, and not with a view to the sale or distribution of any part thereof), and that neither the Agent nor any Lender has the present intention of selling, granting participation in or otherwise distributing the same. By executing this Agreement, Agent and each Lender further represents that they do not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person with respect to any of the Securities. Neither the Agent nor any Lender are registered broker dealers or an entity engaged in the business of being a broker dealer.           (b) Each of Agent and each Lender understands that the Securities are not registered under the Securities Act, on the ground that the sale provided for pursuant to this Agreement and the issuance of the Securities hereunder should be exempt from registration under the Securities Act and that the Borrower’s reliance on such exemption is predicated on such Agent’s and Lenders’ representations set forth herein. Agent and each Lender realize that the basis for the exemption may not be present if, notwithstanding such representations, such Agent or Lender has in mind merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise or for sale if the market does not rise. Agent and each Lender confirm that it has no such intention.           (c) At the time such Agent or Lender was offered the Securities, it was, and at the date hereof it is, an "accredited investor" as defined in Rule 501(a) of Regulation D, as amended, under the Securities Act. Agent and each Lender represent that each is experienced in evaluating and investing in companies such as the Borrower, is able to fend for itself in the transactions contemplated by this Agreement, including the Notes and the Common Stock, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment. Agent and each Lender acknowledge receipt of copies of and its satisfactory review

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of the SEC Filings. Agent and each Lender further represent that it has had access, during the course of the transaction and prior to its purchase of the Securities, to the same kind of information that would be provided in a registration statement filed by the Borrower under the Securities Act and that it has had, during the course of the transaction and prior to its purchase of the Securities, the opportunity to ask questions of, and receive answers from, the Borrower concerning the terms and conditions of the offering and to obtain additional information necessary to verify the accuracy of any information furnished to it or to which it had access and that it has received such information that is necessary to make an informed investment decision with respect to the Securities. Neither Agent nor any Lender learned of the investment in the Securities as a result of any "general advertising" or "general solicitation" as those terms are contemplated in Regulation D, as amended, under the Securities Act. Each Lender is an Eligible Transferee and was not formed solely for the purpose of investing in the Securities.           (d) Agent and each Lender understand that the Securities may only be disposed of in compliance with state and federal securities laws. Agent and each Lender understand that the Securities are characterized as "restricted securities" under the U.S. federal securities laws inasmuch as they are being acquired from the Borrower in a transaction not involving a public offering. Agent and each Lender further understand that the Securities may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Securities or an available exemption from registration under the Securities Act, the Securities must be held indefinitely. In particular, Agent and each Lender is aware that the Securities may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met and that Agent or each Lender may be deemed to be an "affiliate" for purposes of the rule. Agent and each Lender represent that, in the absence of an effective registration statement covering the Securities, it will sell, transfer or otherwise dispose of the Securities only in a manner consistent with its representations set forth herein and in accordance with the terms and conditions of this Agreement.           (e) Agent and each Lender agrees that in no event will it make a transfer or disposition of any of the Securities (other than pursuant to an effective registration statement under the Securities Act) unless and until (i) such Agent or Lender shall have notified the Borrower of the proposed disposition and shall have furnished the Borrower with a statement of the circumstances surrounding the disposition and assurance that the proposed disposition is in compliance with all applicable laws and (ii) if reasonably requested by the Borrower, at the expense of such Agent or Lender or transferee, it shall have furnished to the Borrower an opinion of counsel, reasonably satisfactory to the Borrower, to the effect that such transfer may be made without registration under the Securities Act.      4A.7 Legends .           (a) All certificates for the Securities may bear the following or a substantially similar legend: THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES

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ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE [BORROWER].           (b) The certificates for the Securities may also bear any legend required by any applicable state securities or other law or any of the other agreements executed by Agent or any Lender in connection with its investment in the Borrower.      4A.8 Securities Laws Disclosure; Publicity . The Borrower may issue a press release reasonably acceptable to the Agent disclosing the transactions contemplated hereby within four Business Days of the date of this Agreement and timely file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby. In addition, the Borrower may make such other filings and notices in the manner and time required by the SEC and the Eligible Market on which the Common Stock is listed with respect to the transactions contemplated hereby.

     Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrower shall and shall cause each of its Subsidiaries to do all of the following (provided, however, that only Borrower is required to comply with Section 5.2 and Section 5.3 ):      5.1 Accounting System. Maintain a system of accounting that enables Borrower to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrower also shall keep a reporting system that shows all additions, sales, claims, returns and allowances with respect to its sales.      5.2 Collateral Reporting. Provide Agent with each of the reports set forth on Schedule 5.2 at the times specified therein.      5.3 Financial Statements, Reports, Certificates. Deliver to Agent each of the financial statements, reports, or other items set forth on Schedule 5.3 at the time specified herein. In addition, Borrower agrees that no Subsidiary of Borrower will have a fiscal year end different from that of Borrower, other than as required by applicable law.      5.4 Appraisal . Permit Agent to have the Inventory reappraised by an appraisal company selected by Agent from time to time after the Closing Date; provided, however, that Borrower may satisfy this covenant by delivery to Agent, no less frequently than annually, of a copy of the appraisal of Borrower’s inventory obtained by Senior Lender.

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     5.5 Inspection . Permit Agent, each Lender, and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, its officers and employees at such reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default or Event of Default exists and is continuing, with reasonable prior notice to Borrower.      5.6 Maintenance of Properties. Maintain and preserve all of its properties which are necessary or useful in the proper conduct to its business in good working order and condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so would not be reasonably expected to result in a Material Adverse Change), and comply in all material respects at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any material loss or forfeiture thereof or thereunder.      5.7 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Borrower, its Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrower will and will cause its Subsidiaries to make timely payment or deposit of all material tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that Borrower or its Subsidiary has made such payments or deposits.      5.8 Insurance .           (a) At Borrower’s expense, maintain insurance respecting its and its Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrower also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny and embezzlement. All such policies of insurance shall be in such amounts as are ordinarily maintained by Persons engaged in the same or similar businesses and with such insurance companies as are reasonably satisfactory to Agent. Other than business interruption insurance policies, Borrower shall deliver or has delivered certificates of insurance evidencing all required coverages to Agent with an endorsement naming Agent as loss payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each certificate of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days’ prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever. Agent stipulates and agrees that Borrower’s insurance as set forth on Schedule 5.8(a) is satisfactory to Agent.           (b) Borrower shall give Agent prompt notice of any loss of the Collateral exceeding $50,000 covered by such insurance. Borrower shall have the exclusive right to adjust any losses payable under any insurance policies.      5.9 Location of Inventory and Equipment. Keep the Inventory and Equipment only at the locations identified on Schedule 4.5 or in transit from one such location to another;

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provided, however, that Borrower may amend Schedule 4.5 so long as such amendment occurs by written notice to Agent not less than 5 days prior to the date on which such Inventory or Equipment is moved to such new location, so long as such new location is within the continental United States, and so long as, at the time of such written notification, if such location is not owned by Borrower, Borrower provides Agent a Collateral Access Agreement with respect thereto.      5.10 Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change.      5.11 Leases. Pay, or cause to be paid, when due all rents and other amounts payable under any material leases to which Borrower or any Subsidiary of Borrower is a party or by which Borrower’s or any of its Subsidiaries’ properties and assets are bound.      5.12 Existence. At all times preserve and keep in full force and effect Borrower’s and its Subsidiaries’ (a) valid existence and (b) good standing and any rights and franchises, in each case, material to the Borrower’s business taken as a whole.      5.13 Environmental.           (a) Keep any property owned or operated by Borrower or any Subsidiary of Borrower free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by Borrower or any Subsidiary of Borrower and take or cause to be taken any Remedial Actions reasonably required to abate said release or otherwise for Borrower to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of Borrower that is not a Permitted Lien, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against Borrower or any Subsidiary of Borrower which could reasonably be expected to cause a Material Adverse Change, and (iii) notice of a violation, citation, or other administrative order which reasonably would be expected to result in a Material Adverse Change.      5.14 Disclosure Updates. Promptly and in no event later than 10 Business Days after any Authorized Officer obtains actual knowledge thereof, notify Agent if any written information, exhibit, or report (taken as a whole), including the contents of the SEC Filings, furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the facts and circumstances in which such statement was made or known by Borrower or any Subsidiary of Borrower to exist at the time such statement was

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made. Agent shall be deemed to have notice of updated disclosure regarding Borrower and its Subsidiaries to the extent set forth in the SEC Filings.      5.15 Control Agreements. Subject and pursuant to the Senior Subordination Agreement with respect to Borrower’s Deposit Accounts maintained at Senior Lender, take all reasonable steps in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to all Deposit Accounts maintained at Senior Lender, and with respect to (subject to the proviso contained in Section 6.12) all of its Securities Accounts and other Deposit Accounts (other than Store Deposit Accounts), electronic chattel paper, investment property, and letter of credit rights.      5.16 Assignment of Proceeds. Execute and deliver to Agent any and all additional documents that Agent may reasonably request in its Permitted Discretion, in form and substance reasonably satisfactory to Agent, providing for the collateral assignment of all proceeds to Agent arising from any license or royalty agreement entered into by Borrower with respect to Borrower’s General Intangibles. Such assignment shall provide that Borrower may retain such proceeds so long as no Event of Default shall have occurred and be continuing.      5.17 Employee Benefits.           (a) Deliver to Agent: (i) promptly, and in any event within 10 Business Days after Borrower or its Subsidiaries know or have reason to know that an ERISA Event has occurred that reasonably could be expected to result in a Material Adverse Change, a written statement of the chief financial officer of Borrower or such Subsidiary describing such ERISA Event and any action that is being taking with respect thereto by Borrower or its Subsidiaries or their ERISA Affiliates, and any action taken or threatened by the IRS, Department of Labor, or PBGC; Borrower and its Subsidiaries shall be deemed to know all facts known by the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any event within three Business Days after the filing thereof with the IRS, a copy of each funding waiver request filed with respect to any Benefit Plan and all communications received by Borrower or its Subsidiaries or, to the knowledge of Borrower or its Subsidiaries, any ERISA Affiliate with respect to such request, and (iii) promptly, and in any event within three Business Days after receipt by Borrower or its Subsidiaries of the notice of the PBGC’s intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice.           (b) Cause to be delivered to Agent, upon Agent’s request, each of the following: (i) a copy of each Plan (or, where any such plan is not in writing, complete description thereof) (and if applicable, related trust agreements or other funding instruments) and all amendments thereto, all material written interpretations thereof and material written descriptions thereof that have been distributed to employees or former employees of Borrower or its Subsidiaries; (ii) the most recent determination letter issued by the IRS with respect to each Benefit Plan; and (iii) the aggregate amount of the most recent annual payments made to former employees of Borrower or its Subsidiaries under any Retiree Health Plan.      5.18 Formation of Subsidiaries. At the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, Borrower

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shall (a), if new Subsidiary is a Domestic Subsidiary, cause such new Subsidiary to provide to Agent a guaranty of the Obligations and a joinder to such security documents (including the Security Agreement and Mortgages with respect to any Real Property of such new Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Lender a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in any such new Domestic Subsidiary, and if such new Foreign Subsidiary is owned by a Domestic Subsidiary, 66% of the direct or beneficial ownership interest in any such new Foreign Subsidiary, in each case in form and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 5.18 shall be a Loan Document.

     Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrower will not and will not permit any of its Subsidiaries to do any of the following:      6.1 Indebtedness . Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:           (a) Indebtedness evidenced by this Agreement and the other Loan Documents,           (b) Indebtedness set forth on Schedule 4.19 ,           (c) Permitted Purchase Money Indebtedness,           (d) [INTENTIONALLY OMITTED]           (e) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of this Section 6.1 or this Section 6.1(e) (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended or add one or more obligors as liable with respect thereto if such additional obligors were not liable with respect to the original Indebtedness, (ii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to Borrower, (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or

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extended Indebtedness, and (iv) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended,           (f) endorsement of instruments or other payment items for deposit, and           (g) Indebtedness comprising Permitted Investments.      6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are continuations or replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 6.1(e) and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness).      6.3 Restrictions on Fundamental Changes.           (a) Enter into any Fundamental Transaction or other consolidation, reorganization or recapitalization (other than any merger (x) between any Domestic Subsidiary and Borrower in which Borrower is the surviving corporation or (y) between two Foreign Subsidiaries of Borrower) not otherwise permitted under the Loan Documents, or reclassify its capital stock other than pursuant to the terms of such capital stock (except for common stock dividends, splits, reverse splits or other similar transactions);           (b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),           (c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its assets, or           (d) Other than Permitted Dispositions, suspend or go out of a substantial portion of its or their business.      6.4 Disposal of Assets. Except as set forth on Schedule 6.4, other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of the assets of Borrower or any Subsidiary of Borrower.      6.5 Change Name. Change Borrower’s or any its Subsidiaries’ name, organizational identification number, state of organization, or organizational identity; provided, however, that Borrower or a Subsidiary of Borrower may change its name upon at least 30 days’ prior written notice by Borrower to Agent of such change and so long as, at the time of such written notification, such Borrower or Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens.      6.6 Nature of Business. Make any change in the principal nature of their business.      6.7 Prepayments and Amendments. Except in connection with a refinancing permitted by Section 6.1(e):

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          (a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower or a Subsidiary of Borrower, other than the Obligations in accordance with this Agreement and the Indebtedness evidenced by the Senior Loan Documents in accordance with the terms thereof,           (b) make any payment on account of Indebtedness that has been contractually subordinated in right of payment if such payment is not permitted at such time under the subordination terms and conditions, or           (c) directly or indirectly, materially amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Section 6.1(b) .      6.8 Change of Control. Cause or permit, directly or indirectly, any Change of Control.      6.9 Consignments. Consign any of their Inventory or sell any of their Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale.      6.10 Distributions. Other than distributions or declaration and payment of dividends by any Subsidiary of Borrower to Borrower, or by any Foreign Subsidiary of Borrower to any other Subsidiary of Borrower, make any distribution or declare or pay any dividends (in cash or other property, other than common stock) on, or purchase, acquire, redeem, or retire any of the capital stock of Borrower, of any class, whether now or hereafter outstanding except for cashless exercises (including by delivery of previously outstanding shares) or termination of options or warrants or similar transactions.      6.11 Accounting Methods. Modify or change their fiscal year or materially modify or change their method of accounting (other than as may be required to conform to GAAP or to comply with SEC reporting requirements) or enter into, modify, or terminate any agreement currently existing or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Borrower’s accounting records in a manner that would result in said accounting firm or service bureau declining to provide Agent information regarding Borrower’s and its Subsidiaries’ financial condition.      6.12 Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) other than Indebtedness permitted under Section 6.1 for or in connection with any Investment; provided, however, that Borrower shall not have Permitted Investments in Securities Accounts in an aggregate amount in excess of $50,000 at any one time unless Borrower and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments. Subject to the foregoing proviso, Borrower shall not establish or maintain any Securities Account or Deposit Account (other than Store Deposit Accounts) unless Agent shall have received a Control Agreement in respect of such Securities Account or Deposit Account.      6.13 Transactions with Affiliates. Except as set forth on Schedule 6.13, directly or indirectly enter into or permit to exist any transaction with any Affiliate of Borrower except for

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transactions that (a) are upon fair and reasonable terms, and (b) are no less favorable to Borrower or its Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate.      6.14 Use of Proceeds. Use the proceeds of the Term Loan for any purpose other than (a) the partial repayment of the Indebtedness of Borrower due under the Senior Loan Documents, (b) working capital for business operations and (c) fees and expenses related to this Agreement.      6.15 Inventory and Equipment with Bailees. Except as set forth on Schedule 4.5, store any Inventory or Equipment of Borrower at any time now or hereafter with a bailee, warehouseman, or similar party without Agent’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.      6.16 Financial Covenants.           (a)  Tangible Net Worth . Fail to achieve Tangible Net Worth, measured on a fiscal quarter-end basis, of not less than the required amount set forth in the following table on the date set forth opposite thereto:

          (b) Minimum EBITDA . Fail to achieve EBITDA, measured on a fiscal year to date basis, of not less than the required amount set forth in the following table for the applicable period set forth opposite thereto:

          (c) Capital Expenditures .Make Capital Expenditures in a fiscal year of Borrower in excess of the amount set forth in the following table for the applicable year set forth opposite thereto.

     6.17 No Transactions Prohibited Under ERISA; Unfunded Liability.           (a) Directly or indirectly                (i) engage in any prohibited transaction which is reasonably likely to result in a civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;                (ii) permit to exist with respect to any Benefit Plan any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived;                (iii) fail to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan;                (iv) terminate any Benefit Plan where such event would result in any liability of Borrower, any Subsidiary of Borrower or any of their ERISA Affiliates under Title IV of ERISA which was not paid in connection with such termination;                (v) fail to make any required contribution or payment to any Multiemployer Plan;

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               (vi) fail to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment;                (vii) amend a Plan resulting in an increase in current liability for the Plan year such that Borrower, any Subsidiary of Borrower or any of their ERISA Affiliates is required to provide security to such Plan under Section 401(a)(29) of the IRC; or                (viii) withdraw from any Multiemployer Plan where such withdrawal is reasonably likely to result in any liability of such entity under Title IV of ERISA; which, individually or in the aggregate, results in or reasonably would be expected to result in a claim against or liability of Borrower, any of its Subsidiaries or any of their ERISA Affiliates in excess of $1,000,000.

     Any one or more of the following events shall constitute an event of default (each, an " Event of Default ") under this Agreement:      7.1 If Borrower fails to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days after notice from Agent, or (b) all or any portion of the principal of the Obligations;      7.2 If Borrower or any Subsidiary of Borrower           (a) fail to perform or observe any covenant or other agreement contained in any of Sections 5.2 , 5.5 , 5.8 , 5.12(a) , 5.14 , 5.16 , or 6.1 through 6.17 of this Agreement;           (b) fail to perform or observe any covenant or other agreement contained in any of Sections 5.1 , 5.6 , 5.7 , 5.9 , 5.10 5.11 , 5.12(b) , or 5.15 of this Agreement and such failure continues for a period of 30 days after the earlier of (i) the date on which such failure shall first become known to any Authorized Officer or (ii) written notice thereof is given to Borrower by Agent;           (c) fail to perform any covenant or other agreement contained in Section 5.3, and such failure continues for a period of 5 Business Days after notice from Agent;           (d) fail to pay liquidated damages pursuant to Section 2(b) of the Registration Rights Agreement and such failure continues for a period of 10 Business Days after the earlier of (i) the date on which such failure shall first become known to any Authorized Officer or (ii) written notice thereof is given to Borrower by Agent; or

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          (e) fail to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents (excluding the Registration Rights Agreement, except as provided in Section 7.2(d) of this Agreement); in each case, other than any such covenant or agreement that is the subject of another provision of this Section 7 (in which event such other provision of this Section 7 shall govern), and such failure continues for a period of 30 days after the earlier of (i) the date on which such failure shall first become known to any Authorized Officer or (ii) written notice thereof is given to Borrower by Agent; provided , however , the failure to timely make any filings or notices, including Current Reports on Form 8-K, required by the Commission or the Trading Market on which the Common Stock is listed shall not constitute an Event of Default unless such required filing or notice is not made after a period of 30 Trading Days after the date that Agent submits written demand to Borrower to make such required filing or notice (regardless of whether any such filing shall remain late under rules of the Commission or such Trading Market).      7.3 If any material portion of the assets of Borrower or any material portion of the assets of Borrower and its Subsidiaries, taken as a whole, is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by Borrower or the applicable Subsidiary;      7.4 If an Insolvency Proceeding is commenced by Borrower;      7.5 If an Insolvency Proceeding is commenced against Borrower or any Subsidiary of Borrower and any of the following events occur: (a) Borrower or its applicable Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, Borrower or any Subsidiary of Borrower, or (e) an order for relief shall have been issued or entered therein;      7.6 If Borrower or any Subsidiary of Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;      7.7 If one or more judgments, orders, or awards involving an aggregate amount of $500,000 or more (except to the extent covered by insurance pursuant to which the insurer has accepted liability therefor in writing) shall be entered or filed against Borrower or any Subsidiary of Borrower or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by Borrower or the applicable Subsidiary;      7.8 If Borrower or any Subsidiary thereof (a) fails to pay when due any Material Debt Agreement or (b) fails to observe or perform any other obligation under any Material Debt

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Agreement, and such failure results in the obligations thereunder becoming or being declared due and payable prior to the date on which they would otherwise become due and payable;      7.9 If any material warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Lender in connection with this Agreement or any other Loan Document by Borrower or any officer, employee or director of Borrower, proves to have been untrue in any material respect when made;      7.10 If Borrower shall breach its obligations in any material respect under any of the Senior Loan Documents or Debenture Documents and such breach shall continue beyond any applicable notice and cure period;      7.11 If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected Lien (which is subject only to Permitted Liens) on or security interest in any material portion of the Collateral covered hereby or thereby (taken as a whole), except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement; or      7.12 Any material provision of any Loan Document (except the Registration Rights Agreement) shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower or any Subsidiary of Borrower, or a proceeding shall be commenced by Borrower or any Subsidiary of Borrower, or by any Governmental Authority having jurisdiction over Borrower or any Subsidiary of Borrower, seeking to establish the invalidity or unenforceability thereof.

     8.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrower:           (a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;           (b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement, under any of the Loan Documents, or under any other agreement between Borrower and the Lender Group;           (c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and           (d) The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

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The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 7.4 or Section 7.5 , in addition to the remedies set forth above, without any notice to Borrower or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrower.      8.2 Remedies Cumulative. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

     If Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as and to the extent required under the terms of this Agreement, then, Agent, in its sole discretion and after prior written notice to Borrower, may do any or all of the following: (a) make payment of the same or any part thereof (except to the extent Borrower has advised Agent of a good faith dispute as to the amount, timing or propriety of such payment), or (b) in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance policies of the type described in Section 5.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. 10. WAIVERS; INDEMNIFICATION.      10.1 Demand; Protest; etc. Borrower waives demand, protest, notice of protest, notice of default or dishonor (other than any notice required under this Agreement), notice of payment and nonpayment (other than any notice required under this Agreement), nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which Borrower may in any way be liable.      10.2 The Lender Group’s Liability for Collateral. Borrower hereby agrees that: (a) so long as the Lender Group complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the

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Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrower.      10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an "Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or in connection with the monitoring of Borrower’s or its Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding, Borrower shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.      10.4 Special Damages . Each party hereto hereby irrevocably and unconditionally waives any right it may have to claim or recover any special, exemplary, punitive or consequential damages in any legal action, suit or proceeding with respect to Loan Documents.

     Unless otherwise provided in this Agreement, all notices or demands by Borrower or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrower or to Agent, as the case may be, at its address set forth below:

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     Agent and Borrower may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11 , other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

     (a)  THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS AND PRINCIPLES.

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     (b)  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED , HOWEVER , THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b) .      (c)  BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     13.1 Assignments and Participations.           (a) Neither Agent nor any Lender may assign or transfer all, or any part, of the Obligations, the Commitments and any other rights and obligations of such Agent or such Lender hereunder and under the Loan Documents except as provided herein. The Obligations, Commitments and any other rights and obligations of Agent and each Lender hereunder and under the Loan Documents must be transferred pursuant to a registration statement filed under the Securities Act of 1933, as amended, or an exemption from such registration. The Borrower shall be entitled to advance notice of any transfer and reasonable assurance, including an opinion of counsel reasonably acceptable to the Borrower, that such transfer complies with applicable securities laws. Any Lender may assign and delegate to one or more assignees (each an " Assignee ") that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000 (except such minimum amount shall not apply to an assignment and delegation by a Lender to (x) any other Lender or an Affiliate of such Lender or a Related Fund of such Lender, (y) a group of new Lenders, each of which is an Affiliate or Related Fund of each other so long as the aggregate amount to be assigned to such

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group is at least $5,000,000 or (z) if as a result of such assignment such Lender shall cease to be a party hereto); provided , however , that, Borrower and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Agent an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $5,000. Notwithstanding the preceding sentence, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if (x) such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender or (y) the assignee is a Lender or an Affiliate of a Lender or a Related Fund of a Lender; provided that any such assignment must otherwise comply with applicable securities laws and the other provisions of this Section 13.1(a) .           (b) From and after the date that Agent notifies the assigning Lender (with a copy to Borrower) that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee (if required), (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrower and the Assignee; provided , however , that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 15 and Section 16.7 of this Agreement.           (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints

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and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (6) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.           (d) Immediately upon Agent’s receipt of any processing fee payment (if required) and the fully executed Assignment and Acceptance this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto .           (e) In connection with any such assignment or proposed assignment, a Lender may, subject to the provisions of Section 16.7 , disclose all documents and information which it now or hereafter may have relating to Borrower and its Subsidiaries and their respective businesses.           (f) Agent shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain, or cause to be maintained, a register (the " Register ") on which it shall enter the names and addresses of the Lenders and the Commitments of, and the principal amount of the Term Loan (and stated interest thereon) owing to, each Lender from time to time. Subject to the last sentence of this Section 13.1(f) , the entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower and any Lender at any reasonable time and from time to time upon reasonable notice.           (g) A Registered Loan (and the Registered Note evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each Registered Note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the Registered Note evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the Registered Note evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such Registered Note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new Registered Notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the Registered Note evidencing the same), Agent and Borrower shall treat the Person in whose name such Registered Loan (and the Registered Note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon, notwithstanding notice to the contrary.      13.2 Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrower may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio . No consent to assignment by the Lenders shall release Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section

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13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by Borrower is required in connection with any such assignment.

     14.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Borrower and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders and Borrower, do any of the following:           (a) increase or extend any Commitment of any Lender,           (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,           (c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,           (d) change the Pro Rata Share that is required to take any action hereunder,           (e) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,           (f) other than as permitted by Section 15.12 , release Agent’s Lien in and to any of the Collateral,           (g) change the definition of " Required Lenders " or " Pro Rata Share ",           (h) contractually subordinate any of the Agent’s Liens,           (i) release Borrower from any obligation for the payment of money, or           (j) amend any of the provisions of Sections 2.2 , 2.4(b) , or 15 and, provided further , however , that no amendment, waiver or consent shall, unless in writing and signed by Agent, affect the rights or duties of Agent under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower.

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     14.2 Replacement of Holdout Lender.           (a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender (" Holdout Lender ") fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a " Replacement Lender "), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.           (b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 13.1 . Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitment, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of the Term Loan.      14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Borrower of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

     15.1 Appointment and Authorization of Agent. Each Lender hereby designates and appoints PEMG as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 15. The provisions of this Section 15 (other than the proviso to Section 15.11(a)) are solely for the benefit of Agent, and the Lenders, and Borrower and its Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or

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responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word "Agent" is for convenience only, that PEMG is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrower and its Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make portions of the Loans, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management accounts as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrower, the Obligations, the Collateral, the Collections of Borrower and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.      15.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.      15.3 Liability of Agent. None of the Agent Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Borrower or any Affiliate of Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or

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performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Borrower or the books or records or properties of Borrower’s Subsidiaries or Affiliates.      15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the requisite Lenders as it deems appropriate and until such instructions are received, Agent shall refrain from acting as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.      15.5 Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8; provided, however, that unless and until Agent has received any such request, Agent may refrain from taking such action with respect to such Default or Event of Default as it shall deem advisable.      15.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend

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credit to Borrower. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.      15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, reasonable attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrower and its Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Borrower and its Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent Related Persons (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make any portion of the Term Loan or any other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including reasonable fees and expenses of attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.      15.8 Agent in Individual Capacity. PEMG and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and

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generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though PEMG were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, PEMG or its Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms "Lender" and "Lenders" include PEMG in its individual capacity.      15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders (or such shorter period agreed to by the Agent and the Required Lenders). If Agent resigns under this Agreement, the Required Lenders (with Borrower’s approval which shall not be unreasonably withheld, as long as an Event of Default shall not have occurred and then be continuing) shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the effective date of a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.      15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

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     15.11 Withholding Taxes.           (a) All payments made by Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, Borrower shall comply with the penultimate sentence of this Section 15.11(a) , subject to receipt of the necessary forms from the Lenders. " Taxes " shall mean, any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein measured by or based on the net income or net profits of Lender) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 15.11(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided , however , that Borrower shall not be required to increase any such amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Borrower will furnish to Lender as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by any Borrower.           (b) (i) If a Lender claims an exemption from United States withholding tax, such Lender shall deliver to Agent (or, in the case of an assignee of a Lender which is (x) a Qualified Affiliate or Qualified Related Fund of such Lender, and (y) for which an Assignment and Acceptance is not delivered to the Agent pursuant to Section 13.1(c) , to the assigning Lender only, and in the case of a participant, to the Lender granting the participation only) the following:                     (A) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement and at any other time reasonably requested in writing by Agent or the assigning Lender, as applicable;                     (B) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement and at any other time reasonably requested in writing by Agent or the assigning Lender, as applicable; or                     (C) such other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested in writing by Agent or the assigning Lender, as applicable.

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                    (ii) If a Lender claims an exemption from United States withholding tax pursuant to the portfolio interest exception, such Lender represents that such Lender (v) is not a " bank " as described in Section 881(c)(3)(A) of the IRC, (w) is not a 10% shareholder of Borrower within the meaning of Sections 871(h)(3)(B) or 881(c)(3)(B) of the IRC, (x) is not a controlled foreign corporation related to Borrower within the meaning of Sections 864(d)(4) and 881(c)(3)(C) of the IRC, (y) has no arrangement with Borrower that would cause the interest to be " contingent " within the meaning of Sections 871(h)(4) and 881(c)(4) of the IRC, and (z) does not reside in a foreign country described in Sections 871(h)(6) or 881(c)(6) of the IRC. Each such Lender shall deliver to Agent (or, in the case of an assignment to a Qualified Affiliate or Qualified Related Fund that is made pursuant to Section 13.1(c) , to the assigning Lender) a properly completed IRS Form W-8BEN, before receiving its first payment under this Agreement and at any other time reasonably requested in writing by Agent or the assigning Lender, as applicable.           Notwithstanding the foregoing, such Lender may provide a form W-8IMY, where applicable, with appropriate forms attached thereto.           Each Lender agrees promptly to notify Agent or the assigning Lender, as applicable, of any change in circumstances which would modify or render invalid any claimed exemption or reduction. Notwithstanding any other provision of this Section 15.11 , no Lender shall be required to deliver any form that such Lender is not legally able to deliver.           (c) If a Lender claims an exemption from, or reduction of, withholding tax in a jurisdiction other than the United States, such Lender shall deliver to Agent (or, in the case of an assignee of a Lender which is (x) a Qualified Affiliate or Qualified Related Fund of such Lender, and (y) for which an Assignment and Acceptance is not delivered to the Agent pursuant to Section 13.1(c) , to the assigning Lender only, and in the case of a participant, to the Lender granting the participation only) any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested in writing by Agent or the assigning Lender, as applicable.           Each Lender agrees promptly to notify Agent or the assigning Lender, as applicable, of any change in circumstances which would modify or render invalid any claimed exemption or reduction.           (d) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of this Section 15.11 are not delivered in accordance with such subsections, then Agent or the assigning Lender, as applicable, may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.           (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent or the assigning Lender, as applicable, did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on

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the part of the Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the proper Person of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent or the assigning Lender, as applicable, harmless for all amounts paid, directly or indirectly, by Agent or the assigning Lender, as applicable, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable by Agent or the assigning Lender, as applicable, under this Section 15.11 , together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.      15.12 Collateral Matters.           (a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrower of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which neither Borrower nor any of its Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.12 ; provided , however , that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.           (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrower or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other

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duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.      15.13 Restrictions on Actions by Lenders; Sharing of Payments.           (a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower or any Deposit Accounts of Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.           (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s ratable portion of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.      15.14 Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Division 8 or Division 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.      15.15 Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.      15.16 Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan

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Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.      15.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender:           (a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a " Report " and collectively, " Reports ") prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,           (b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,           (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrower and will rely significantly upon the books and records of Borrower and its Subsidiaries, as well as on representations of Borrower’s personnel,           (d) agrees to keep all Reports and other material, non-public information regarding Borrower and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 16.7 , and           (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrower; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrower to Agent that has not been contemporaneously provided by Borrower to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrower, any Lender may, from time to time, reasonably request

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Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.      15.18 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

     16.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.      16.2 Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.      16.3 Interpretation. Neither this Agreement or any of the other Loan Documents nor any uncertainty or ambiguity herein or therein shall be construed or resolved against the Lender Group or Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement and the other Loan Documents have been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto and thereto. Time is of the essence in Borrower’s payment and performance of the Obligations.      16.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

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     16.5 Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis .      16.6 Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by Borrower or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrower automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.      16.7 Confidentiality. Agent and Lenders each individually (and not jointly or jointly and severally) agree that, non-public information regarding Borrower and its Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender Group, provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 16.7, (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender’s interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section 16.7, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, however, that, unless prohibited by applicable law, statute, regulation, or court order, such Lender or Agent shall: (y) notify

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Borrower of any request by any court, governmental or administrative agency, or pursuant to any subpoena or other legal process for disclosure of any such non-public material information concurrent with, or where practicable, prior to the disclosure thereof, and (z) notify all other Persons described in clause (a) above that they are bound by, the provisions of this Section 16.7. The provisions of this Section 16.7 shall survive the payment in full of the Obligations.      16.8 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.      16.9 INTENTIONALLY OMITTED      16.10 Compliance With USA Patriot Act. Agent is subject to the USA Patriot Act and hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act Agent is required to obtain, verify and record information that identifies Borrower and certain of its Affiliates, which information includes the name and address of Borrower and these Affiliates and other information that will allow Agent to identify Borrower and these Affiliates in accordance with the USA Patriot Act.      16.11 Subordination Agreements. All undertakings and obligations of Borrower hereunder and all rights, privileges, undertakings and obligations of the Lender Group hereunder are subject to the terms, conditions and covenants set forth in the Subordination Agreements.      16.12 Public Announcements. Nothing contained in this Agreement will prohibit Borrower, Agent or any Lender or any of their respective advisors after the Closing Date from issuing or causing publication of any "tombstone" or similar advertisement in customary form, provided that no such "tombstone" or similar advertisement issued or caused to be published by or on behalf of Borrower, Agent or any Lender or any of their respective advisors shall contain information regarding (a) financial information concerning Borrower, Agent of any Lender or (b) the financial terms of this Agreement or the transactions contemplated hereby other than the amount of the Term Loan; provided further, that any such tombstones shall comply with applicable securities laws and Borrower and Agent shall have the right to approve any such tombstone or advertisement prior to publication, which approval shall not be unreasonably withheld.

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      IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

[Signature Page to the Second Lien Credit Agreement]

EXHIBIT A-1 FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT           This ASSIGNMENT AND ACCEPTANCE AGREEMENT (" Assignment Agreement" ) is entered into as of                      between                      (" Assignor" ) and                      (" Assignee" ). Reference is made to the agreement described in Item 2 of Annex I annexed hereto (the " Credit Agreement" ). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.           1. In accordance with the terms and conditions of Section 13 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents [excluding the Registration Rights Agreement to the extent not transferred] as of the date hereof with respect to the Obligations owing to the Assignor, Assignor’s portion of the Term Loan, all as specified on Annex 1 and Assignor’s obligations owing to the Borrower.           2. Assignee represents and warrants that it is an "accredited investor" as defined in Rule 501(a) of Regulation D, as amended under the Securities Act, and hereby agrees to be bound by the terms and conditions of the Loan Documents. Assignee agrees to be bound by the terms and conditions of the Loan Documents and agrees that it will not dispose of the Securities except in compliance with the applicable requirements of the Securities Act.           3. Assignee hereby confirms that, as of the date hereof: (1) including the shares of Common Stock to be acquired, the undersigned, together with its Affiliates, does not beneficially own more than 19.99% of the outstanding Common Stock as determined pursuant to Section 5 of the Notes; and (2) that, upon receipt, the shares of Common Stock will not be disposed of except in compliance with applicable federal and state securities laws.           4. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrower to Assignor with respect to Assignor’s share of the Term Loan assigned hereunder, as reflected by the Register.

EXHIBIT A-1 - 1

          5. The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information (including documents filed by Borrower with the SEC) as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Agent, Assignor, or any other Lender, based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (c) confirms that it is an Eligible Transferee; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; and (f) attaches the forms prescribed by the IRS certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Loan Documents [excluding the Registration Rights Agreement to the extent not transferred] or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.           6. Following the execution of this Assignment Agreement by the Assignor and Assignee, it will be delivered by the Assignor (if required by the Credit Agreement) to the Agent (with a copy to the Borrower) for recording by the Agent. The effective date of this Assignment (the " Settlement Date ") shall be the latest to occur of (a) the date of the execution hereof by the Assignor and the Assignee, the payment by Assignor or Assignee to Agent for Agent’s sole and separate account of a processing fee in the amount of $5,000 (if required by the Credit Agreement), and the receipt of any required consent of the Borrower and Agent, (b) the Settlement Date specified on Annex I , and (c) the receipt by Assignor of the Purchase Price specified in Annex I .           7. Upon recording by the Agent, as of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents [excluding the Registration Rights Agreement to the extent not transferred], and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided , however , that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 15 and Section 16.7 of the Credit Agreement.           8. Upon recording by the Agent, from and after the Settlement Date, the Agent shall make all payments under the Credit Agreement and the other Loan Documents [excluding the Registration Rights Agreement to the extent not transferred] in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees (if applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor the Purchase Price (as set forth on Annex I ) of the principal amount of any outstanding loans under the Credit Agreement and the other Loan

EXHIBIT A-1 - 2

Documents [excluding the Registration Rights Agreement to the extent not transferred]. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the other Loan Documents [excluding the Registration Rights Agreement to the extent not transferred] for periods prior to the Settlement Date directly between themselves on the Settlement Date.           9. This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Assignment Agreement may be executed and delivered by telecopier or other facsimile transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.           10. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.           IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

EXHIBIT B-1 FORM OF SUBORDINATED TERM NOTE

SUBORDINATED TERM NOTE THIS SUBORDINATED TERM NOTE ("NOTE") AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE, IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT SUBORDINATION AGREEMENT (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE " SENIOR LOAN SUBORDINATION AGREEMENT ") DATED AS OF FEBRUARY 1, 2008 BETWEEN AND AMONG BAKERS FOOTWEAR GROUP, INC., A MISSOURI CORPORATION (THE " COMPANY "), EACH OF THE SUBORDINATED CREDITORS SET FORTH ON THE SIGNATURE PAGES THERETO AND BANK OF AMERICA, N.A. ("SENIOR LENDER"), TO ALL INDEBTEDNESS OWED BY THE MAKER OF THIS NOTE TO THE SENIOR LENDER, AND THE LENDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SENIOR LOAN SUBORDINATION AGREEMENT. THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

BAKERS FOOTWEAR GROUP, INC.
SUBORDINATED TERM NOTE           THIS SUBORDINATED TERM NOTE (this " Note ") is being issued pursuant to the terms of that certain Second Lien Credit Agreement (as amended, supplemented or otherwise modified from time to time, the " Credit Agreement "), dated as of February 1, 2008, by and among Bakers Footwear Group, Inc., a Missouri corporation (the " Company "), the lenders party thereto as "Lenders" (" Lenders ") and Private Equity Management Group, Inc., a Nevada corporation, in its capacity as administrative agent for the Lender Group (together with its successors, " Agent ")           FOR VALUE RECEIVED, the Company promises to pay to the order of GVECR II 2007 E Trust dated December 17, 2007 or its registered assigns (the " Lender "), the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars ($7,500,000), or such lesser principal amount as may then be outstanding hereunder, on February 1, 2011 or such earlier date as this Note is required to be repaid as provided hereunder (the " Maturity Date "), and

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to pay interest to the Lender in accordance with the provisions of the Credit Agreement. This Note is subject to the following additional provisions:      1.  Definitions . In addition to the terms defined elsewhere in this Note, capitalized terms that are used but not otherwise defined herein have the meanings given to such terms in the Credit Agreement.      2.  Payments . The Company shall pay principal and interest to the Lender pursuant to the terms of the Credit Agreement. This Note also may and must be prepaid as provided in the Credit Agreement, together with any premiums set forth herein, under the circumstances therein described. Payment of principal hereof and interest and premium hereon shall be made in lawful money of the United States of America.      3.  Transfers . This Note may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended, or an exemption from such registration. Subject to such restrictions, the Company shall register (or allow the registration of) the transfer of any portion of this Note upon surrender of this Note to the Company, properly endorsed, at its address for notice set forth herein together with delivery of the duly executed Note assignment form attached hereto as Exhibit A and in compliance with Section 7(a). Any transfer shall also comply with the provisions on transfer in the Credit Agreement. Upon any such registration or transfer, a new Note, in substantially the form of this Note (any such new note, a "New Note" ), evidencing the portion of this Note so transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred, if any, shall be issued to the transferring Lender. The acceptance of the New Note by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Note. The Company agrees that its prior consent is not required for the transfer of any portion of this Note; provided , however , that the Company shall be entitled to reasonable assurance, including an opinion of counsel reasonably acceptable to Company, that such transfer complies with applicable securities laws. No service charge or other fee will be imposed in connection with any such registration of transfer or exchange.      4.  Ranking . This Note ranks pari passu with all other Notes now or hereafter issued pursuant to the Loan Documents and is subject to the terms and conditions of the Credit Agreement, including those in respect of any additional indebtedness. Notwithstanding anything to the contrary herein, the Company and Lender agree that the payment of all amounts hereunder is subject to the Subordination Agreement.      5.  Charges, Taxes and Expenses . The Lender shall be responsible for all tax liability that may arise as a result of holding or transferring this Note.      6.  Notices . Any and all notices or other communications or deliveries hereunder shall be made in accordance with Section 11 of the Credit Agreement.      7.  Miscellaneous .           (a) Lender may transfer or assign, in whole or from time to time in part, to one or more persons, which shall be (A) an "accredited investor" as defined in Rule 501(a) of Regulation D, as amended under the Securities Act; (B) shall be an Affiliate of Private Equity Management

Group, Inc.; (C) shall not be a direct competitor of the Company to such Lender; and (D) which shall agree in writing to be bound by the terms and conditions of this Note, its rights hereunder in connection with the transfer of the Note by Lender to such person, provided that the Lender complies with all laws applicable thereto and provides written notice of assignment in the form attached hereto as Exhibit A to the Company promptly after such assignment is effected. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.           (b) Subject to Section 8(a), above, nothing in this Note shall be construed to give to any person or corporation other than the Company and the Lender any legal or equitable right, remedy or cause under this Note. This Note shall inure to the sole and exclusive benefit of the Company and the Lender.           (c)  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING.           (d) The prevailing party in a proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such proceeding.           (e) The headings herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.           (f) In case any one or more of the provisions of this Note shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Note shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Note.           (g) No provision of this Note may be waived, amended or otherwise modified except in accordance with the requirements set forth in the Credit Agreement. No waiver of any default with respect to any provision, condition or requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.           (h) To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Lender in order to enforce any right or remedy under the Notes. Notwithstanding any provision to the contrary contained in the Notes, it is expressly agreed and provided that the total liability of the Company under the Notes for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the "Maximum Rate" ), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Notes exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed

by law and applicable to the Notes is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate of interest applicable to the Notes from the effective date forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Lender with respect to indebtedness evidenced by the Notes, such excess shall be applied by such Lender to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Lender’s election.           (i) This note is one of the Notes referred to in the Credit Agreement. The Credit Agreement and the other Loan Documents referred to therein contain additional rights of the holder of, and the security for, this Note.           (j) This Note shall be governed by, and construed in accordance with, the laws of the State of California in all respects, including all matters of construction, validity and performance, without regard to the choice of law provisions thereof.           (k) In the event of a conflict between the provisions of this Note and the provisions of the Credit Agreement, the latter shall control. **********

          IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of this ___ day of February, 2008.

[Signature Page to the Subordinated Term Note]

EXHIBIT A NOTE ASSIGNMENT FORM FOR VALUE RECEIVED,                                          hereby sells, assigns and transfers to the transferee named below, this Note together with all right, title and interest therein. The transferee agrees to be bound by the terms and conditions of this Note and agrees that it will not dispose of the Note except in compliance with the applicable requirements of the Securities Act of 1933, as amended.

EXHIBIT C-1 FORM OF COMPLIANCE CERTIFICATE [on Borrower’s letterhead]

Ladies and Gentlemen:           Reference is made to that certain Second Lien Credit Agreement (the " Credit Agreement ") dated as of February 1, 2008, by and among the lenders identified on the signature pages thereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a " Lender " and collectively as the " Lenders "), PRIVATE EQUITY MANAGEMENT GROUP, INC., a Nevada corporation, as the arranger and administrative agent for the Lenders (" Agent "), and BAKERS FOOTWEAR GROUP, INC., a Missouri corporation (" Borrower "). Capitalized terms used in this Compliance Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.           Pursuant to Schedule 5.3 of the Credit Agreement, the undersigned officer of Parent hereby certifies that:           1. The consolidated financial information of Borrower and its Subsidiaries furnished in Schedule 1 attached hereto has been prepared in accordance with GAAP (except for year-end adjustments and the lack of footnotes or as set forth on Schedule 1 ), and fairly presents in all material respects in accordance with GAAP the financial condition of Borrower and its Subsidiaries.           2. Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of Borrower and its Subsidiaries during the accounting period covered by the financial statements delivered pursuant to Schedule 5.3 of the Credit Agreement.           3. Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event or condition that constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2 attached hereto, specifying the nature and period of existence thereof and what action Borrower has taken, is taking, or proposes to take with respect thereto.           4. The representations and warranties of Borrower set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as

EXHIBIT C-1 - 1

o